Small Diameter Graphite Electrodes from the People's Republic of China: Initiation of Antidumping Duty Investigation, 8287-8290 [E8-2646]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 73, Number 30 (Wednesday, February 13, 2008)]
[Notices]
[Pages 8287-8290]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-2646]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-929]


Small Diameter Graphite Electrodes from the People's Republic of 
China: Initiation of Antidumping Duty Investigation

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

EFFECTIVE DATE: February 13, 2008.

FOR FURTHER INFORMATION CONTACT: Magd Zalok, AD/CVD Operations, Office 
4, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-4162.

SUPPLEMENTARY INFORMATION:

The Petition

    On January 17, 2008, the Department of Commerce (``Department'') 
received a petition concerning imports of small diameter graphite 
electrodes (``SDGE'') from the People's Republic of China (``PRC'') 
filed in proper form by SGL Carbon LLC and Superior Graphite Co. 
(collectively ``Petitioners''). See Petition on Small Diameter Graphite 
Electrodes from the People's Republic of China dated January 17, 2008 
(``Petition''). On January 22 and 29, 2008, the Department issued a 
request for additional information regarding, and clarification of 
certain areas of, the Petition. Based on the Department's requests, the 
Petitioners filed additional information on January 25 and 30, 2008. 
The period of investigation (``POI'') is July 1 through December 31, 
2007. See 19 CFR 351.204(b).
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (``the Act''), the Petitioners allege that imports of SDGE from 
the PRC are being, or are likely to be, sold in the United States at 
less than fair value, within the meaning of section 731 of the Act, and 
that such imports are materially injuring, or threaten material injury 
to, an industry in the United States.
    The Department finds that the Petitioners filed this Petition on 
behalf of the domestic industry because the Petitioners are interested 
parties as defined in section 771(9)(C) of the Act, and have 
demonstrated sufficient industry support with respect to the 
antidumping duty investigation that the Petitioners are requesting that 
the Department initiate (see ``Determination of Industry Support for 
the Petition'' section below).

Scope of Investigation

    The merchandise covered by this investigation includes all small 
diameter graphite electrodes of any length, whether or not finished, of 
a kind used in furnaces, with a nominal or actual diameter of 400 
millimeters (16 inches) or less, and whether or not attached to a 
graphite pin joining system or any other type of joining system or 
hardware. Small diameter graphite electrodes are most commonly used in 
primary melting, ladle metallurgy, and specialty furnace applications 
in industries including foundries, smelters, and steel refining 
operations. Small diameter graphite electrodes subject to this 
investigation are currently classified under the Harmonized Tariff 
Schedule of the United States (``HTSUS'') subheading 8545.11.0000. The 
HTSUS number is provided for convenience and customs purposes, but the 
written description of the scope is dispositive.

Comments on Scope of Investigation

    During our review of the Petition, we discussed the scope with the 
Petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations (Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), 
we are setting aside a period for interested parties to raise issues 
regarding product coverage. The Department encourages all interested 
parties to submit such comments within 20 days of signature of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit (``CRU''), Room 1870, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230, attention 
Magd Zalok, room 3067. The period of scope consultations is intended to 
provide the Department with ample opportunity to consider all comments 
and to consult with parties prior to the issuance of the preliminary 
determination.

Comments on Product Characteristics for Antidumping Duty Questionnaire

    We are requesting comments from interested parties regarding the 
appropriate physical characteristics of SDGE to be reported in response 
to the Department's antidumping questionnaire. This information will be 
used to identify the key physical characteristics of the subject 
merchandise in order for respondents to accurately report the relevant 
factors of production, as well as develop appropriate product reporting 
criteria.
    Interested parties may provide any information or comments that 
they feel are relevant to the development of an accurate list of 
physical characteristics. Specifically, they may provide comments as to 
which characteristics are appropriate to use as general product 
characteristics and product reporting criteria. We note that it is not 
always appropriate to use all product characteristics as product 
reporting criteria. We base product reporting criteria on meaningful 
differences among products. While there may be some physical product 
characteristics which manufacturers use to describe SDGE, it may be 
that only a select few product characteristics take into account 
meaningful physical characteristics. In

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order to consider the suggestions of interested parties in developing 
the antidumping duty questionnaire, we must receive comments at the 
above-referenced address by February 26, 2008. Rebuttal comments must 
be received within 10 calendar days of the receipt of timely filed 
comments.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (i) at least 
25 percent of the total production of the domestic like product; and 
(ii) more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition. Moreover, section 732(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A), or (ii) determine industry support using a 
statistically valid sampling method if there is a large number of 
producers in the industry.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The International Trade Commission (ITC), which 
is responsible for determining whether ``the domestic industry'' has 
been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While both the Department and 
the ITC must apply the same statutory definition regarding the domestic 
like product (section 771(10) of the Act), they do so for different 
purposes and pursuant to a separate and distinct authority. In 
addition, the Department's determination is subject to limitations of 
time and information. Although this may result in different definitions 
of the like product, such differences do not render the decision of 
either agency contrary to law. See USEC, Inc. v. United States, 132 F. 
Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United 
States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d 240 (Fed. Cir. 
1989), cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this subtitle.'' Thus, the reference point from which the 
domestic like product analysis begins is ``the article subject to an 
investigation,'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, the Petitioners do not 
offer a definition of domestic like product distinct from the scope of 
the investigation. Based on our analysis of the information submitted 
on the record, we have determined that SDGE constitute a single 
domestic like product and we have analyzed industry support in terms of 
that domestic like product. For a discussion of the domestic like 
product analysis in this case, see the Antidumping Investigation 
Initiation Checklist: Small Diameter Graphite Electrodes from the 
People's Republic of China (PRC) (PRC Initiation Checklist), Industry 
Support at Attachment II, on file in the CRU.
    On February 1, 2008, we received an industry support challenge from 
an importer of graphite electrodes from China. The Petitioners 
responded to this submission on February 4, 2008. See PRC Initiation 
Checklist at Attachment II (Industry Support). Our review of the data 
provided in the Petition, supplemental submissions, and other 
information readily available to the Department indicates that the 
Petitioners have established industry support. First, the Petition 
established support from domestic producers (or workers) accounting for 
more than 50 percent of the total production of the domestic like 
product and, as such, the Department is not required to take further 
action in order to evaluate industry support (e.g., polling). See 
section 732(c)(4)(D) of the Act. Second, the domestic producers have 
met the statutory criteria for industry support under section 
732(c)(4)(A)(i) of the Act because the domestic producers (or workers) 
who support the Petition account for at least 25 percent of the total 
production of the domestic like product. Finally, the domestic 
producers have met the statutory criteria for industry support under 
732(c)(4)(A)(ii) because the domestic producers (or workers) who 
support the Petition account for more than 50 percent of the production 
of the domestic like product produced by that portion of the industry 
expressing support for, or opposition to, the Petition. Accordingly, 
the Department determines that the Petition was filed on behalf of the 
domestic industry within the meaning of section 732(b)(1) of the Act. 
See PRC Initiation Checklist at Attachment II (Industry Support).
    The Department finds that the Petitioners filed the Petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) of the Act and they have demonstrated 
sufficient industry support with respect to the antidumping 
investigation that they are requesting the Department initiate. See PRC 
Initiation Checklist at Attachment II (Industry Support).

Allegations and Evidence of Material Injury and Causation

    The Petitioners allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the imports of the subject 
merchandise sold at less than normal value (``NV''). The Petitioners 
contend that the industry's injured condition is illustrated by reduced 
market share, lost sales, reduced production, reduced capacity 
utilization rate, reduced shipments, underselling and price depressing 
and suppressing effects, lost revenue, reduced employment, decline in 
financial performance, and an increase in import penetration. We have 
assessed the allegations and supporting evidence regarding material 
injury and causation, and have determined that these allegations are 
properly supported by adequate evidence and meet the statutory 
requirements for initiation. See PRC Initiation Checklist at Attachment 
III (Injury).

Allegation of Sales at Less Than Fair Value

    The following is a description of the allegation of sales at less 
than fair value upon which the Department based its decision to 
initiate this investigation of imports of SDGE from the PRC. The 
sources of data for the deductions and adjustments relating to the U.S. 
price and the factors of production are also discussed in the 
checklist. See Initiation Checklist. Should the need arise to use any 
of this information as facts available under section 776 of the Act in 
our preliminary or final determinations, we will reexamine the 
information and revise the margin calculations, if appropriate.

Export Price

    The Petitioners relied on 14 prices obtained from U.S. resellers 
for SDGE manufactured by Chinese producers/

[[Page 8289]]

exporters. The 14 prices were for POI sales of certain types of SDGE 
falling within the scope of the Petition. The Petitioners deducted from 
the quoted prices the costs associated with exporting and delivering 
the product to the customer in the United States, including foreign 
brokerage and handling, ocean freight and insurance, U.S. inland 
freight, U.S. port fees, and a reseller's mark-up. See Initiation 
Checklist. The Petitioners calculated foreign brokerage and handling 
based on the methodology used by the Department in the Final 
Determination of Sales at Less Than Fair Value and Partial Affirmative 
Determination of Critical Circumstances: Certain Polyester Staple Fiber 
from the People's Republic of China, 72 FR 19690 (April 19, 2007), and 
the accompanying memorandum, Investigation of Certain Polyester Staple 
Fiber from the People's Republic of China: Surrogate Values for the 
Final Determination, dated April 10, 2007, at 2. See also the Petition 
at page 51 and Exhibit AD-5. The Petitioners calculated ocean freight 
and insurance based on the CIF data for imports of SDGE from the PRC 
under HTSUS number 8545.11.0000, which were reported in the official 
U.S. import statistics published by the U.S. International Trade 
Commission Dataweb. The Petitioners calculated U.S. port fees, 
including harbor maintenance and processing fees, based on standard 
charges applicable to SDGE imported under HTSUS number 8545.11.0000. 
Lastly, the Petitioners calculated U.S. inland freight and a reseller's 
mark-up based on their own experience and knowledge of the industry.

NV

    The Petitioners stated that the Department has not revoked the non-
market economy (``NME'') status of the PRC, and thus they treated the 
PRC as a NME country for purposes of their Petition. The Department 
examined the PRC's market status and determined that NME status should 
continue for the PRC. See Memorandum from the Office of Policy to David 
M. Spooner, Assistant Secretary for Import Administration, Regarding 
The People's Republic of China Status as a Non-Market Economy, dated 
May 15, 2006. (This document is available online at https://
ia.ita.doc.gov/download/prc-nme-status/prc-nme-status-memo.pdf.) In 
addition, in every subsequent investigations, the Department treated 
the PRC as an NME country. See, e.g., Final Determination of Sales at 
Less Than Fair Value: Certain Activated Carbon from the People's 
Republic of China, 72 FR 9508 (March 2, 2007), and Final Determination 
of Sales at Less Than Fair Value and Partial Affirmative Determination 
of Critical Circumstances: Certain Polyester Staple Fiber from the 
People's Republic of China, 72 FR 19690 (April 19, 2007). In accordance 
with section 771(18)(C)(i) of the Act, the presumption of NME status 
remains in effect until revoked by the Department. Because the 
presumption of NME status for the PRC has not been revoked by the 
Department it remains in effect for purposes of the initiation of this 
investigation. Accordingly, the NV of the product is appropriately 
based on factors of production valued in a surrogate market-economy 
country in accordance with section 773(c) of the Act. After initiation, 
all parties will have the opportunity to provide relevant information 
related to the issues of the PRC's NME status and the granting of 
separate rates to individual exporters.
    The Petitioners selected India as the surrogate country arguing, 
pursuant to section 773(c)(4) of the Act, that India is an appropriate 
surrogate because it is a market-economy country that is at a level of 
economic development comparable to that of the PRC and is a significant 
producer and exporter of SDGE. See Petition at pages 52 through 54. 
Based on the information provided by the Petitioners, we find it 
appropriate to use India as a surrogate country for this initiation. 
After initiation, we will solicit comments regarding surrogate country 
selection.
    The Petitioners calculated NVs for each of the U.S. prices 
discussed above using the Department's NME methodology that is required 
by 19 CFR 351.202(b)(7)(i)(C) and 19 CFR 351.408. Because the 
quantities of the factors of production that are consumed by Chinese 
companies in manufacturing SDGE are not available to the Petitioners, 
the Petitioners calculated NVs using consumption rates experienced by 
U.S. producers of SDGE. See Petition at page 54. The 
Petitioners provided information which they claim demonstrates that 
Chinese and U.S. companies use the same process to produce SDGE. See 
the January 25, 2008, supplement to Petition at 11 and Enclosure 13. 
Additionally, the Petitioners provide an affidavit to support their use 
of U.S. production data. See the Petition at Exhibit AD-2. The 
Petitioners valued the factors of production as noted below.
    The Petitioners valued material inputs using the most recently 
available six months of import data from the World Trade Atlas (data 
from December 2006 through May 2007). See the PRC Initiation Checklist 
and the Petition at page 56. In calculating surrogate values from 
Indian import data, the Petitioners excluded the values of imports from 
unspecified countries, NME countries, and countries which the 
Department has found to maintain broadly available, non-industry-
specific export subsidies (i.e., Indonesia, the Republic of Korea and 
Thailand). See Hand Trucks and Certain Parts Thereof From the People's 
Republic of China: Final Results of Administrative Review and Final 
Results of New Shipper Review, 72 FR 27287 (May 15, 2007), and 
accompanying Issues and Decision Memorandum at Comment 23.
    The Petitioners valued electricity using the cost of electricity 
for industrial use in India for 2000, obtained from Energy Prices and 
Taxes, Quarterly Statistics, 3rd Quarter 2003, published in the 
International Financial Statistics by the IMF. See Petition at pages 
61-62 and Exhibit AD-7.
    The Petitioners valued natural gas based on an article in The 
Financial Express, `` Gas Prices Hiked 12%,'' dated May 28, 2005. See 
Petition at pages 62-63 and Exhibit AD-7.
    Where a surrogate value was in effect during a period preceding the 
POI, the Petitioners adjusted it using the Indian wholesale price index 
in the publication International Financial Statistics, which is 
published by the International Monetary Fund. See Petition at Exhibit 
AD-7. The surrogate values used by the Petitioners for the above-
referenced inputs consist of information reasonably available to the 
Petitioners and are, therefore, acceptable for purposes of initiation.
    The Petitioners based factory overhead expenses, selling, general 
and administrative expenses, and profit on data from an Indian SDGE 
producer, Graphite India Limited. The data come from the company's most 
recently available annual report which covers the period April 1, 2006, 
through March 31, 2007. See Petition at pages 63-64 and Exhibit AD-8, 
as well as Enclosure 1 of the January 30, 2008, supplement to the 
Petition. We find that the Petitioners' use of this company's 
information as surrogate financial data is appropriate for purposes of 
this initiation.

Fair Value Comparisons

    Based on the data provided by the Petitioners, there is reason to 
believe that imports of SDGE from the PRC are being, or are likely to 
be, sold in the United States at less than fair value. Based on 
comparisons of export price to NV, calculated in accordance with 
section 773(c) of the Act, the estimated dumping margins for SDGE range 
from

[[Page 8290]]

119.09 percent to 159.34 percent. See Enclosure 4 of the January 30, 
2008, supplement to the Petition.

Initiation of Antidumping Investigation

    Based upon the examination of the Petition on SDGE from the PRC, 
the Department finds that the Petition meets the requirements of 
section 732 of the Act. Therefore, we are initiating an antidumping 
duty investigation to determine whether imports of SDGE from the PRC 
are being, or are likely to be, sold in the United States at less than 
fair value. In accordance with section 733(b)(1)(A) of the Act, unless 
postponed, we will make our preliminary determination no later than 140 
days after the date of this initiation.

Separate Rates

    In order to obtain separate-rate status in NME investigations, 
exporters and producers must submit a separate-rate status application. 
See Policy Bulletin 05.1: Separate-Rates Practice and Application of 
Combination Rates in Antidumping Investigations Involving Non-Market 
Economy Countries (April 5, 2005) (Separate Rates and Combination Rates 
Bulletin), available on the Department's website at https://
ia.ita.doc.gov/policy/bull05-1.pdf. Based on our experience in 
processing the separate-rate applications in previous antidumping duty 
investigations, we have modified the application for this investigation 
to make it more administrable and easier for applicants to complete. 
See, e.g., Initiation of Antidumping Duty Investigation: Certain New 
Pneumatic Off-the-Road Tires From the People's Republic of China, 72 FR 
43591, 43594-95 (August 6, 2007). The specific requirements for 
submitting the separate-rate application in this investigation are 
outlined in detail in the application itself, which will be available 
on the Department's website at https://ia.ita.doc.gov/ia-highlights-and-
news.html on the date of publication of this initiation notice in the 
Federal Register. The separate-rate application will be due 60 days 
after publication of this initiation notice.

Respondent Selection

    For this investigation, the Department intends to select 
respondents based on U.S. Customs and Border Protection (CBP) data for 
U.S. imports under HTSUS number 8545.11.0000 during the POI. We intend 
to make our decision regarding respondent selection within 20 days of 
publication of this Federal Register notice. The Department invites 
comments regarding the CBP data and respondent selection within seven 
days of publication of this Federal Register notice.

Use of Combination Rates in an NME Investigation

    The Department will calculate combination rates for certain 
respondents that are eligible for a separate rate in this 
investigation. The Separate Rates and Combination Rates Bulletin, 
states:
    {w{time} hile continuing the practice of assigning separate rates 
only to exporters, all separate rates that the Department will now 
assign in its NME investigations will be specific to those producers 
that supplied the exporter during the period of investigation. Note, 
however, that one rate is calculated for the exporter and all of the 
producers which supplied subject merchandise to it during the period of 
investigation. This practice applies both to mandatory respondents 
receiving an individually calculated separate rate as well as the pool 
of non-investigated firms receiving the weighted-average of the 
individually calculated rates. This practice is referred to as the 
application of ``combination rates'' because such rates apply to 
specific combinations of exporters and one or more producers. The cash-
deposit rate assigned to an exporter will apply only to merchandise 
both exported by the firm in question and produced by a firm that 
supplied the exporter during the period of investigation. (Emphasis in 
original.)
See Separate Rates and Combination Rates Bulletin at 6.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act and 19 CFR 
351.202(f), copies of the public version of the Petition have been 
provided to the representatives of the Government of the PRC. We will 
attempt to provide a copy of the public version of the Petition to the 
foreign producers/exporters, consistent with 19 CFR 351.203(c)(2).

International Trade Commission Notification

    We have notified the ITC of our initiation, as required by section 
732(d) of the Act.

Preliminary Determination by the International Trade Commission

    The ITC will preliminarily determine, no later than March 3, 2008, 
whether there is a reasonable indication that imports of SDGE from the 
PRC are materially injuring, or threatening material injury to, a U.S. 
industry. A negative ITC determination will result in the investigation 
being terminated; otherwise, this investigation will proceed according 
to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: February 6, 2008.
Ronald K. Lorentzen,
Acting Deputy Assistant Secretary for Import Administration.
[FR Doc. E8-2646 Filed 2-12-08; 8:45 am]
BILLING CODE 3510-DS-S