Notice of Preliminary Results of Antidumping Duty Administrative Review and Notice of Initiation of Changed Circumstances Review: Carbon and Certain Alloy Steel Wire Rod from Canada, 64921-64926 [E6-18664]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 214 (Monday, November 6, 2006)]
[Notices]
[Pages 64921-64926]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-18664]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-122-840)


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

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

SUMMARY: The Department of Commerce (``the Department'') is conducting 
an administrative review of the antidumping duty order on carbon and 
certain alloy steel wire rod from Canada for the period October 1, 
2004, to September 30, 2005 (``the POR''). We preliminarily determine 
that sales of subject merchandise by Ivaco Rolling Mills 2004 L.P. and 
Sivaco Ontario, a division of Sivaco Wire Group 2004 L.P., (the 
respondents collectively refer to themselves as ``Ivaco'') have been 
made below normal value (``NV''). If these preliminary results are 
adopted in our final results, we will instruct U.S. Customs and Border 
Protection (``CBP'') to assess antidumping duties on appropriate 
entries. Interested parties are invited to comment on these preliminary 
results. We will issue the final results no later than 120 days from 
the publication of this notice.
    In response to Ivaco's January 12, 2006, response to the 
Department's original Section A questionnaire, notifying the Department 
that the assets of Ivaco, Inc. and all of its divisions (e.g., Sivaco 
Ontario, and Sivaco Quebec) had been purchased, the Department is self-
initiating a changed circumstances review of the antidumping duty order 
on carbon and certain alloy steel wire rod from Canada.

EFFECTIVE DATE: November 6, 2006.

FOR FURTHER INFORMATION CONTACT: Damian Felton or Brandon Farlander, at 
(202) 482-0133 or (202) 482-0182, respectively; AD/CVD Operations, 
Office 1, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street & Constitution Avenue, NW, 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

[[Page 64922]]

Background

    On October 29, 2002, the Department published in the Federal 
Register an antidumping duty order on carbon and certain alloy steel 
wire rod (``wire rod'') from Canada. See Notice of Amended Final 
Determination of Sales at Less Than Fair Value and Antidumping Duty 
Order: Carbon and Certain Alloy Steel Wire Rod from Canada, 67 FR 65944 
(October 29, 2002) (``Order''). On October 3, 2005, the Department 
issued a notice of opportunity to request an administrative review of 
this order for the October 1, 2004 through September 30, 2005 POR. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 70 FR 
57558 (October 3, 2005). On October 31, 2005, in accordance with 19 CFR 
351.213(b), Ivaco requested an administrative review. On December 1, 
2005, the Department published the notice of initiation of this 
antidumping duty administrative review. See Initiation of Antidumping 
and Countervailing Duty Administrative Reviews and Deferral of 
Administrative Reviews, 70 FR 72107 (December 1, 2005). In its January 
12, 2006 response to Section A of the Department's original 
questionnaire, Ivaco notified the Department that the assets of Ivaco, 
Inc. and all of its divisions (e.g., Sivaco Ontario, and Sivaco Quebec) 
had been purchased on December 1, 2004. We received responses to the 
remaining section of our questionnaire on February 21, 2006.

Scope of the Order

    The merchandise subject to this order is certain hot-rolled 
products of carbon steel and alloy steel, in coils, of approximately 
round cross section, 5.00 mm or more, but less than 19.00 mm, in solid 
cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (``HTSUS'') definitions for (a) stainless steel; (b) 
tool steel; (c) high nickel steel; (d) ball bearing steel; and (e) 
concrete reinforcing bars and rods. Also excluded are (f) free 
machining steel products (i.e., products that contain by weight one or 
more of the following elements: 0.03 percent or more of lead, 0.05 
percent or more of bismuth, 0.08 percent or more of sulfur, more than 
0.04 percent of phosphorus, more than 0.05 percent of selenium, or more 
than 0.01 percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. Grade 1080 tire cord 
quality rod is defined as: (i) grade 1080 tire cord quality wire rod 
measuring 5.0 mm or more but not more than 6.0 mm in cross-sectional 
diameter; (ii) with an average partial decarburization of no more than 
70 microns in depth (maximum individual 200 microns); (iii) having no 
non-deformable inclusions greater than 20 microns and no deformable 
inclusions greater than 35 microns; (iv) having a carbon segregation 
per heat average of 3.0 or better using European Method NFA 04-114; (v) 
having a surface quality with no surface defects of a length greater 
than 0.15 mm; (vi) capable of being drawn to a diameter of 0.30 mm or 
less with 3 or fewer breaks per ton, and (vii) containing by weight the 
following elements in the proportions shown: (1) 0.78 percent or more 
of carbon, (2) less than 0.01 percent of aluminum, (3) 0.040 percent or 
less, in the aggregate, of phosphorus and sulfur, (4) 0.006 percent or 
less of nitrogen, and (5) not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium.
    Grade 1080 tire bead quality rod is defined as: (i) grade 1080 tire 
bead quality wire rod measuring 5.5 mm or more but not more than 7.0 mm 
in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no non-deformable inclusions greater than 20 
microns and no deformable inclusions greater than 35 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    For purposes of grade 1080 tire cord quality wire rod and grade 
1080 tire bead quality wire rod, an inclusion will be considered to be 
deformable if its ratio of length (measured along the axis - that is, 
the direction of rolling - of the rod) over thickness (measured on the 
same inclusion in a direction perpendicular to the axis of the rod) is 
equal to or greater than three. The size of an inclusion for purposes 
of the 20 microns and 35 microns limitations is the measurement of the 
largest dimension observed on a longitudinal section measured in a 
direction perpendicular to the axis of the rod. This measurement 
methodology applies only to inclusions on certain grade 1080 tire cord 
quality wire rod and certain grade 1080 tire bead quality wire rod that 
are entered, or withdrawn from warehouse, for consumption on or after 
July 24, 2003.
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications, end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under review are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3015, 7213.91.3090, 7213.91.3092, 
7213.91.4510, 7213.91.4590, 7213.91.6010, 7213.91.6090, 7213.99.0031, 
7213.99.0038, 7213.99.0090, 7227.20.0010, 7227.20.0020, 7227.20.0090, 
7227.20.0095, 7227.90.6010, 7227.90.6051, 7227.90.6053, 7227.90.6058, 
7227.90.6059, and 7227.90.6080 of the HTSUS. Although the HTSUS 
subheadings are provided for convenience and customs purposes, the 
written description of the scope of this order is dispositive.

Initiation of Changed Circumstances Review

    Pursuant to section 751(b) of the Tariff Act of 1930, as amended 
(``the Act''), and 19 CFR 351.216, we will conduct a changed 
circumstances review upon receipt of information

[[Page 64923]]

concerning, or a request from an interested party for a review of, an 
antidumping duty finding or order which shows changed circumstances 
sufficient to warrant a review of the order. The information submitted 
by Ivaco stating the change in ownership and change in the respondent 
entities' legal names demonstrates changed circumstances sufficient to 
warrant a review. See 19 CFR 351.216(d).
    The respondents named in our initiation notice were Ivaco Rolling 
Mills L.P. (aka Ivaco Rolling Mills 2004 L.P.), and Sivaco Ontario 
Processing (aka Sivaco Ontario, a division of Sivaco Wire Group 2004 
L.P.).\1\ In the most recently completed review, the responding 
entities were Ivaco Rolling Mills L.P. (the producer) and Ivaco Inc., 
which through its division Sivaco Ontario, purchased wire rod from 
Ivaco Rolling Mills L.P. and sold wire rod to unaffiliated customers 
after further processing. See Notice of Final Results of Antidumping 
Duty Administrative Review: Carbon and Certain Alloy Steel Wire Rod 
from Canada, 71 FR 3822 (January 24, 2006).
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    \1\ See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Deferral of Administrative Reviews, 70 FR 
72107 (December 1, 2005).
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    As noted above in the ``Background'' section of this notice, Ivaco 
notified the Department that the assets of Ivaco, Inc. and all of its 
divisions were purchased on December 1, 2004. Subsequent to the 
purchase, Ivaco Rolling Mills L.P. was renamed and is now known as 
Ivaco Rolling Mills 2004 L.P., and Sivaco Ontario and Sivaco Quebec\2\ 
were reorganized into divisions of Sivaco Wire Group 2004 L.P. Ivaco, 
Inc. is now known as Heico 2004 Member Inc. (``Heico 2004''). Heico 
2004 functions as a headquarters managing the operations of Ivaco 
Rolling Mills 2004 L.P. and Sivaco Wire Group 2004 L.P. Heico 2004, 
Ivaco Rolling Mills 2004 L.P., and Sivaco Wire group 2004 L.P. are 
commonly owned.
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    \2\ Sivaco Quebec purchases green wire rod from Ivaco Rolling 
Mills 2004 L.P. and draws the wire rod into wire and wire products 
that are not within the scope of this order for sale to customers in 
Canada and the United States. See Ivaco's January 12, 2006, response 
to Section A of the Department's questionnaire.
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    The Department is self-initiating a changed circumstances review to 
determine whether Ivaco Rolling Mills 2004 L.P. (referred to as ``IRM'' 
throughout the remainder of this notice) and Sivaco Wire Group 2004 
L.P., including its divisions, Sivaco Ontario and Sivaco Quebec, are 
successors to Ivaco Rolling Mills L.P. and Ivaco Inc. We will publish 
in the Federal Register a notice of preliminary results of antidumping 
duty changed circumstances review, in accordance with 19 CFR 
351.221(b)(4) and 351.221(c)(3)(i), which will set forth the factual 
and legal conclusions upon which our preliminary results are based and 
a description of any action proposed based on those results. As per 
section 351.221(b)(4), interested parties will have an opportunity to 
comment. The Department will issue its final results of review no later 
than 270 days after publication of this notice of initiation. All 
written comments must be submitted to the Department and served on all 
interested parties on the Department's service list in accordance with 
19 CFR 351.303.
    During the course of this changed circumstances review, the current 
requirement for a cash deposit of estimated antidumping duties on all 
subject merchandise, including the merchandise subject to this changed 
circumstances review, will continue unless and until it is modified 
pursuant to the final results of this changed circumstances review or 
other administrative review.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, export 
price (``EP'') or constructed export price (``CEP''), as defined in 
sections 772(a) and 772(b) of the Act, respectively. Section 772(a) of 
the Act defines EP as the price at which the subject merchandise is 
first sold before the date of importation by the producer or exporter 
outside of the United States to an unaffiliated purchaser in the United 
States or to an unaffiliated purchaser for exportation to the United 
States, as adjusted under section 772(c) of the Act.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold in the United States before or after 
the date of importation by or for the account of the producer or 
exporter of such merchandise or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter, as adjusted under sections 772(c) and (d) of the Act.
    Ivaco made both EP and CEP transactions. We calculated an EP for 
sales where the merchandise was sold directly by Ivaco to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts on the record. We 
calculated a CEP for sales made by Ivaco to the U.S. customer from 
unaffiliated processors or distribution warehouses after importation 
into the United States.
    For EP sales, we made additions to the starting price (gross unit 
price), where appropriate, for freight revenue (reimbursement for 
freight charges paid by Ivaco) and for billing errors (debit-note price 
adjustments made by Ivaco), and deductions, where appropriate, for 
billing adjustments (including credit-note price adjustments made by 
Ivaco), early payment discounts and rebates, and movement expenses in 
accordance with section 772(c)(2)(A) of the Act. Movement expenses 
included inland freight, warehousing expenses, and brokerage fees.
    For CEP sales, we made the same adjustments to the starting price 
as for the EP transactions described above. Consistent with our 
treatment of these expenses in the most recent review, we recategorized 
freight from one unaffiliated processor in the United Sates to another 
unaffiliated processor in the United Sates as further manufacturing 
costs.\3\ In addition, in accordance with section 772(d)(1) of the Act, 
we deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses (e.g., credit expenses), imputed 
inventory carrying costs, and further manufacturing. Finally, in 
accordance with section 772(d)(3) of the Act, we deducted an amount of 
profit allocated to the expenses deducted under sections 772(d)(1) and 
(2) of the Act. See Memorandum from Damian Felton, International Trade 
Compliance Analyst, to Brandon Farlander, Program Manager, entitled, 
``Analysis Memorandum for Ivaco,'' dated October 31, 2006 (``Ivaco 
Analysis Memorandum'').
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    \3\ See Notice of Final Results of Antidumping Duty 
Administrative Review: Carbon and Certain Alloy Steel Wire Rod from 
Canada, 71 FR 3822 (January 24, 2006); see also Final Results of 
Stainless Steel Sheet and Strip in Coils from France, 70 FR 7240 
(February 11, 2005).
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Normal Value

A. Selection of Comparison Markets

    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate) and that there is not a particular market 
situation that prevents a proper comparison with sales to the United 
States. The statute contemplates that quantities (or value) will 
normally be considered insufficient if they are less than five percent 
of the aggregate quantity (or value) of sales of the subject

[[Page 64924]]

merchandise to the United States. See section 773(a)(1)(C) of the Act.
    We found that Ivaco had a viable home market for steel wire rod. As 
such, Ivaco submitted home market sales data for purposes of the 
calculation of NV. In deriving NV, we made adjustments as detailed in 
the ``Calculation of Normal Value Based on Comparison Market Prices'' 
section below.

B. Cost of Production Analysis

    Because we disregarded below-cost sales in the most recently 
completed segment of the proceeding, we have reasonable grounds to 
believe or suspect that home market sales of the foreign like product 
by the respondents were made at prices below the cost of production 
(``COP'') during the POR.\4\ See section 773(b) of the Act. Therefore, 
we have required Ivaco to file a Section D response for the 
Department's Questionnaire.
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    \4\ See Notice of Final Results of Antidumping Duty 
Administrative Review: Carbon and Certain Alloy Steel Wire Rod from 
Canada, 69 FR 68309 (November 24, 2004); see also Notice of Final 
Results of Antidumping Duty Administrative Review: Carbon and 
Certain Alloy Steel Rod from Canada, 71 FR 3822 (January 24, 2006).
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1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of materials, 
fabrication, and general and administrative (``G&A'') expenses.
2. Test of Comparison Market Sales Prices
    We compared the weighted-average COPs for the respondent to its 
home market sales prices of the foreign like product, as required under 
section 773(b) of the Act, to determine whether these sales had been 
made at prices below the COP within an extended period of time (i.e., a 
period of one year) in substantial quantities and whether such prices 
were sufficient to permit the recovery of all costs within a reasonable 
period of time. On a model-specific basis, we compared the COP to the 
home market prices, less any applicable movement charges, discounts, 
rebates, and direct and indirect selling expenses.
3. Results of the COP Test
    We disregard below-cost sales where (1) 20 percent or more of the 
respondent's sales of a given product during the POR were made at 
prices below the COP in accordance with sections 773(b)(2)(B) and (C) 
of the Act, and (2) based on comparisons of price to weighted-average 
COPs for the POR, we determine that the below-cost sales of the product 
were at prices which would not permit recovery of all costs within a 
reasonable time period, in accordance with section 773(b)(2)(D) of the 
Act. We found that Ivaco made sales below cost and we disregarded such 
sales where appropriate.

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

    We determined NV for Ivaco as follows. We made adjustments for any 
differences in packing and deducted home market movement expenses 
pursuant to sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. In 
addition, we made adjustments for differences in circumstances of sale 
(``COS'') pursuant to section 773(a)(6)(C)(iii) of the Act.
    Specifically, we made COS adjustments for Ivaco's EP transactions 
by deducting direct selling expenses incurred for home market sales 
(credit expenses and warranty expenses) and adding U.S. direct selling 
expenses (credit expenses and warranty expenses). See section 
773(a)(6)(C)(iii) of the Act. See also 19 CFR 351.410(c). Where we 
compared Ivaco's U.S. sales to home market sales of merchandise, we 
made adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

D. Arm's-Length Sales

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

E. Calculation of Normal Value Based on Constructed Value

    Section 773(a)(4) of the Act provides that, where NV cannot be 
based on comparison-market sales, NV may be based on constructed value 
(``CV''). Accordingly, for those models of steel wire rod for which we 
could not determine the NV based on comparison-market sales, either 
because there were no sales of a comparable product or all sales of the 
comparison products failed the COP test, we based NV on CV.
    Section 773(e)(1) of the Act provides that CV shall be based on the 
sum of the cost of materials and fabrication for the imported 
merchandise plus amounts for selling, general, and administrative 
expenses (``SG&A''), profit, and U.S. packing expenses. We calculated 
the cost of materials and fabrication based on the methodology 
described in the COP section of this notice. We based SG&A and profit 
on the actual amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the comparison market, 
in accordance with section 773(e)(2)(A) of the Act.
    We made adjustments to CV for differences in COS in accordance with 
section 773(a)(8) of the Act and 19 CFR 351.410. For CEP and EP 
comparisons, we deducted direct selling expenses incurred for home 
market sales (credit expenses and warranty expenses). See section 
773(a)(6)(C)(iii) of the Act. See also 19 CFR 351.410(c). For EP sales, 
we added U.S. direct selling expenses (credit expenses and warranty 
expenses) to the NV.

F. Level of Trade/Constructed Export Price Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market 
made at the same level of trade as the U.S. sales. If the comparison 
market sales are at a different level of trade and the difference 
affects price comparability, as manifested in a pattern of consistent 
price differences between the sales on which NV is based and 
comparison-market sales at the level of trade of the export 
transaction, we make a level-of-trade adjustment in accordance with 
section 773(a)(7)(A) of the Act.
    Ivaco reported two channels of distribution in the home market. The 
channels of distribution are: (1) direct sales by IRM and (2) direct 
sales by Sivaco Ontario. To determine whether the two channels 
constitute separate levels of trade in the home market, we examined the 
stages in the marketing process and selling functions along the chains 
of distribution between Ivaco and its customers. Based on this 
examination, we preliminarily determine that Ivaco sold merchandise at 
two levels of trade in the home market during the POR. One level of 
trade is for sales made by Ivaco's steel

[[Page 64925]]

wire rod manufacturing facility, IRM; the second level of trade is for 
sales made by Sivaco Ontario, Ivaco's customer service center, which is 
a steel wire rod processing and drawing facility. Sales by Sivaco 
Ontario have different, more complex, distribution patterns, involving 
substantially greater selling activities. Therefore, based upon our 
analysis of the marketing process for these sales, we preliminarily 
determine that sales by Sivaco Ontario are at a more advanced stage 
than sales by IRM.
    Ivaco's selling functions in the home market include inventory 
maintenance services, delivery services, handling services, freight 
services, sales administration services, bid assistance, technical 
services, and extension of credit. With regard to inventory 
maintenance, Sivaco Ontario maintains a significant general inventory, 
which results in a significantly longer inventory turnover rate than 
that experienced by IRM. Thereby, Sivaco Ontario assumes the inventory 
services that would normally be performed by the customer. IRM does not 
provide these additional services. As stated by the Department in Pipe 
and Tube from Turkey, ``inventory maintenance is a principal selling 
function'' and ``the additional responsibilities of maintaining 
merchandise in inventory also give rise to related selling functions 
that are performed.''\5\
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    \5\ See Notice of Final Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipe and Tube From Turkey, 63 FR 35190, 35193 (June 29, 1998) (Pipe 
and Tube from Turkey).
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    Due to its provision of these inventory services, Sivaco Ontario 
ships more often than IRM and also offers its customers just-in-time 
(``JIT'') delivery services. In contrast, IRM produces and ships rod 
based on a quarterly rolling schedule. In addition, Sivaco Ontario 
provides more handling and freight services than IRM in that it offers 
smaller, more frequent shipments with more varied freight services. For 
example, IRM sells rod in either full truck load or rail car 
quantities, while Sivaco Ontario will arrange shipment for less than 
truck-load quantities. IRM is able to produce significant quantities of 
wire rod on a rolling basis that are demanded by large volume 
companies, which is reflected in its delivery and freight services as 
well as the limited customer services provided. Sivaco Ontario, 
however, offers customers wire rod and wire products based on inventory 
already in stock, which enables the company to offer a short lead time 
in providing different quantities and a variety of processed wire rod 
products to its customers.
    With regard to sales administration services, Sivaco Ontario has a 
smaller average shipment size than IRM, resulting in a higher 
proportional sales administrative service cost than IRM. In addition to 
its short-lead-time delivery capabilities, Sivaco Ontario also offers 
variable customer service options. These additional factors allow 
Sivaco Ontario to establish customer relations with companies that 
require smaller volumes of merchandise, inventory flexibility and have 
limited end use or processing schedules for the purchased product. 
Furthermore, Sivaco Ontario offers the following services to its 
customers, which IRM does not: (1) bid assistance to customers, (2) 
assistance with product specification and material processing review, 
and (3) a wider range of technical assistance, including helping 
customers solve usage problems and choose the best type of rod for 
their applications and machinery.\6\
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    \6\ See Submission from Ivaco to the Department, Re: Section A 
Response (January 12, 2006) at pages A-37 - A-45.
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    The above differences between IRM and Sivaco Ontario in their 
marketing process and selling functions allow Ivaco to develop customer 
relationships on two distinct levels. Based upon these differences, we 
concluded that two levels of trade exist in the home market, an IRM 
level of trade (level one) and a Sivaco Ontario level of trade (level 
two). Although IRM and Sivaco Ontario may have certain customers in 
common, the Department does not find the number of common customers to 
be significant.
    In the U.S. market, Ivaco reported two EP channels of distribution. 
The channels of distribution are: (1) direct sales by IRM to U.S. 
customers and (2) direct sales by Sivaco Ontario to U.S. customers. To 
determine whether separate levels of trade exist for EP sales to the 
U.S. market, we examined the selling functions, the chain of 
distribution, and the customer categories reported in the United 
States.
    Specifically, we have found that direct sales by IRM to U.S. 
customers involve all the same selling functions as IRM's sales in the 
home market. Further, direct sales by Sivaco Ontario in the United 
States include all the same selling functions as those found for its 
home market sales. Finally, the customer categories submitted by Ivaco 
for IRM and Sivaco Ontario in the U.S. market match the similar 
customer categories reported for the home market.
    Based upon this, we preliminarily determine that EP sales by IRM 
are made at level of trade one, the same as IRM's home market sales. EP 
sales by Sivaco Ontario are made at level of trade two, also the same 
level of trade as Sivaco Ontario's home market sales.
    To the extent possible, we have compared U.S. EP transactions and 
home market sales at the same level of trade without making a level-of-
trade adjustment. When we were unable to find sales of the foreign like 
product in the home market at the same level of trade as the U.S. sale, 
we examined whether a level-of-trade adjustment was appropriate. Based 
on our analysis of sales made at the two levels of trade in the home 
market, we found that there were consistent price differences between 
models sold at different levels of trade. Therefore, we made a level-
of-trade adjustment for EP sales for which we were not able to find 
sales of the foreign like product in the home market at the same level 
of trade as the U.S. sale.
    In addition, Ivaco has two CEP channels of distribution: (1) sales 
of goods manufactured by IRM using unaffiliated U.S. processor and/or 
warehoused in inventory locations in the United States and (2) sales of 
goods manufactured by IRM through locations in the United States. For 
CEP sales, we examined the relevant selling functions after deducting 
the costs of further manufacturing and U.S. selling expenses and 
associated profit. As a result, there are virtually no selling 
activities associated with Ivaco's CEP sales in either channel of 
distribution. Therefore, we preliminarily find a single level of trade 
with respect to Ivaco's CEP sales, and, moreover, that the CEP level of 
trade is not comparable to either level of trade in the home market. As 
the available data do not provide an appropriate basis for making a 
level of trade adjustment, we matched, where possible, to the closest 
home market level of trade, level one (direct sales by IRM), and 
granted a CEP offset pursuant to 773(a)(7)(B) of the Act. This offset 
is equal to the amount of indirect expenses incurred in the home market 
not exceeding the amount of the deductions made from the U.S. price in 
accordance with section 772(d)(1)(D) of the Act.

Currency Conversion

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

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margin exists for the period October 1, 
2004, through September 30, 2005:

[[Page 64926]]



------------------------------------------------------------------------
                                                      Weighted-Average
                     Producer                        Margin (Percentage)
------------------------------------------------------------------------
Ivaco.............................................                  2.75
------------------------------------------------------------------------

    In accordance with 19 CFR 351.224(b), the Department will disclose 
calculations performed within 5 days of publication of this notice. 
Interested parties may submit case briefs and/or written comments no 
later than 30 days after the date of publication of these preliminary 
results. See 19 CFR 351.309(c)(ii). Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in such briefs or comments, 
may be filed no later than five days after submission of case briefs. 
See 19 CFR 351.309(d). Parties who submit arguments are requested to 
submit with the argument (1) a statement of the issue, (2) a brief 
summary of the argument, and (3) a table of authorities. Further, the 
parties submitting written comments should provide the Department with 
an additional copy of the public version of any such comments on 
diskette. An interested party may request a hearing within 30 days of 
publication of these preliminary results. See 19 CFR 351.310(c). Any 
hearing, if requested, will be held 44 days after the date of 
publication, or the first working day thereafter. The Department will 
issue the final results of this administrative review, which will 
include the results of its analysis of issues raised in any such 
comments, within 120 days of publication of these preliminary results.

Assessment

    Upon completion of this administrative review, pursuant to 19 CFR 
351.212(b), the Department will calculate an assessment rate on all 
appropriate entries. We will calculate importer-specific duty 
assessment rates on the basis of the ratio of the total amount of 
antidumping duties calculated for the examined sales to the total 
volume of the examined sales for that importer. Where the assessment 
rate is above de minimis, pursuant to 19 CFR 356.8(a), the Department 
intends to issue appropriate assessment instructions directly to CBP on 
or after 41 days following the publication of the final results of 
review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) 
(``Assessment Policy Notice''). This clarification will apply to 
entries of subject merchandise during the period of review produced by 
companies included in these final results of reviews for which the 
reviewed companies did not know that the merchandise it sold to the 
intermediary (e.g., a reseller, trading company, or exporter) was 
destined for the United States. In such instances, we will instruct CBP 
to liquidate unreviewed entries at the all-others rate if there is no 
rate for the intermediary involved in the transaction. See Assessment 
Policy Notice for a full discussion of this clarification.

Cash Deposit Requirements

    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
steel wire rod from Canada entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rates for Ivaco will be the 
rates established in the final results of this review, except if a rate 
is less than 0.5 percent, and therefore de minimis, the cash deposit 
will be zero; (2) for previously reviewed or investigated companies not 
listed above, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter 
is not a firm covered in this review, a prior review, or the less-than-
fair-value (``LTFV'') investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and (4) if neither the 
exporter nor the manufacturer is a firm covered in this or any previous 
review conducted by the Department, the cash deposit rate will be 8.11 
percent, the ``All Others'' rate established in the LTFV investigation. 
These cash deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entities during this review period. Failure to comply with 
this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    These preliminary results are issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) f the Act.

    Dated: October 31, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-18664 Filed 11-3-06; 8:45 am]
BILLING CODE 3510-DS-S