Certain Corrosion-Resistant Carbon Steel Flat Products From the Republic of Korea: Notice of Preliminary Results of the Sixteenth Antidumping Duty Administrative Review, 55769-55776 [2010-22887]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 177 (Tuesday, September 14, 2010)]
[Notices]
[Pages 55769-55776]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22887]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-816]


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

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

SUMMARY: In response to timely requests, the Department of Commerce 
(the Department) is conducting the sixteenth administrative review of 
the antidumping order on corrosion-resistant carbon steel flat products 
(CORE) from the Republic of Korea (Korea).\1\ This review covers eight 
manufacturers and/or exporters (collectively, the respondents) of the 
subject merchandise: LG Chem., Ltd. (LG Chem); Haewon MSC Co. Ltd. 
(Haewon); Dongbu Steel Co., Ltd.,

[[Page 55770]]

(Dongbu); Hyundai HYSCO (HYSCO); Pohang Iron & Steel Co., Ltd. (POSCO) 
and Pohang Coated Steel Co., Ltd. (POCOS) (collectively, POSCO); 
Dongkuk Industries Co., Ltd. (Dongkuk); LG Hausys, Ltd. (Hausys); and 
Union Steel Manufacturing Co., Ltd. (Union). The period of review (POR) 
is August 1, 2008, through July 31, 2009. We preliminarily determine 
that Union and Dongbu made sales of subject merchandise at less than 
normal value (NV). We preliminarily determine that HYSCO and POSCO have 
not made sales below NV.
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    \1\ See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 74 FR 
48224, 48225 (September 22, 2009) (Initiation Notice).
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    In addition, based on the preliminary results for the respondents 
selected for individual review, we have preliminarily determined a 
margin for those companies that were not selected for individual 
review. If these preliminary results are adopted in the final results 
of this administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on all appropriate 
entries of subject merchandise during the POR.

DATES: Effective Date: September 14, 2010.

FOR FURTHER INFORMATION CONTACT: Jolanta Lawska (HYSCO), Victoria Cho 
(POSCO), Dennis McClure (Union) or Christopher Hargett (Dongbu), AD/CVD 
Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
8362, (202) 482-5075, (202) 482-5973, and (202) 482-4161, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 19, 1993, the Department published the antidumping order 
on CORE from Korea. See Antidumping Duty Orders on Certain Cold-Rolled 
Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel 
Flat Products from Korea, 58 FR 44159 (August 19, 1993) (Orders on 
Certain Steel from Korea). On August 3, 2009, we published in the 
Federal Register the Antidumping or Countervailing Duty Order, Finding, 
or Suspended Investigation; Opportunity to Request Administrative 
Review, 74 FR 38397 (August 3, 2009). On August 31, 2009, respondents 
and petitioners \2\ requested a review of Dongbu, HYSCO, POSCO, Union, 
Dongkuk, Haewon, Hausys, and LG Chem. The Department initiated a review 
of each of the companies for which a review was requested. See 
Initiation Notice, 74 FR at 48225.
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    \2\ Petitioners are the United States Steel Corporation (U.S. 
Steel), Nucor Corporation (Nucor), and Mittal Steel USA ISG, Inc. 
(Mittal Steel USA).
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    On December 7, 2008, the Department selected Dongbu, POSCO, HYSCO 
and Union as mandatory respondents in this review. See Memorandum from 
Dennis McClure, International Trade Compliance Analyst, through James 
Terpstra, Program Manager, to Melissa Skinner, Director, Office 3, 
entitled ``2008-2009 Antidumping Duty Administrative Review of 
Corrosion-Resistant Carbon Steel Flat Products from the Republic of 
Korea: Selection of Respondents for Individual Review,'' dated December 
7, 2009. The Department indicated that it would calculate a weighted-
average of the mandatory respondents' margins to apply to those 
companies not selected for individual examination.
    During the most recently completed segments of the proceeding in 
which HYSCO, Dongbu, POSCO and Union participated,\3\ the Department 
disregarded sales below the cost of production (COP) for each of these 
companies. Therefore, pursuant to section 773(b)(2)(A)(ii) of the 
Tariff Act of 1930, as amended (the Act), we had reasonable grounds to 
believe or suspect that sales by these companies of the foreign like 
product under consideration for the determination of NV in this review 
were made at prices below the COP. We instructed HYSCO, Dongbu, POSCO 
and Union to respond to sections A through E of the initial 
questionnaire,\4\ which we issued on December 7, 2009.
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    \3\ See Certain Corrosion-Resistant Carbon Steel Flat Products 
from the Republic of Korea: Notice of Final Results of the Fifteenth 
Administrative Review, 75 FR 13490 (March 22, 2010) (CORE 15 Final 
Results); Certain Corrosion-Resistant Carbon Steel Flat Products 
from the Republic of Korea: Notice of Final Results of the 
Fourteenth Administrative Review and Partial Rescission, 74 FR 11082 
(March 16, 2009) (CORE 14 Final Results).
    \4\ Section A: Organization, Accounting Practices, Markets and 
Merchandise; Section B: Comparison Market Sales; Section C: Sales to 
the United States; Section D: Cost of Production and Constructed 
Value; Section E: Further Manufacturing.
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    As explained in the memorandum from the Deputy Assistant Secretary 
for Import Administration, the Department has exercised its discretion 
to toll deadlines for the duration of the closure of the Federal 
Government from February 5, through February 12, 2010. Thus, all 
deadlines in this segment of the proceeding have been extended by seven 
days. See Memorandum to the Record from Ronald Lorentzen, DAS for 
Import Administration, regarding ``Tolling of Administrative Deadlines 
As a Result of the Government Closure During the Recent Snowstorms,'' 
dated February 12, 2010. As a result of this tolling, the revised 
deadline for the preliminary results of this review became May 10, 
2010.
    On May 10, 2010, the Department published a notice extending the 
time period for issuing the preliminary results of the sixteenth 
administrative review to September 7, 2010.\5\
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    \5\ See Corrosion-Resistant Carbon Steel Flat Products From the 
Republic of Korea: Extension of Time Limits for the Preliminary 
Results of Antidumping Duty Administrative Review, 75 FR 25841 (May 
10, 2010).
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HYSCO

    On January 27, 2010, HYSCO submitted its section A response to the 
Department's initial questionnaire. On February 12, 2010, HYSCO 
submitted its sections B through D response to the Department's initial 
questionnaire. HYSCO submitted its response to the Department's 
supplemental questionnaires for sections A through C on June 23, 2010, 
and August 11, 2010. HYSCO submitted its response to the Department's 
supplemental questionnaires for section D on June 23, 2010, June 25, 
2010, August 4, 2010, August 11, 2010, August 18, 2010, and August 23, 
2010.

Union

    On January 21, 2010, Union submitted its section A response to the 
initial questionnaire. On February 4, 2010, Union submitted its 
response to sections B and C and D of the Department's questionnaire. 
On May 28, 2010, and July 15, 2010, Union submitted its responses to 
the Department's supplemental questionnaires for sections A through C. 
On June 7, 2010, Union submitted its response to the Department's 
supplemental questionnaire for section D regarding the purchase of 
major inputs from POSCO. On June 11, 2010, Union submitted its response 
to the Department's supplemental questionnaire for sections A and D. On 
July 20, 2010, Union submitted its response to an additional 
supplemental questionnaire for section D. On August 18, 2010, Union 
submitted a response to an additional supplemental questionnaire for 
section D.

POSCO

    On January 20, 2010, POSCO submitted its sections A through D 
response to the Department's initial questionnaire. On June 14, 2010, 
POSCO submitted its response to the Department's first supplemental 
questionnaire for sections A through D. On August 10, 2010, POSCO 
submitted its response to the Department's second

[[Page 55771]]

supplemental questionnaire for section D. On August 25, 2010, POSCO 
submitted a voluntary correction to exhibit 25 of its June 14, 2010, 
first supplemental section D response.

Dongbu

    On January 13, 2010, and February 3, 2010, Dongbu submitted its 
section A and sections B through D responses to the Department's 
initial questionnaire. Dongbu submitted its response to the 
Department's supplemental questionnaires for sections A through D on 
May 18, 2010, and July 16, 2009, and August 3, 2010. Dongbu submitted a 
reconciliation of its home market and U.S. sales databases on August 
17, 2010.

Period of Review

    The POR covered by this review is August 1, 2008, through July 31, 
2009.

Scope of the Order

    This order covers flat-rolled carbon steel products, of rectangular 
shape, either clad, plated, or coated with corrosion-resistant metals 
such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based 
alloys, whether or not corrugated or painted, varnished or coated with 
plastics or other nonmetallic substances in addition to the metallic 
coating, in coils (whether or not in successively superimposed layers) 
and of a width of 0.5 inch or greater, or in straight lengths which, if 
of a thickness less than 4.75 millimeters, are of a width of 0.5 inch 
or greater and which measures at least 10 times the thickness or if of 
a thickness of 4.75 millimeters or more are of a width which exceeds 
150 millimeters and measures at least twice the thickness, as currently 
classifiable in the Harmonized Tariff Schedule of the United States 
(HTSUS) under item numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 
7210.49.0030, 7210.49.0090, 7210.49.0091, 7210.49.0095, 7210.61.0000, 
7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 
7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 
7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 
7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 
7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 
and 7217.90.5090. Included in the order are flat-rolled products of 
non-rectangular cross-section where such cross-section is achieved 
subsequent to the rolling process including products which have been 
beveled or rounded at the edges (i.e., products which have been 
``worked after rolling''). Excluded from this order are flat-rolled 
steel products either plated or coated with tin, lead, chromium, 
chromium oxides, both tin and lead (``terne plate''), or both chromium 
and chromium oxides (``tin-free steel''), whether or not painted, 
varnished or coated with plastics or other nonmetallic substances in 
addition to the metallic coating. Also excluded from this order are 
clad products in straight lengths of 0.1875 inch or more in composite 
thickness and of a width which exceeds 150 millimeters and measures at 
least twice the thickness. Also excluded from this order are certain 
clad stainless flat-rolled products, which are three-layered corrosion-
resistant carbon steel flat-rolled products less than 4.75 millimeters 
in composite thickness that consist of a carbon steel flat-rolled 
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
    These HTSUS item numbers are provided for convenience and customs 
purposes. The written descriptions remain dispositive.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
CORE products produced by the respondents, covered by the scope of the 
order, and sold in the home market during the POR to be foreign like 
products for the purpose of determining appropriate product comparisons 
to CORE sold in the United States.
    Where there were no sales in the ordinary course of trade of 
identical merchandise in the home market to compare to U.S. sales, we 
compared U.S. sales to the next most similar foreign like product on 
the basis of the characteristics listed in Appendix V of the 
Department's antidumping questionnaire. In making the product 
comparisons, we matched foreign like products based on the Appendix V 
physical characteristics reported by each respondent.

Normal Value Comparisons

    To determine whether sales of CORE by the respondents to the United 
States were made at less than NV, we compared the Export Price (EP) or 
Constructed Export Price (CEP) to the NV, as described in the ``Export 
Price/Constructed Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(2) of the Act, we calculated 
monthly weighted-average prices for NV and compared these to individual 
U.S. transactions. Regarding HYSCO, Union and Dongbu, because we are 
using quarterly costs, we have not made price-to-price comparisons 
outside of a quarter to lessen the potential distortion to sales prices 
which result from significantly changing costs.\6\
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    \6\ See Memorandum from Jolanta Lawska through James Terpstra, 
Program Manager Office 3, to the File, entitled ``Preliminary 
Results in the 16th Administrative Review on Corrosion-Resistant 
Carbon Steel Flat Products from Korea: Calculation Memorandum for 
Hyundai HYSCO,'' dated September 7, 2010 (HYSCO Calc Memo); 
Memorandum from Victoria Cho through James Terpstra, Program Manager 
Office 3, to the File, entitled ``Preliminary Results in the 16th 
Administrative Review on Corrosion-Resistant Carbon Steel Flat 
Products from Korea: Calculation Memorandum for Calculation 
Memorandum for Pohang Iron & Steel Company, Ltd. (POSCO) and Pohang 
Coated Steel Co., Ltd. (POCOS) (collectively, the POSCO Group),'' 
dated September 7, 2010 (POSCO Calc Memo); Memorandum from Dennis 
McClure through James Terpstra, Program Manager Office 3, to the 
File, entitled ``Preliminary Results in the 16th Administrative 
Review on Corrosion-Resistant Carbon Steel Flat Products from Korea: 
Calculation Memorandum for Union Steel Manufacturing Inc.,'' dated 
September 7, 2010 (Union Calc Memo); and Memorandum from Christopher 
Hargett through James Terpstra, Program Manager Office 3, to the 
File, entitled ``Preliminary Results in the 16th Administrative 
Review on Corrosion-Resistant Carbon Steel Flat Products from Korea: 
Calculation Memorandum for Dongbu Steel,'' dated September 7, 2010 
(Dongbu Calc Memo) (collectively ``Calculation Memos for the 16th 
Review''), the public versions of which are on file in the Central 
Record Unit, Room 7046, of the main Department building.
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Export Price/Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, in accordance with sections 772(a) and (b) of the Act. We 
calculated EP when the merchandise was sold by the producer or exporter 
outside of the United States directly to the first unaffiliated 
purchaser in the United States prior to importation and when CEP was 
not otherwise warranted based on the facts on the record. We calculated 
CEP for those sales where a person in the United States, affiliated 
with the foreign exporter or acting for the account of the exporter, 
made the sale to the first unaffiliated purchaser in the United States 
of the subject merchandise. We based EP and CEP on the packed prices 
and the applicable delivery terms to the first unaffiliated customer 
in, or for exportation to, the United States.
    In accordance with section 772(a) of the Act, we calculated EP for 
a number of Union's U.S. sales because these sales were made before the 
date of importation and were sales directly to unaffiliated customers 
in the United States, and because CEP methodology was not otherwise 
indicated. We made deductions for movement expenses in accordance with 
section 772(c)(2)(A) of the Act, which included, where

[[Page 55772]]

appropriate, foreign inland freight to the port, foreign brokerage, 
international freight, marine insurance, U.S. inland freight from the 
port to warehouse, U.S. warehouse expenses, U.S. inland freight from 
the warehouse to the unaffiliated customer, U.S. brokerage and handling 
expenses, and U.S. customs duty.
    In accordance with section 772(b) of the Act, we calculated CEP 
where the record established that sales made by HYSCO, POSCO, Dongbu, 
and Union were made in the United States after importation. HYSCO's, 
POSCO's, Dongbu's and Union's respective affiliates in the United 
States (1) took title to the subject merchandise and (2) invoiced and 
received payment from the unaffiliated U.S. customers for their sales 
of the subject merchandise to those U.S. customers. Thus, where 
appropriate, the Department determined that these U.S. sales should be 
classified as CEP transactions under section 772(b) of the Act. Where 
appropriate, we made deductions from the starting price for foreign 
inland freight to the port, foreign brokerage, international freight, 
marine insurance, U.S. inland freight from the port to warehouse, U.S. 
warehouse expenses, U.S. inland freight from the warehouse to the 
unaffiliated customer, U.S. brokerage and handling expenses, U.S. 
customs duty, credit expenses, warranty expenses, commissions, 
inventory carrying costs incurred in the United States, and other 
indirect selling expenses in the United States associated with economic 
activity in the United States. See sections 772(c)(2)(A) and 772(d)(1) 
of the Act. Pursuant to section 772(d)(3) of the Act, we made an 
adjustment for CEP profit. Where appropriate, we added interest revenue 
to the gross unit price.

HYSCO's Entries of Subject Merchandise That Were Further Manufactured 
and Sold as Non-Subject Merchandise in the United States

    In its section A questionnaire response, HYSCO requested that the 
Department excuse it from reporting information for certain POR sales 
of subject merchandise imported by its wholly owned U.S. subsidiary, 
HYSCO America Company (HAC), that were further manufactured after 
importation and sold as non-subject merchandise in the United States, 
claiming that determining CEP for sales through HAC would be 
unreasonably burdensome.
    Section 772(e) of the Act provides that when the value added in the 
United States by an affiliated party is likely to exceed substantially 
the value of the subject merchandise, the Department shall use one of 
the following prices to determine CEP if there is a sufficient quantity 
of sales to provide a reasonable basis of comparison and the use of 
such sales is appropriate: (1) The price of identical subject 
merchandise sold by the exporter or producer to an unaffiliated person; 
or (2) the price of other subject merchandise sold by the exporter or 
producer to an unaffiliated person.
    The record evidence shows that the value added by the affiliated 
party to the subject merchandise after importation in the United States 
was significantly greater than the 65 percent threshold we use in 
determining whether the value added in the United States by an 
affiliated party substantially exceeds the value of the subject 
merchandise. See 19 CFR 351.402(c)(2). We then considered whether there 
were sales of identical subject merchandise or other subject 
merchandise sold in sufficient quantities by the exporter or producer 
to an unaffiliated person that could provide a reasonable basis of 
comparison. In addition to the sales to HAC that were further 
manufactured, HYSCO also had CEP sales of similar, but not identical, 
subject merchandise to unaffiliated customers in the United States in 
back-to-back transactions through another HYSCO affiliate in the United 
States, Hyundai HYSCO USA (HHU).
    The appropriate methodology for determining the CEP for sales whose 
value has been substantially increased through U.S. further 
manufacturing generally must be made on a case-by-case basis. In this 
instance, we find that there is a reasonable quantity of sales of 
subject merchandise to an unaffiliated person for comparison purposes. 
See HYSCO Calc Memo. Furthermore, there is no other reasonable 
methodology for determining CEP for HAC's CEP sales. Therefore, we 
relied on HYSCO's other sales of similar merchandise to unaffiliated 
parties in the United States as the basis for calculating CEP for 
HYSCO's sales through HAC, which is consistent with the four previous 
administrative reviews of CORE from Korea.\7\
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    \7\ See, e.g., Certain Corrosion-Resistant Carbon Steel Flat 
Products from the Republic of Korea: Notice of Preliminary Results 
of the Antidumping Duty Administrative Review, 74 FR 46110, 46112 
(September 8, 2009) (unchanged in CORE 15 Final Results); Certain 
Corrosion-Resistant Carbon Steel Flat Products From the Republic of 
Korea: Notice of Preliminary Results of the Antidumping Duty 
Administrative Review, 73 FR 52267, 52270 (September 9, 2008) 
(unchanged in CORE 14 Final Results).
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Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a)(1) of the Act. Therefore, in 
accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the 
price at which the foreign like product was first sold for consumption 
in the home market, in the usual commercial quantities and in the 
ordinary course of trade. We increased NV by U.S. packing costs in 
accordance with section 773(a)(6)(A) of the Act.
    Where appropriate, we deducted inland freight from the plant to 
distribution warehouse, warehouse expense, inland freight from the 
plant/warehouse to customer, and packing, pursuant to section 
773(a)(6)(B) of the Act. Additionally, we made adjustments to NV, where 
appropriate, for credit and warranty expenses, in accordance with 
section 773(a)(6)(C)(iii) of the Act. Where appropriate, we added 
interest revenue and applied billing adjustments to the gross unit 
price.
    We also made adjustments for Union, in accordance with 19 CFR 
351.410(e), for indirect selling expenses incurred in the home market 
or the United States where commissions were granted on sales in one 
market but not in the other. Specifically, where commissions are 
incurred in one market, but not in the other, we will limit the amount 
of such allowance to the amount of either the selling expenses incurred 
in the one market or the commissions allowed in the other market, 
whichever is less. See 19 CFR 351.401(e).
    For purposes of calculating NV, section 771(16) of the Act defines 
``foreign like product'' as merchandise which is either (1) identical 
or (2) similar to the merchandise sold in the United States. When no 
identical products are sold in the home market, the products which are 
most similar to the product sold in the United States are identified. 
For the non-identical or most similar products which are identified 
based on the Department's product matching criteria, an adjustment is 
made to the NV for differences in cost attributable to differences in 
the actual physical differences between the products sold in the United 
States and the home market. See 19 CFR 351.411 and section 
773(a)(6)(C)(ii) of the Act.

Cost of Production

    As stated above, in the most recently completed segments of the 
proceeding in which HYSCO, POSCO, Dongbu and Union participated, the 
Department found and disregarded sales that failed the cost test for 
each of these

[[Page 55773]]

companies. Therefore, for this review, the Department has reasonable 
grounds to believe or suspect that sales of the foreign like products 
under consideration for the determination of NV may have been made at 
prices below the COP as provided by section 773(b)(2)(A)(ii) of the 
Act. Pursuant to section 773(b)(1) of the Act, the Department conducted 
a COP investigation of sales in the home market by HYSCO, POSCO, Dongbu 
and Union.

A. Cost Reporting Period

    The Department's normal practice is to calculate an annual 
weighted-average cost for the POR. See, e.g., Certain Pasta From Italy: 
Final Results of Antidumping Duty Administrative Review, 65 FR 77852 
(December 13, 2000), and accompanying Issues and Decision Memorandum at 
Comment 18, and Notice of Final Results of Antidumping Duty 
Administrative Review: Carbon and Certain Alloy Steel Wire Rod from 
Canada, 71 FR 3822 (January 24, 2006), and accompanying Issues and 
Decision Memorandum at Comment 5 (explaining the Department's practice 
of computing a single weighted-average cost for the entire period). 
However, the Department recognizes that possible distortions may result 
if we use our normal annual-average cost method during a period of 
significant cost changes. In determining whether to deviate from our 
normal methodology of calculating an annual weighted-average cost, the 
Department evaluates the case-specific record evidence using two 
primary factors: (1) The change in the cost of manufacturing (COM) 
recognized by the respondent during the POR must be deemed significant; 
(2) the record evidence must indicate that sale prices during the 
shorter averaging periods could be reasonably linked with the COP or 
constructed value (CV) during the same shorter averaging periods. See 
Stainless Steel Sheet and Strip in Coils From Mexico: Final Results of 
Antidumping Duty Administrative Review, 75 FR 6627 (February 10, 2010) 
(SSSS from Mexico), and accompanying Issues and Decision Memorandum at 
Comment 6 and Stainless Steel Plate in Coils From Belgium: Final 
Results of Antidumping Duty Administrative Review, 73 FR 75398 
(December 11, 2008) (SSPC from Belgium), and accompanying Issues and 
Decision Memorandum at Comment 4.
1. Significance of Cost Changes
    In prior cases, we established 25 percent as the threshold (between 
the high- and low-quarter COM) for determining that the changes in COM 
are significant enough to warrant a departure from our standard annual-
cost approach. See SSPC from Belgium at Comment 4. In the instant case, 
record evidence shows that Union, Dongbu, and HYSCO experienced 
significant changes (i.e., changes that exceeded 25 percent) between 
the high and low quarterly COM during the POR for the selected products 
(i.e., CONNUMs) with the highest sales volumes. This change in COM is 
primarily attributable to the price volatility for substrate inputs 
used in the manufacture of CORE. Substrate is the major input consumed 
in the production of CORE. We found that prices for substrate changed 
significantly throughout the POR and, as a result, directly affected 
the cost of the material inputs consumed by Union, Dongbu, and 
HYSCO.\8\
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    \8\ See Memorandum from Kristen Case to Neal M. Halper, Director 
of Office of Accounting, entitled ``Cost of Production and 
Constructed Value Calculation Adjustments for the Preliminary 
Results--Union Steel Co., Ltd.,'', dated September 7, 2010 (``Union 
Cost Calculation Memo''); Memorandum from Laurens Van Houten to Neal 
M. Halper, Director of Office of Accounting, entitled ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Results--Dongbu Steel,'' dated September 7, 2010 
(``Dongbu Cost Calculation Memo''); and Memorandum from Ji Young Oh 
to Neal M. Halper, Director of Office of Accounting, entitled ``Cost 
of Production and Constructed Value Calculation Adjustments for the 
Preliminary Results--Hyundai HYSCO'' (HYSCO Cost Calculation Memo), 
dated September 7, 2010, the public versions of which are on file in 
the Central Record Unit, Room 7046, of the main Department building.
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2. Linkage Between Cost and Sale Price Information
    Consistent with past precedent, because we found the changes in 
costs to be significant, we evaluated whether there is evidence of a 
linkage between the cost changes and the sales prices during the POR. 
See, e.g., SSSS from Mexico at Comment 6, and SSPC from Belgium at 
Comment 4. The Department's definition of ``linkage'' does not require 
direct traceability between specific sales and their specific 
production costs, but rather relies on whether there are elements that 
would indicate a reasonable correlation between the underlying costs 
and the final sales prices levied by the company. See SSPC from Belgium 
at Comment 4. These correlative elements may be measured and defined in 
a number of ways depending on the associated industry and the overall 
production and sales processes. To determine whether a reasonable 
correlation existed between the sales prices and their underlying costs 
during the POR for each respondent, we compared weighted-average 
quarterly prices to the corresponding quarterly COM for the five 
CONNUMs with the highest volume of sales in each of the comparison 
market and the United States market. Our comparison reveals that sale 
prices and costs for each of the sample CONNUMs generally trended in 
the same direction and indicated that there is linkage between changing 
costs and sale prices during the POR. The inventory records for HYSCO, 
Union and Dongbu demonstrate that the raw material and finished goods 
inventory are relatively low, indicating a minimal time lag between 
material purchase, production and sale dates. See Union, HYSCO and 
Dongbu Cost Calculation Memos. After reviewing this information and 
determining that there is a trend of sale prices and costs for the 
majority of the POR, we preliminarily determine that there is linkage 
between HYSCO, Union and Doungbu's changing costs and sales prices 
during the POR. See, e.g., SSSS from Mexico at Comment 6 and SSPC from 
Belgium at Comment 4.
    Because we have found significant cost changes in COM as well as 
reasonable linkage between costs and sales prices, we have 
preliminarily determined that the use of quarterly cost leads to more 
appropriate comparisons in our antidumping duty calculation for HYSCO, 
Union and Dongbu.

B. Calculation of Cost of Production

    Before making any comparisons to NV, we conducted a quarterly COP 
analysis of HYSCO, Union and Dongbu's sales pursuant to section 
773(b)(3) of the Act to determine whether HYSCO, Union and Dongbu's 
comparison market sales were made at prices below the COP. For these 
preliminary results, the Department used the quarterly cost database 
submitted on August 18, 2010, for HYSCO, the quarterly cost database 
submitted on August 18, 2010, for Union, and the quarterly COP database 
submitted on August 3, 2010, for Dongbu.
    For POSCO, we conducted an annual COP analysis pursuant to section 
773(b)(1)(A) and (B) of the Act to determine whether POSCO's comparison 
market sales were made at prices below the COP. We calculated the COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus amounts for SG&A expenses and packing, in 
accordance with section 773(b)(3) of the Act.
    Except as noted below, the Department relied on the COP data 
submitted by HYSCO, POSCO, Union and Dongbu and their supplemental 
section D questionnaire responses for the COP calculation. Union 
provided

[[Page 55774]]

information in its questionnaire responses showing that it purchased 
substrate from affiliated parties. We consider substrate to be a major 
input and therefore have applied the major-input rule to value such 
purchases. Accordingly, pursuant to section 773(f)(3) of the Act and 19 
CFR 351.407(b), we adjusted Union's substrate costs. Additionally, for 
the purposes of calculating Union's general and administrative (G&A) 
expense ratio, we excluded an item of non-operating income. See Union 
Cost Calculation Memo at 3.
    For POSCO we excluded the gains related to the disposition and 
valuation of trading securities from the calculation of the G&A expense 
ratio because these gains are related to the company's investment 
activities. See Memorandum from Sheikh M. Hannan, Senior Accountant to 
Neal M. Halper, Director, Office of Accounting, entitled ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Results--POSCO,'' dated September 7, 2010 (``POSCO Cost 
Calculation Memo'').
    HYSCO provided information in its questionnaire responses showing 
that it purchased substrate from affiliated parties. We consider 
substrate to be a major input and therefore have applied the major-
input rule to value such purchases. Accordingly, pursuant to section 
773(f)(3) of the Act and 19 CFR 351.407(b), we adjusted HYSCO's 
substrate costs. Additionally, we adjusted the cost of goods sold 
denominator used in the G&A expense ratio and financial expense ratios 
to reflect the major input adjustment. See HYSCO Cost Calculation Memo.

Application of Facts Available

    Section 776(a) of the Act provides that the Department shall apply 
``facts otherwise available'' if (1) necessary information is not on 
the record, or (2) an interested party or any other person (A) 
Withholds information that has been requested, (B) fails to provide 
information within the deadlines established, or in the form and manner 
requested by the Department, subject to subsections (c)(1) and (e) of 
section 782 of the Act, (C) significantly impedes a proceeding, or (D) 
provides information that cannot be verified as provided by section 
782(i) of the Act.
    In the current review, multiple CONNUMs in HYSCO's submitted cost 
file contained negative values for certain cost fields. The Department 
requested on two different occasions that HYSCO provide an explanation 
for these negative values. See the Department's Section D supplemental 
questionnaire, dated May 19, 2010, and July 21, 2010, respectively. 
However, HYSCO's responses to date have not provided an adequate 
explanation of how negative POR production costs could be incurred to 
produce products. See HYSCO's section D supplemental questionnaire 
responses, dated June 23, 2010, and August 4, 2010, respectively. 
Accordingly, the Department determines that it lacks the information 
necessary to calculate accurate production costs for certain CONNUMs in 
these preliminary results. Therefore, we determine that application of 
partial facts available is warranted pursuant to sections 776(a)(1) and 
(2)(A) of the Act and have used the weighted-average value for each of 
those cost fields. See HYSCO Cost Calculation Memo. The Department 
intends to seek further explanation from HYSCO for the negative values 
in its cost file and will analyze any new data in the final results.
    Furthermore, HYSCO did not provide hot-rolled coil cost for CONNUMs 
sold, but not produced, during the POR. For CONNUMs sold but not 
produced during the POR, we selected as partial facts available 
pursuant to sections 776(a)(1) and (2)(A) of the Act the next similar 
CONNUM, in accordance with the product characteristics as defined in 
the Department's questionnaire, to use as the surrogate to compute the 
costs for these CONNUMs. See HYSCO Cost Calculation Memo.

C. Test of Comparison Market Sales Prices

    As required under section 773(b)(2) of the Act, we compared the 
quarterly or POR, as appropriate, weighted-average COP to the per-unit 
price of the comparison market sales of the foreign like product to 
determine whether these sales had been made at prices below the COP 
within an extended period of time in substantial quantities, and 
whether such prices were sufficient to permit the recovery of all costs 
within a reasonable period of time. We determined the net comparison 
market prices for the below cost test by subtracting from the gross 
unit price any applicable movement charges, discounts, rebates, direct 
and indirect selling expenses (also subtracted from the COP), and 
packing expenses.

D. Results of the COP Test

    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of the respondent's home market 
sales of a given model were at prices less than the COP, we disregarded 
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 indexed POR or POR, as appropriate, 
weighted-average COPs, 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.
    Therefore, for HYSCO, POSCO, Union and Dongbu, we disregarded 
below-cost sales of a given product of 20 percent or more and used the 
remaining sales as the basis for determining NV, in accordance with 
section 773(b)(1) of the Act. See HYSCO, POSCO, Union and Dongbu Cost 
Calculation Memos.

Calculation of NV Based on Comparison Market Prices

    For those comparison products for which there were sales at prices 
above the COP for HYSCO, POSCO, Union and Dongbu, we based NV on home 
market prices. In these preliminary results, we were able to match all 
U.S. sales to contemporaneous sales, made in the ordinary course of 
trade, of either an identical or a similar foreign like product, based 
on the matching characteristics identified in Appendix V of the 
original questionnaire. We calculated NV based on free on board (FOB) 
mill or delivered prices to unaffiliated customers, or prices to 
affiliated customers which were determined to be at arm's length (see 
discussion below regarding these arm's-length sales). We made 
deductions, where appropriate, from the starting price for billing 
adjustments, discounts, rebates, and inland freight. Additionally, we 
added interest revenue. In accordance with section 773(a)(6) of the 
Act, we deducted home market packing costs and added U.S. packing 
costs. See Calculation Memos for the 16th Review.
    In accordance with section 773(a)(6)(C)(iii) of the Act, we 
adjusted for differences in the circumstances of sale. These 
circumstances included differences in imputed credit expenses and other 
direct selling expenses, such as the expense related to bank charges 
and factoring. Id. We also made adjustments, where appropriate, for 
physical differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.

[[Page 55775]]

Arm's-Length Sales

    Dongbu, Union, HYSCO and POSCO also reported that they made sales 
in the home market to affiliated parties. The Department calculates NV 
based on a sale to an affiliated party only if it is satisfied that the 
price to the affiliated party is comparable to the price at which sales 
are made to parties not affiliated with the producer or exporter, i.e., 
sales at arm's length. See 19 CFR 351.403(c).
    To test whether these sales were made at arm's length, we compared 
the reported home market prices of sales to affiliated and unaffiliated 
customers with applied billing adjustments, including interest revenue 
and net of all movement charges, direct selling expenses, discounts, 
rebates, and packing. In accordance with the Department's current 
practice, if the prices charged to an affiliated party were, on 
average, between 98 and 102 percent of the prices charged to 
unaffiliated parties for merchandise identical or most similar to that 
sold to the affiliated party, we considered the sales to be at arm's-
length prices. See Notice of Preliminary Results and Partial Rescission 
of Antidumping Duty Administrative: Ninth Administrative Review of the 
Antidumping Duty Order on Certain Pasta from Italy, 71 FR 45017, 45020 
(August 8, 2006) (unchanged in Notice of Final Results of the Ninth 
Administrative Review of the Antidumping Duty Order on Certain Pasta 
from Italy, 72 FR 7011 (February 14, 2007)); 19 CFR 351.403(c). 
Conversely, where we found that the sales to an affiliated party did 
not pass the arm's-length test, then all sales to that affiliated party 
have been excluded from the NV calculation. See Antidumping 
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 
FR 69186, 69187 (November 15, 2002); see also Calculation Memos for the 
16th Review.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, we determined 
NV based on sales in the comparison market at the same level of trade 
(LOT) as the EP or CEP sales, to the extent possible. When there were 
no sales at the same LOT, we compared U.S. sales to comparison market 
sales at a different LOT.
    Pursuant to 19 CFR 351.412, to determine whether EP or CEP sales 
and NV sales were at different LOTs, we examined stages in the 
marketing process and selling functions along the chain of distribution 
between the producer and the unaffiliated (or arm's-length) customers. 
If the comparison market sales are at a different LOT and the 
differences affect price comparability, as manifested in a pattern of 
consistent price differences between sales at different LOTs in the 
country in which NV is determined, we will make an LOT adjustment under 
section 773(a)(7)(A) of the Act. For CEP sales, if the NV LOT is at a 
more advanced stage of distribution than the CEP LOT and the data 
available do not provide an appropriate basis to determine an LOT 
adjustment, we will grant a CEP offset, as provided in section 
773(a)(7)(B) of the Act. See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from 
South Africa, 62 FR 61731, 61732-33 (November 19, 1997).
    We did not make an LOT adjustment under 19 CFR 351.412(e) because, 
there was only one home market LOT for each respondent and we were 
unable to identify a pattern of consistent price differences 
attributable to differences in LOTs. See 19 CFR 351.412(d). Under 
section 773(a)(7)(B) of the Act and 19 CFR 351.412(f), we are 
preliminarily granting a CEP offset for HYSCO, POSCO, Dongbu, and Union 
because the NV sales for each company are at a more advanced LOT than 
the LOT for the U.S. CEP sales.
    For a detailed description of our LOT methodology and a summary of 
company-specific LOT findings for these preliminary results, see 
Calculation Memos for the 16th Review.

Currency Conversion

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

Preliminary Results of the Review

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

------------------------------------------------------------------------
                                                                Percent
                    Manufacturer/exporter                        margin
------------------------------------------------------------------------
HYSCO........................................................       *.22
POSCO........................................................       *.04
Union........................................................       2.27
Dongbu.......................................................       3.89
Review-Specific Average Rate applicable to the following            3.08
 companies:\9\ LG Chem, Haewon, Hausys, and Dongkuk..........
------------------------------------------------------------------------
*(De minimis).

Public Comment

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties to this 
proceeding in accordance with 19 CFR 351.224(b). Interested parties may 
submit case briefs no later than 30 days after the date of publication 
of these preliminary results of review. See 19 CFR 351.309(c)(ii). 
Rebuttal briefs are limited to issues raised in the case briefs and may 
be filed no later than five days after the time limit for filing the 
case briefs. See 19 CFR 351.309(d). Parties submitting arguments in 
this proceeding are requested to submit with the argument: (1) A 
statement of the issue, (2) a brief summary of the argument, and (3) a 
table of authorities, in accordance with 19 CFR 351.309(d)(2). Further, 
parties submitting case and/or rebuttal briefs are requested to provide 
the Department with an additional electronic copy of the public version 
of any such comments on a computer diskette. Case and rebuttal briefs 
must be served on interested parties in accordance with 19 CFR 
351.303(f).
---------------------------------------------------------------------------

    \9\ This rate is based on the margins calculated for those 
companies that were selected for individual review, excluding de 
minimis margins or margins based entirely on adverse facts 
available.
---------------------------------------------------------------------------

    An interested party may request a hearing within 30 days of 
publication of these preliminary results. See 19 CFR 351.310(c). Any 
hearing, if requested, ordinarily will be held two days after the due 
date of the rebuttal briefs in accordance with 19 CFR 351.310(d)(1). 
The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, or at a hearing, if requested, within 120 days of 
publication of these preliminary results, unless extended. See section 
751(a)(3)(A) of the Act and 19 CFR 351.213(h).

Assessment Rate

    Upon completion of the final results of this administrative review, 
the Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), 
the Department will calculate importer-specific assessment rates for 
each respondent based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
those sales. Where the respondent did not report the entered value for 
U.S. sales, we have calculated importer-specific assessment rates for 
the merchandise in question by aggregating the dumping margins 
calculated for all U.S. sales to each

[[Page 55776]]

importer and dividing this amount by the total quantity of those sales. 
To determine whether the duty assessment rates were de minimis, in 
accordance with the requirement set forth in 19 CFR 351.106(c)(2), we 
calculated importer-specific ad valorem rates based on the estimated 
entered value. Where the assessment rate is above de minimis, we will 
instruct CBP to assess duties on all entries of subject merchandise by 
that importer. Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP 
to liquidate without regard to antidumping duties any entries for which 
the assessment rate is de minimis (i.e., less than 0.50 percent). The 
Department intends to issue assessment instructions directly to CBP 15 
days after publication of the final results of this 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). This 
clarification will apply to entries of subject merchandise during the 
POR produced by the respondents subject to this review for which the 
reviewed companies did not know that the merchandise which it sold to 
an 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. For a full 
discussion of this clarification, see id.

Cash Deposit Requirements

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

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: September 7, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-22887 Filed 9-13-10; 8:45 am]
BILLING CODE 3510-DS-P