73 FR 49408, August 21, 2008

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-929]

 
Small Diameter Graphite Electrodes From the People's Republic of 
China: Preliminary Determination of Sales at Less Than Fair Value, 
Postponement of Final Determination, and Affirmative Preliminary 
Determination of Critical Circumstances, in Part

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
    Effective Date: August 21, 2008.
SUMMARY: The Department of Commerce (``Department'') preliminarily 
determines that small diameter graphite electrodes (``graphite 
electrodes'') from the People's Republic of China (``PRC'') are being, 
or are likely to be, sold in the United States at less than fair value 
(``LTFV''), as provided in section 733 of the Tariff Act of 1930, as 
amended (``Act''). The estimated dumping margins are shown in the 
``Preliminary Determination'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Magd Zalok or Drew Jackson, 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 or (202) 482-4406, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On January 17, 2008, the Department received a petition concerning 
imports of graphite electrodes from the PRC filed in proper form by SGL 
Carbon LLC and Superior Graphite Co. (collectively ``petitioners''). 
The Department initiated an antidumping duty investigation of graphite 
electrodes from the PRC on

[[Page 49409]]

February 6, 2008. See Small Diameter Graphite Electrodes from the 
People's Republic of China: Initiation of Antidumping Duty 
Investigation, 73 FR 8287 (February 13, 2008) (``Initiation Notice''). 
On February 13, 2008, the Department provided interested parties with 
U.S. Customs and Border Protection (``CBP'') data on U.S. imports of 
graphite electrodes from the PRC during the period of investigation 
(``POI''). Between February 19, 2008, and February 21, 2008, the 
Department requested quantity and value (``Q&V'') information from 81 
of the 102 companies identified by the petitioners as potential 
exporters and/or producers of graphite electrodes from the PRC.\1\ See 
Petition for the Imposition of Antidumping Duties Against Small 
Diameter Graphite Electrodes from the People's Republic of China, 
Exhibit General 3, Volume I (January 17, 2008) (``Petition'').
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    \1\ The Department did not send Q&V questionnaires to 21 
companies listed in the petition due to incomplete addresses.
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    On March 3, 2008, the International Trade Commission (``ITC'') 
notified the Department that it had preliminarily determined that there 
is a reasonable indication that an industry in the United States is 
materially injured by reason of imports of graphite electrodes from the 
PRC. See Small Diameter Graphite Electrodes From China, Investigation 
No. 731-TA-1143 (Preliminary), 73 FR 12461 (March 7, 2008).
    Between March 7, 2008, and March 13, 2008, the Department received 
timely responses to its Q&V questionnaire from the following 13 
companies: Fushun Jinly Petrochemical Carbon Co., Ltd. (``Fushun 
Jinly''); Fushun Carbon Co. Ltd. (``Fushun Carbon''); Shanghai Jinneng 
International Trade Co., Ltd.; Dalian Thrive Metallurgy Import and 
Export Co., Ltd.; GES (China) Co., Ltd.; Brilliant Charter Limited; 
Qingdao Haosheng Metals & Minerals Imp & Exp Co., Ltd.; Nantong River-
East Carbon Joint Stock Co., Ltd.; Jilin Carbon Import and Export 
Company (``Jilin Carbon''); Xinghe County Muzi Carbon Co., Ltd.; 
Guangham Shida Carbon Co., Ltd.; Shenyang Jinli Metals & Minerals Imp & 
Exp Co., Ltd.; and Shijiazhuang Huanan Carbon Factory. On April 4, 
2008, the Department selected Fushun Jinly and Fushun Carbon as 
mandatory respondents. See Memorandum to Stephen Claeys, Deputy 
Assistant Secretary for Import Administration, through Abdelali 
Elouaradia, Director, Office 4, and Howard Smith, Program Manager, 
Office 4, from Magd Zalok and Rebecca Pandolph, International Trade 
Analysts, ``Selection of Respondents in the Antidumping Investigation 
of Small Diameter Graphite Electrodes from the People's Republic of 
China,'' dated April 4, 2008 (``Respondent Selection Memorandum'').
    On April 14, 2008, the Department received separate-rate 
applications from Jilin Carbon; Guangham Shida Carbon Co., Ltd.; 
Nantong River-East Carbon Joint Stock Co., Ltd.; Xinghe County Muzi 
Carbon Co. Ltd.; Brilliant Charter Limited; Shijiazhuang Huanan Carbon 
Factory; Shenyang Jinli Metals & Minerals Imp & Exp Co., Ltd.; Shanghai 
Jinneng International Trade Co., Ltd.; Dalian Thrive Metallurgy Import 
and Export Co., Ltd.; GES (China) Co., Ltd.; and Qingdao Haosheng 
Metals & Minerals Imp & Exp Co., Ltd. (the mandatory respondents filed 
separate-rate applications in their responses to section A of the 
Department's questionnaire). The Department rejected an untimely filed 
separate-rate application from Shanxi Xinrong International Trade Co.
    On April 7, 2008, the Department issued its antidumping 
questionnaire to the mandatory respondents. Fushun Jinly and the Fushun 
Carbon submitted timely responses to all sections of the Department's 
questionnaire during April and May 2008. Fushun Carbon, along with its 
affiliated companies, Fangda Carbon New Material Co., Ltd. (``Fangda 
Carbon''), Beijing Fangda Carbon Tech Co., Ltd. (``Beijing Fangda''), 
and Chengdu Rongguang Carbon Co., Ltd. (``Chengdu Rongguang'') 
(collectively ``Fangda Group'') submitted a consolidated response to 
the Department's questionnaire. See ``Affiliation'' and ``Single 
Entity'' sections below. The Department issued supplemental 
questionnaires to, and received responses from, Fushun Jinly, the 
Fangda Group, and the separate rate respondents in May, June, and July 
2008. The petitioners submitted comments to the Department regarding 
Fushun Jinly and the Fangda Group's questionnaire and supplemental 
questionnaire responses, and the separate rates response of Jilin 
Carbon in May, June, and July 2008.
    On May 30, 2008, the Department released to interested parties a 
memorandum which listed potential surrogate countries and invited 
interested parties to comment on surrogate country and factor value 
selection. See Letter to All Interested Parties from Howard Smith, 
Program Manager, Office 4, concerning ``Antidumping Duty Investigation 
of Small Diameter Graphite Electrodes from the People's Republic of 
China,'' dated May 30, 2008. No party responded to the Department's 
invitation to comment on surrogate country selection. However, in June 
and July 2008, both the petitioners and the respondents submitted 
surrogate values for use in this investigation. All of the submitted 
surrogate data are from India.
    On July 15, 2008, the petitioners alleged targeted dumping by 
Fushun Jinly.
    On July 23, 2008, the petitioners requested that the Department 
make a finding that critical circumstances exist with respect to 
imports of graphite electrodes from the PRC. The Department issued 
questionnaires regarding critical circumstances to Fushun Jinly and the 
Fangda Group on July 24, 2008. Fushun Jinly and the Fangda Group 
submitted their responses to those questionnaires on July 30, 2008. See 
the ``Critical Circumstances'' section of this notice for additional 
information.

Period of Investigation

    The POI is July 1, 2007, through December 31, 2007. This period 
comprises the two most recently completed fiscal quarters as of the 
month preceding the month in which the petition was filed (i.e., 
January 2008). See 19 CFR 351.204(b)(1).

Scope of the 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.

Scope Comments

    In accordance with the preamble to the Department's regulations, we 
set aside a period of time in our Initiation Notice for parties to 
raise issues regarding product coverage, and encouraged all parties to 
submit comments within 20 calendar days of

[[Page 49410]]

publication of that notice. See Antidumping Duties; Countervailing 
Duties, 62 FR 27296, 27323 (May 19, 1997); see also Initiation Notice. 
The Department received no comments concerning the scope of the 
graphite electrodes antidumping duty investigation during the 20 day 
period set aside for such comments.
    However, in response to a request from the Department for comments 
on whether graphite pin joining systems (connecting pins) are within 
the scope of the investigation, on July 25, 2008, and July 30, 2008, 
parties submitted direct and rebuttal comments, respectively. On August 
6, 2008, the petitioners submitted additional comments regarding 
connecting pins and revised language to clarify the scope of the 
investigation.
    According to the respondents, connecting pins are within the scope 
of the investigation when they are sold with electrodes (either 
attached to the electrode or unattached), but not when they are sold 
separately from the electrodes (i.e., listed separately on an invoice). 
When there are more connecting pins than electrodes in a sale, the 
respondents believe the additional connecting pins are within the scope 
of the investigation if the connecting pins are part of the electrode 
sale and not listed as a separate line item on the invoice.
    In contrast, the petitioners maintain that connecting pins are 
covered by the scope of the investigation, regardless of whether they 
are attached to, shipped with, or sold separately from, electrodes. 
According to the petitioners, the word ``attached'' in the scope 
language is to be read as ``sold with,'' and should not be interpreted 
as requiring the connecting pin to be physically attached to the 
electrode to be covered by the scope. Additionally, the petitioners 
maintain that the HTSUS number listed in the scope includes connecting 
pins and the U.S. domestic industry included connecting pin sales in 
the sales data reported to the Department and the ITC. Lastly, the 
petitioners note that if the Department does not include connecting 
pins in the scope of the investigation, foreign producers will begin 
selling electrodes at artificially high prices (to avoid dumping 
duties) while separately selling connecting pins at very low prices.
    After reviewing the parties' comments, we have preliminarily 
determined that all connecting pins are outside of the scope of the 
investigation. The description of the scope identifies only small 
diameter graphite electrodes as subject merchandise; it does not state 
that both electrodes and connecting pins are subject merchandise. 
Furthermore, we do not agree that the word ``attached'' in the scope 
language conveys the meaning ``sold with.'' Even if the word 
``attached'' is read as ``sold with,'' such a reading simply means that 
electrodes are covered by the scope whether or not they are sold with 
connecting pins; it does not indicate that connecting pins are subject 
merchandise. Furthermore, although the Petition notes that finished 
electrodes may be fitted with a threaded graphite pin joining system, 
the Petition consistently describes subject merchandise as small 
diameter graphite electrodes regardless of the type of joining system 
to which they are attached. The Petition does not state that connecting 
pins are also subject merchandise. Given the foregoing, we find that 
all connecting pins are outside the scope of the investigation, 
regardless of whether the connecting pin is sold or shipped with an 
electrode (either attached to the electrode or unattached), or sold or 
shipped separately from the electrode. Therefore, we have not 
considered sales of connecting pins in calculating the preliminary 
dumping margins.

Targeted Dumping

    Pursuant to section 777A(d)(1) of the Act, in calculating dumping 
margins in investigations, the Department normally will compare U.S. 
prices and normal values using a weighted average-to-average or 
transaction-to-transaction comparison methodology. However, section 
777A(d)(1)(B) of the Act allows the Department to compare transaction-
specific export or constructed export prices to weighted-average normal 
values if there is a pattern of export or constructed export prices for 
comparable merchandise that differ significantly among purchasers, 
regions, or periods of time, and the Department explains why such 
differences cannot be taken into account using the weighted average-to-
average or transaction-to-transaction methods. See sections 
777A(d)(1)(B)(i)-(ii) of the Act. Section 351.414(f)(1)(i) of the 
Department's regulations allows the Department to apply a average-to-
transaction method if ``through the use of, among other things, 
standard and appropriate statistical techniques'' there is a pattern of 
export or constructed export prices for comparable merchandise that 
differ significantly among purchasers, regions, or periods of time 
(``targeted dumping''). The regulations further state that targeted 
dumping allegations ``must include all supporting factual information, 
and an explanation as to why the average-to-average or transaction-to-
transaction method could not take into account any alleged price 
differences.'' 19 CFR 351.414(f)(3).
    On July 15, 2008, the petitioners alleged that Fushun Jinly 
targeted certain sales of graphite electrodes for dumping. On July 28, 
2008, the petitioners submitted additional information regarding 
targeted dumping in response to the Department's July 22, 2008 
supplemental questionnaire. According to the petitioners, targeted 
dumping is evidenced by differing export prices for comparable 
merchandise among U.S. purchasers. Specifically, in their July 15, 
2008, allegation, the petitioners argued that, in most instances, the 
average net price of subject merchandise sold by Fushun Jinly to a 
particular customer in a particular month of the POI differed by more 
than two percent from the average net price of all sales of that 
merchandise in the same month to all other customers. The petitioners 
explain that they used the two-percent price difference as the 
threshold for a significant price difference based on: (1) The 
Department's use of plus/minus two percent as the basis for determining 
whether sales to affiliated parties are at arm's length prices; (2) the 
fact that a dumping margin of two percent is used as the threshold for 
a finding of dumping, and (3) the pricing pattern of Fushun Jinly's 
sales to a particular customer compared to its other sales of the 
subject merchandise. The petitioners therefore argue that Fushun Jinly 
engaged in targeted dumping with respect to a particular customer.
    The petitioners note that the Department has recently relied on a 
different methodology for purposes of determining whether targeted 
dumping has occurred. See Certain New Pneumatic Off-The-Road Tires from 
the People's Republic of China; Final Affirmative Determination of 
Sales at Less Than Fair Value and Partial Affirmative Determination of 
Critical Circumstances, 73 FR 40485, 40487 (July 15, 2008) (``Off-The-
Road Tires''). The petitioners also note that in Off-The-Road Tires, 
although the Department relied on a different methodology for 
calculating the final margin for purposes of initiating an 
investigation regarding targeted dumping, the Department accepted the 
petitioners' allegation of targeted dumping in that case based on the 
methodology relied on by petitioners in the instant case. See Off-The-
Road Tires, and accompanying Issues and Decision Memorandum at Comment 
23.A. Accordingly, the petitioners maintain that the information 
submitted in

[[Page 49411]]

support of their targeted dumping allegation is, at a minimum, 
sufficient to initiate a targeted dumping analysis by the Department.
    The petitioners point out that they disagree with the methodology 
used in Off-The-Road Tires to determine whether there is targeted 
dumping. Specifically, the petitioners claim that the methodology used 
in Off-The-Road Tires does not appropriately measure whether targeted 
dumping is occurring because it cannot detect obvious patterns of 
targeting and does not rely on an appropriate statistical technique to 
determine whether targeted dumping exists. Thus, the petitioners argue 
that the Department's method is inconsistent with the express statutory 
directive and regulatory requirement. Additionally, the petitioners 
contend that the Department's methodology is complex, redundant and 
difficult to satisfy, thereby limiting domestic industries' ability to 
obtain relief from unfair trading practices, in contravention of 
legislative intent. Nevertheless, in support of their allegation, the 
petitioners submitted a targeted dumping analysis based on the 
methodology used by the Department in the final determination of Off-
The-Road Tires.
    The Department has determined that the petitioners' analysis 
provides a basis for accepting their targeted dumping allegation and 
performing a targeted dumping analysis. After performing such an 
analysis, we have determined that targeted dumping was occurring with 
respect to the particular customer identified by the petitioners. 
However, because there are no negative transaction-specific dumping 
margins in this preliminary determination, it is not possible that the 
targeted dumping of sales is being masked by our normal calculation 
methodology. See Memorandum to the File from Magd Zalok, regarding 
``Transaction-specific Margins'' dated August 14, 2008. Thus, the 
petitioners' claim that the observed price differences can only be 
taken into account using an average-to-transaction comparison is not 
supported. See id. As mentioned above, Section 777A(d)(1)(B)(ii) of the 
Act requires that, in order to use the average-to-transaction 
comparison methodology, the Department must explain why the average-to-
average or transaction-to-transaction methodology cannot account for 
the price differences. See also Statement of Administrative Action, 
accompanying the Uruguay Round Agreements Act, H.R. Rep. No. 103-316, 
Vol. I at 843 (1994) (``SAA''), reprinted in 1994 U.S.C.C.A.N. 4040 
(``{b{time} efore relying on {the average-to-transaction 
comparison{time}  methodology, however, Commerce must establish and 
provide an explanation why it cannot account for such differences 
through the use of an average-to-average or transaction-to-transaction 
comparison.''). Hence, the Department preliminarily determines that the 
average-to-average comparison methodology does account for price 
differences and, therefore, finds that petitioners' allegation does not 
warrant the use of the average-to-transaction comparison methodology.

Critical Circumstances

    After reviewing record information, the Department preliminarily 
finds that there is reason to believe or suspect that critical 
circumstances exist for imports of subject merchandise from the Fangda 
Group and the separate rate companies because: (A) In accordance with 
section 733(e)(1)(A)(ii) of the Act, the person by whom, or for whose 
account, the merchandise was imported knew or should have known that 
the exporter was selling the subject merchandise at less than its fair 
value and that there was likely to be material injury by reason of such 
sales; and (B) in accordance with section 733(e)(1)(B) of the Act, the 
Fangda Group and the separate rate companies had massive imports during 
a relatively short period. However, record evidence does not indicate 
that critical circumstances exist with respect to imports of subject 
merchandise from Fushun Jinly or the PRC wide entity. See Memorandum to 
Stephen J. Claeys, Deputy Assistant Secretary for Import Administration 
from Abdelali Elouaradia, Director, Office 4, ``Preliminary Affirmative 
Determination of Critical Circumstances,'' dated August 14, 2008.

Single Entity Treatment

    Pursuant to 19 CFR 351.401(f)(1), the Department will treat 
producers as a single entity, or ``collapse'' them, where: (1) Those 
producers are affiliated; (2) the producers have production facilities 
for producing similar or identical products that would not require 
substantial retooling of either facility in order to restructure 
manufacturing priorities; and (3) there is a significant potential for 
manipulation of price or production.\2\ In determining whether a 
significant potential for manipulation exists, 19 CFR 351.401(f)(2) 
states that the Department may consider various factors, including: (1) 
The level of common ownership; (2) the extent to which managerial 
employees or board members of one firm sit on the board of directors of 
an affiliated firm; and (3) whether the operations of the affiliated 
firms are intertwined through the sharing of sales information, 
involvement in production and pricing decisions, the sharing of 
facilities or employees, or significant transactions between the 
affiliated producers.\3\
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    \2\ See, e.g., Gray Portland Cement and Clinker From Mexico: 
Final Results of Antidumping Duty Administrative Review, 63 FR 
12764, 12774 (March 16, 1998).
    \3\ See Notice of Final Determination of Sales at Less Than Fair 
Value: Collated Roofing Nails From Taiwan, 62 FR 51427, 51436 
(October 1, 1997).
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    In proceedings involving non-market economy (``NME'') countries, 
the Department begins with the rebuttable presumption that all 
companies within the country are subject to government control.\4\ 
Companies subject to government control are treated as part of the NME 
entity and assigned the same dumping rate.\5\ The Department, however, 
recognizes that NME companies may also be connected by means other than 
government control. Hence, even if certain companies are not part of 
the NME entity, it may be appropriate to treat the companies as a 
single entity and to determine a single dumping margin for the 
entity.\6\ Therefore, to the extent that the Department's practice does 
not conflict with section 773(c) of the Act, the Department has, in 
prior cases, treated certain NME exporters and/or producers as a single 
entity if the facts of the case supported such treatment.\7\
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    \4\ See, e.g., Off-The-Road Tires (citing Final Determination of 
Sales at Less Than Fair Value: Sparklers from the People's Republic 
of China, 56 FR 20588 (May 6, 1991)(``Sparklers''), as amplified by 
Notice of Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the People's Republic of China, 59 FR 22585 
(May 2, 1994) (``Silicon Carbide''), and 19 CFR 351.107(d)).
    \5\ See id.
    \6\ See Certain Steel Nails From the People's Republic of China: 
Preliminary Determination of Sales at Less Than Fair Value and 
Partial Affirmative Determination of Critical Circumstances and 
Postponement of Final Determination, 73 FR 3928 (January 23, 2008) 
(unchanged in final determination, Certain Steel Nails From the 
People's Republic of China: Final Determination of Sales at Less 
Than Fair Value and Partial Affirmative Determination of Critical 
Circumstances, 73 FR 33977 (June 16, 2008), and amended final 
determination, Certain Steel Nails From the People's Republic of 
China: Amended Preliminary Determination of Sales at Less Than Fair 
Value, 73 FR 7254 (February 7, 2008)).
    \7\ See id.
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    Moreover, the Department has determined that the factors listed in 
19 CFR 351.401(f)(2) are not exhaustive and, in the context of an NME 
proceeding, other factors unique to the relationships between business 
entities within the NME country may lead the Department to determine 
that collapsing is warranted. The Court of International Trade has 
upheld the Department's practice of taking into account one such

[[Page 49412]]

unique factor, namely export decisions, in applying the collapsing 
provisions in NME proceedings.\8\ Thus, although the Department's 
regulations do not address the treatment of non-producing entities 
(e.g., exporters), where non-producing entities are affiliated, and 
there exists a significant potential for manipulation of prices and/or 
export decisions, the Department has considered such entities, as well 
as any other affiliated entities (where appropriate), as a single 
entity.\9\
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    \8\ See Hontex Enterprises v. United States, 342 F. Supp. 2d 
1225, 1230-34 (CIT 2004).
    \9\ See, e.g., Certain Cold-Rolled Flat-Rolled Carbon-Quality 
Steel Products from Brazil; Notice of Final Determination at Sales 
at Less Than Fair Value, 65 FR 5554 (February 4, 2000); Certain 
Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of 
Antidumping Duty Administrative Review, 63 FR 55578 (October 16, 
1998) and accompanying Issues and Decision Memorandum at Comment 2; 
Automotive Replacement Glass Windshields from the People's Republic 
of China; Preliminary Results of Antidumping Duty Administrative 
Review, 69 FR 25545 (May 7, 2004); Automotive Replacement Glass 
Windshields from the People's Republic of China; Final Results of 
Antidumping Duty Administrative Review, 69 FR 61790 (October 21, 
2004); Certain Preserved Mushrooms From the People's Republic of 
China: Final Results of Sixth Antidumping Duty New Shipper Review 
and Final Results and Partial Rescission of the Fourth Antidumping 
Duty Administrative Review, 69 FR 54635 (September 9, 2004) and 
accompanying Issues and Decision Memorandum at Comment 1. See also 
Hontex Enterprises v. United States, 248 F. Supp. 2d 1323, 1343 (CIT 
2003).
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    We have preliminarily determined that the exporters and producers 
of the Fangda Group (i.e., Beijing Fangda, Fangda Carbon, Fushun 
Carbon, Chengdu Rongguang, and Hefei Carbon) are affiliated pursuant to 
sections 771(33)(F) and (G) of the Act and that these companies should 
be treated as a single entity for the purposes of the antidumping duty 
investigation of graphite electrodes from the PRC. These companies have 
common ownership and are under common control, and therefore, are 
affiliated in accordance sections 771(33)(F) and (G) of the Act (which 
states that affiliated persons include two or more persons directly or 
indirectly controlling, controlled by, or under common control with, 
any person (subsection F); and any person who controls any other person 
and such other person (subsection G)).
    Further, we find that the member companies of the Fangda Group that 
operate production facilities (specifically, Fushun Carbon, Fangda 
Carbon, and Chengdu Rongguang) \10\ produce similar or identical 
products that would not require substantial retooling of their 
facilities in order to restructure manufacturing priorities. We have 
also determined that there is a significant potential for the 
manipulation of price or production among these companies as evidenced 
by the level of common ownership, the degree of management overlap, and 
the intertwined nature of the operations of these companies. See 
Memorandum to Stephen J. Claeys, Deputy Assistant Secretary for Import 
Administration, through Abdelali Elouaradia, Director, Office 4, and 
Howard Smith, Program Manager, Office 4, from Drew Jackson, 
International Trade Analyst, concerning ``Small Diameter Graphite 
Electrodes from the People's Republic of China: Affiliation and Single 
Entity Status of Beijing Fangda Carbon Tech Co., Ltd.; Fangda Carbon 
New Material Co., Ltd.; Fushun Carbon Co., Ltd.; Chengdu Rongguang 
Carbon Co., Ltd.; and Hefei Carbon Co., Ltd.,'' dated August 11, 2008.
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    \10\ The Fangda Group reported that Beijing Fangda is a sales 
entity, and does not produce subject merchandise.
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Non-Market Economy Treatment

    The Department considers the PRC to be an NME country. In 
accordance with section 771(18)(c)(i) of the Act, any determination 
that a country is an NME country shall remain in effect until revoked 
by the administering authority. See Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, From the People's Republic of China: 
Preliminary Results of 2001-2002 Administrative Review and Partial 
Rescission of Review, 68 FR 7500 (February 14, 2003), unchanged in 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
from the People's Republic of China: Final Results of 2001-2002 
Administrative Review and Partial Rescission of Review, 68 FR 70488 
(December 18, 2003). The Department has not revoked the PRC's status as 
an NME country. Therefore, in this preliminary determination, we have 
treated the PRC as an NME country and applied our current NME 
methodology.

Selection of a Surrogate Country

    In antidumping proceedings involving NME countries, the Department, 
pursuant to section 773(c)(1) of the Act, will generally base normal 
value (``NV'') on the value of the NME producer's factors of 
production. In accordance with section 773(c)(4) of the Act, in valuing 
the factors of production, the Department shall utilize, to the extent 
possible, the prices or costs of factors of production in one or more 
market economy countries that are at a level of economic development 
comparable to that of the NME country and are significant producers of 
merchandise comparable to the subject merchandise.
    The Department has determined that India, Indonesia, Sri Lanka, the 
Philippines, and Egypt are countries that are at a level of economic 
development comparable to that of the PRC. See Memorandum from Carol 
Showers, Acting Director, Office of Policy to Howard Smith, Program 
Manager, AD/CVD Operations, Office 4, concerning ``Antidumping Duty 
Investigation of Small Diameter Graphite Electrodes (SDGE) from the 
People's Republic of China (PRC): Request for a List of Surrogate 
Countries,'' dated May 22, 2008. From among these economically 
comparable countries, the Department has preliminarily selected India 
as the surrogate country for this investigation because it determined 
that: 1) India is a significant producer of merchandise comparable to 
the subject merchandise; and 2) reliable Indian data for valuing the 
factors of production are readily available. See Memorandum to the File 
through Abdelali Elouaradia, Director, Office 4, and Howard Smith, 
Program Manager, Office 4, from Magd Zalok, International Trade 
Analyst, concerning ``Antidumping Duty Investigation of Small Diameter 
Graphite Electrodes from the People's Republic of China: Selection of a 
Surrogate Country,'' dated June 25, 2008.

Separate Rates

    In the Initiation Notice, the Department notified parties of the 
recent application process by which exporters and producers may obtain 
separate-rate status in NME investigations. See Initiation Notice. 
Pursuant to the Department's practice, exporters and producers are 
required to submit a separate-rate status application. See also Policy 
Bulletin 05.1: Separate-Rates Practice and Application of Combination 
Rates in Antidumping Investigations involving Non-Market Economy 
Countries, (April 5, 2005) (``Policy Bulletin 05.1''), available at 
http://ia.ita.doc.gov.\11\ However, the

[[Page 49413]]

standard for eligibility for a separate rate, which is whether a firm 
can demonstrate an absence of both de jure and de facto governmental 
control over its export activities, has not changed. Id., at 
``Background.''
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    \11\ Policy Bulletin 05.1 states: ``while 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 applied 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.'' See Policy Bulletin 05.1 at 6.
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    In proceedings involving NME countries, the Department has a 
rebuttable presumption that all companies within the country are 
subject to government control and thus should be assessed a single 
antidumping duty rate. It is the Department's policy to assign all 
exporters of merchandise subject to investigation in an NME country 
this single rate unless an exporter can demonstrate that it is 
sufficiently independent so as to be entitled to a separate rate. 
Exporters can demonstrate this independence through the absence of both 
de jure and de facto governmental control over export activities. The 
Department analyzes each entity exporting the subject merchandise under 
a test arising from Sparklers, as further developed in Silicon Carbide. 
However, if the Department determines that a company is wholly foreign-
owned or located in a market economy, then a separate rate analysis is 
not necessary to determine whether it is independent from government 
control.

A. Separate Rate Applicants

    All of the separate rate applicants, including the mandatory 
respondents Fushun Jinly and the Fangda Group, stated that they are 
either joint ventures between Chinese and foreign companies or are 
wholly Chinese-owned companies (collectively ``PRC SR Applicants''). 
For one applicant, mandatory respondent Fushun Jinly, there is 
conflicting information on the record regarding its ownership status 
during the POI.
    Fushun Jinly reported that it was established in 1987 as a 
collectively-owned enterprise (i.e. owned by Nianpan Township), known 
as the Fushun Carbon Products Plant, but that the plant was sold to the 
Factory Director in 2002. Despite the sale, Fushun Jinly reported that 
it did not change its legal status as a collectively-owned enterprise 
since suppliers were more willing to extend credit to a collectively-
owned entity. However, according to Fushun Jinly, by 2007 most of the 
township's collectively-owned enterprises had been sold and, thus, it 
decided it was time to officially change its status to a limited 
liability company. Thus, in June 2007, the Factory Director began the 
process of changing the company's legal status from a collectively-
owned entity to a limited liability company. In order to make the 
transition, Fushun Jinly reported that it obtained contracts from the 
township, dated in June 2007, showing the sale of the plant. Fushun 
Jinly obtained a new business license identifying it as a limited 
liability company on November 1, 2007.
    Given the above information, we have preliminarily determined that 
Fushun Jinly continued to be a collectively-owned enterprise until 
October 31, 2007, four months into the POI. Record evidence, namely 
Fushun Jinly's business license, shows that the company legally 
remained a collectively-owned enterprise until October 31, 2007. 
Additionally, Fushun Jinly has provided conflicting information as to 
when the township sold the factory's assets. Thus, we have considered 
Fushun Jinly to be a ``collectively-owned enterprise'' until October 
31, 2007, and a limited liability company thereafter.
    Since none of the separate rate or mandatory respondents are wholly 
foreign-owned (with no PRC control) or located in a market economy with 
no PRC ownership, we must analyze whether these respondents can 
demonstrate the absence of both de jure and de facto governmental 
control over export activities.
 a. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) other formal 
measures by the government decentralizing control of companies. See 
Sparklers, 56 FR 20589.
    The evidence provided by the PRC SR Applicants supports a 
preliminary finding of de jure absence of governmental control based on 
the following: (1) An absence of restrictive stipulations associated 
with the individual exporters' business and export licenses; (2) 
applicable legislative enactments decentralizing control of the 
companies; and (3) and formal measures by the government decentralizing 
control of these companies.\12\
---------------------------------------------------------------------------

    \12\ See e.g., Shijiazhuang Huanan Carbon Factory's April 15, 
2008, submission at Exhibit 4, and Fushun Jinly's July 8, 2008, 
submission at Appendices A-6 and A-11.
---------------------------------------------------------------------------

    With respect to Fushun Jinly, the record indicates that while the 
company was collectively owned, it was subject to the ``Regulations on 
Rural Collectively-Owned Enterprises of the People's Republic of 
China'' (``Collectively-Owned Enterprise Regulations''), Order No. 59 
of the State Council, Implemented on July 1st 1990.\13\ The Department 
has cited the Collectively-Owned Enterprise Regulations, together with 
a number of other laws, as a basis for finding an absence of de jure 
government control of respondents in a number of proceedings. See e.g., 
Brake Rotors from the People's Republic of China: Preliminary Results 
and Partial Rescission of the Sixth Administrative Review and 
Preliminary Results and Final Partial Rescission of the Ninth New 
Shipper Review, 69 FR 10402 (March 5, 2004). Thus, our preliminary 
finding of an absence of de jure government control with respect to 
Fushun Jinly is consistent with the Department's findings in prior 
determinations. Id.
---------------------------------------------------------------------------

    \13\ See Fushun Jinly's July 8, 2008, submission at 4 and 
Appendix A-11.
---------------------------------------------------------------------------

 b. Absence of De Facto Control
    Typically the Department considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by or are 
subject to the approval of a governmental agency; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-22587; see 
also Notice of Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol From the People's Republic of China, 60 FR 22544, 
22545 (May 8, 1995). The Department has determined that an analysis of 
de facto control is critical in determining whether respondents are, in 
fact, subject to a degree of governmental control which would preclude 
the Department from assigning separate rates.
    The evidence placed on the record of this investigation by the PRC 
SR Applicants demonstrate an absence of de facto government control 
with respect to each of the exporters' exports of the merchandise under 
investigation, in accordance with the criteria identified in Sparklers 
and Silicon

[[Page 49414]]

Carbide. Thus, there is an absence of both de jure and de facto 
government control with respect to each of the PRC SR Applicants. 
Therefore, the Department has preliminarily granted separate rate 
status to the following companies: Fushun Jinly, Fushun Carbon, Fangda 
Carbon, Beijing Fangda Chengdu Rongguang, Jilin Carbon, Guangham Shida 
Carbon Co., Ltd., Nantong River-East Carbon Joint Stock Co., Ltd., 
Xinghe County Muzi Carbon Co. Ltd., Brilliant Charter Limited, 
Shijiazhuang Huanan Carbon Factory, Shenyang Jinli Metals & Minerals 
Imp & Exp Co., Ltd., Shanghai Jinneng International Trade Co., Ltd., 
Dalian Thrive Metallurgy Import and Export Co., Ltd., GES (China) Co., 
Ltd., and Qingdao Haosheng Metals & Minerals Imp & Exp Co., Ltd. The 
Department has calculated company-specific dumping margins for the two 
mandatory respondents, Fushun Jinly and the Fangda Group (i.e., Fushun 
Carbon, Fangda Carbon, Beijing Fangda, and Chengdu Rongguang) and 
assigned the other companies that have been granted a separate rate a 
dumping margin equal to a simple average of the dumping margins 
calculated for the two mandatory respondents.

B. Companies Not Receiving a Separate Rate

    The Department has determined that all parties applying for a 
separate rate in this segment of the proceeding have demonstrated an 
absence of government control both in law and in fact (see discussion 
above), and is, therefore, not denying separate rate status to any 
applicants.

The PRC-Wide Entity

    Although PRC exporters of subject merchandise to the United States 
were given an opportunity to provide Q&V information to the Department, 
not all exporters responded to the Department's request for Q&V 
information.\14\ Based upon our knowledge of the volume of imports of 
subject merchandise from the PRC, we have concluded that the companies 
that responded to the Q&V questionnaire do not account for all U.S. 
imports of subject merchandise from the PRC made during the POI. We 
have treated the non-responsive PRC producers/exporters as part of the 
PRC-wide entity because they did not qualify for a separate rate.
---------------------------------------------------------------------------

    \14\ The Department received only 13 timely responses to the 
requests for Q&V information that it sent to 81 potential exporters 
identified in the petition. With a few exceptions, the record 
indicates the questionnaires were received by the exporters. See 
Respondent Selection Memorandum.
---------------------------------------------------------------------------

    Section 776(a)(2) of the Act provides that the Department shall, 
subject to subsection 782(d) of the Act, use facts otherwise available 
in reaching the applicable determination if an interested party: (A) 
Withholds information that has been requested by the Department; (B) 
fails to provide such information in a timely manner or in the form or 
manner requested, subject to subsections 782(c)(1) and (e) of the Act; 
(C) significantly impedes a proceeding under the antidumping statute; 
or (D) provides such information but the information cannot be 
verified.
    As noted above, the PRC-wide entity withheld information requested 
by the Department. As a result, pursuant to section 776(a)(2)(A) of the 
Act, we find it appropriate to base the PRC-wide dumping margin on 
facts available. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value, Affirmative Preliminary Determination of Critical 
Circumstances and Postponement of Final Determination: Certain Frozen 
Fish Fillets From the Socialist Republic of Vietnam, 68 FR 4986 
(January 31, 2003), unchanged in Notice of Final Antidumping Duty 
Determination of Sales at Less Than Fair Value and Affirmative Critical 
Circumstances: Certain Frozen Fish Fillets from the Socialist Republic 
of Vietnam, 68 FR 37116 (June 23, 2003).
    Section 776(b) of the Act provides that, in selecting from among 
the facts otherwise available, the Department may employ an adverse 
inference if an interested party fails to cooperate by not acting to 
the best of its ability to comply with requests for information. See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From the Russian 
Federation, 65 FR 5510, 5518 (February 4, 2000); see also ``Statement 
of Administrative Action,'' accompanying the URAA, H.R. Rep. No. 103-
316, 870 (1994) (``SAA'') at 870. Since the PRC-wide entity did not 
respond to the Department's request for information, the Department has 
concluded that the PRC-wide entity has failed to cooperate to the best 
of its ability. Therefore, the Department preliminarily finds that, in 
selecting from among the facts available, an adverse inference is 
appropriate.
    Section 776(b) of the Act authorizes the Department to use, as 
adverse facts available (``AFA''): (1) Information derived from the 
petition; (2) the final determination from the LTFV investigation; (3) 
a previous administrative review; or (4) any other information placed 
on the record. In selecting a rate for AFA, the Department selects one 
that is sufficiently adverse ``as to effectuate the purpose of the 
facts available rule to induce respondents to provide the Department 
with complete and accurate information in a timely manner.'' See Notice 
of Final Determination of Sales at Less Than Fair Value: Static Random 
Access Memory Semiconductors From Taiwan, 63 FR 8909 (February 23, 
1998). It is the Department's practice to select, as AFA, the higher 
of: (a) The highest margin alleged in the petition or (b) the highest 
calculated rate for any respondent in the investigation. See Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Flat-Rolled Carbon Quality Steel Products From the People's Republic of 
China, 65 FR 34660 (May 31, 2000) and accompanying Issues and Decisions 
Memorandum at Facts Available. The highest margin alleged in the 
petition is 159.34 percent. Since the dumping margin derived from the 
Petition is higher than the calculated weighted-average margins for the 
mandatory respondents, we examined whether it was appropriate to base 
the PRC-wide dumping margin on the secondary information in the 
Petition.
    When the Department relies on secondary information, rather than 
information obtained in the course of an investigation, section 776(c) 
of the Act requires it to, to the extent practicable, corroborate that 
information from independent sources reasonably at its disposal.\15\ 
The SAA also states that the independent sources may include published 
price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. See SAA at 870.
---------------------------------------------------------------------------

    \15\ Secondary information is described in the SAA as 
``information dervied from the petition that gave rise to the 
investigation or review, the final determination concerning subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.'' See SAA at 870.
---------------------------------------------------------------------------

    The SAA also clarifies that ``corroborate'' means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870. To corroborate secondary 
information, the Department will, to the extent practicable, examine 
the reliability and relevance of the information used. See Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan; Preliminary Results of Antidumping 
Duty Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996), unchanged in Tapered 
Roller Bearings and Parts

[[Page 49415]]

Thereof, Finished and Unfinished, From Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, From Japan: Final Results of Antidumping Duty Administrative 
Reviews and Termination in Part, 62 FR 11825 (March 13, 1997).
    To corroborate the Petition margin, we compared the range of 
control number-specific preliminary dumping margins calculated for the 
mandatory respondents to the dumping margin alleged in the Petition. 
Based on this comparison, we have preliminarily corroborated the 159.34 
percent dumping from the Petition, which is within the range of control 
number-specific dumping margins calculated for the mandatory 
respondents. See Memorandum regarding ``Corroboration of the PRC-Wide 
Facts Available Rate for the Preliminary Determination in the 
Antidumping Duty Investigation of Small Diameter Graphite Electrodes 
from the People's Republic of China,'' dated concurrently with this 
notice. The dumping margin for the PRC-wide entity applies to all 
entries of the merchandise under investigation except for entries of 
subject merchandise from Fushun Jinly, the Fangda Group, Jilin Carbon, 
Guangham Shida Carbon Co., Ltd., Nantong River-East Carbon Joint Stock 
Co., Ltd., Xinghe County Muzi Carbon Co. Ltd., Brilliant Charter 
Limited, Shijiazhuang Huanan Carbon Factory, Shenyang Jinli Metals & 
Minerals Imp & Exp Co., Ltd., Shanghai Jinneng International Trade Co., 
Ltd., Dalian Thrive Metallurgy Import and Export Co., Ltd., GES (China) 
Co., Ltd., and Qingdao Haosheng Metals & Minerals Imp & Exp Co., Ltd.

Fair Value Comparisons

    To determine whether Fushun Jinly or the Fangda Group sold graphite 
electrodes to the United States at LTFV, we compared the weighted-
average export price of the graphite electrodes to the normal value of 
the graphite electrodes, as described in the ``U.S. Price'' and 
``Normal Value'' sections of this notice.

U.S. Price

Export Price

    In accordance with section 772(a) of the Act, we based U.S. price 
on export price (``EP'') because the first sale to an unaffiliated 
purchaser was made prior to importation and the use of constructed 
export price was not otherwise warranted. In accordance with section 
772(c) of the Act, we calculated EP by deducting, where applicable, the 
following expenses from the starting price (gross unit price) charged 
to the first unaffiliated customer in the United States: Foreign 
movement expenses, marine insurance, international freight, and foreign 
brokerage and handling expenses.
    We based these movement expenses on surrogate values where a PRC 
company provided the service and was paid in Renminbi. If market 
economy service providers, who were paid in a market economy currency, 
provided movement services for over 33 percent of subject merchandise 
shipments, by volume, we based the movement expenses on the actual 
price charged by the service provider. If market economy service 
providers, who were paid in a market economy currency, provided 
movement services for less than 33 percent of subject merchandise 
shipments, by volume, we calculated the movement expenses by weight-
averaging surrogate values with the actual price charged by the service 
provider. See Antidumping Methodologies: Market Economy Inputs, 
Expected Non-Market Economy Wages, Duty Drawback; and Request for 
Comments, 71 FR 61716, 61717-18 (October 19, 2006).
    For details regarding our EP calculation, see Memorandum to the 
File, through, Howard Smith, Program Manager, Office 4, from Drew 
Jackson, International Trade Analyst, ``Investigation of Small Diameter 
Graphite Electrodes from the People's Republic of China: Analysis 
Memorandum for Beijing Fangda Carbon Tech Co., Ltd., Fushun Carbon Co. 
Ltd., and Chengdu Rongguang Carbon Co., Ltd.,'' dated August 14, 2008, 
and Memorandum to the File, through, Howard Smith, Program Manager, 
Office 4, from Magd Zalok, International Trade Analyst, ``Investigation 
of Small Diameter Graphite Electrodes from the People's Republic of 
China: Analysis Memorandum for Fushun Jinly Petrochemical Carbon Co., 
Ltd.,'' dated August 14, 2008 (collectively, ``Analysis Memoranda'').

Normal Value

    In accordance with section 773(c) of the Act, we constructed normal 
value (``NV'') from the factors of production employed by the 
respondents to manufacture subject merchandise during the POI. 
Specifically, we calculated NV by adding together the values of the 
factors of production, general expenses, profit, and packing costs. We 
valued the factors of production using prices and financial statements 
from the surrogate country, India. In selecting surrogate values, we 
followed, to the extent practicable, the Department's practice of 
choosing values which are non-export average values, contemporaneous 
with, or closest in time to, the POI, product-specific, and tax-
exclusive. See, e.g., Notice of Preliminary Determination of Sales at 
Less Than Fair Value, Negative Preliminary Determination of Critical 
Circumstances and Postponement of Final Determination: Certain Frozen 
and Canned Warmwater Shrimp From the Socialist Republic of Vietnam, 69 
FR 42672, 42682 (July 16, 2004), unchanged in Final Determination of 
Sales at Less Than Fair Value: Certain Frozen and Canned Warmwater 
Shrimp from the Socialist Republic of Vietnam, 69 FR 71005 (December 8, 
2004). We also considered the quality of the source of surrogate 
information in selecting surrogate values.
    We valued material inputs and packing materials by multiplying the 
amount of the factor consumed in producing subject merchandise by the 
average unit value of the factor. We derived the average unit value of 
the factor from Indian import statistics. In addition, we added freight 
costs to the surrogate costs that we calculated for material inputs. We 
calculated freight costs by multiplying surrogate freight rates by the 
shorter of the reported distance from the domestic supplier to the 
factory that produced the subject merchandise or the distance from the 
nearest seaport to the factory that produced the subject merchandise, 
as appropriate. This adjustment is in accordance with the Court of 
Appeals for the Federal Circuit's decision in Sigma Corp. v. United 
States, 117 F.3d 1401, 1407-08 (Fed. Cir. 1997). Where we could only 
obtain surrogate values that were not contemporaneous with the POI, we 
inflated (or deflated) the surrogate values using the Indian Wholesale 
Price Index (``WPI'') as published in the International Financial 
Statistics of the International Monetary Fund.
    Further, in calculating surrogate values from Indian imports, we 
disregarded imports from Indonesia, the Republic of South Korea, and 
Thailand because in other proceedings the Department found that these 
countries maintain broadly available, non-industry-specific export 
subsidies. Therefore, it is reasonable to infer that all exports to all 
markets from these countries may be subsidized. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value and Negative Final 
Determination of Critical Circumstances: Certain Color Television 
Receivers From the People's Republic of China, 69 FR 20594 (April 16, 
2004) and

[[Page 49416]]

accompanying Issues and Decision Memorandum at Comment 7.\16\ Thus, we 
have not used prices from these countries in calculating the Indian 
import-based surrogate values.
---------------------------------------------------------------------------

    \16\ In addition, we note that legislative history explains that 
the Department is not required to conduct a formal investigation to 
ensure that such prices are not subsidized. See H.R. Rep. 100-576 at 
590 (1988). As such, it is the Department's practice to base its 
decision on information that is available to it at the time it makes 
its determination.
---------------------------------------------------------------------------

    We valued electricity using price data for small, medium, and large 
industries, as published by the Central Electricity Authority of the 
Government of India in its publication titled Electricity Tariff & Duty 
and Average Rates of Electricity Supply in India, dated July 2006. 
These electricity rates represent actual country-wide, publicly-
available information on tax-exclusive electricity rates charged to 
industries in India. Since the rates are not contemporaneous with the 
POI, we inflated the values using the WPI. See Memorandum to the File 
regarding ``Investigation of Small Diameter Graphite Electrodes from 
the People's Republic of China: Surrogate Values Selected'' for Fushun 
Jinly and the Fangda Group, dated August 14, 2008 (``Factor Value 
Memorandum'').
    We valued natural gas using a value obtained from the Gas Authority 
of India Ltd.'s Web site, a supplier of natural gas in India. See 
http://www.gailonline.com/gailnewsite/index.html. The value relates to 
the period January through June 2002. Therefore, we inflated the value 
using the WPI. In addition, we added transportation charges to the 
value. See Surrogate Value Memorandum and Polyvinyl Alcohol From the 
People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, 71 FR 27991 (May 15, 2006), and accompanying 
Issues and Decision Memorandum at Comment 2.
    For direct labor, indirect labor and packing labor, consistent with 
19 CFR 351.408(c)(3), we used the most recently calculated regression-
based wage rate, which relies on 2005 data. This wage rate can be found 
on the Department's Web site on Import Administration's home page. See 
Expected Wages of Selected NME Countries (revised May 2008) (available 
at http://ia.ita.doc.gov/wages/index.html). The source of these wage 
rate data on the Import Administration's Web site is the International 
Labour Organization, Geneva, Labour Statistics Database Chapter 5B: 
Wages in Manufacturing. Since this regression-based wage rate does not 
separate the labor rates into different skill levels or types of labor, 
we have applied the same wage rate to all skill levels and types of 
labor reported by Fushun Jinly and the Fangda Group. See Factor Value 
Memorandum.
    We valued truck freight expenses using a per-unit average rate 
calculated from data on the following Web site: http://
www.infobanc.com/logistics/logtruck.htm. The logistics section of this 
Web site contains inland freight truck rates between many large Indian 
cities. Since this value is not contemporaneous with the POI, we 
deflated the rate using the WPI. See Factor Value Memorandum.
    We valued rail freight expenses using a per-unit average rate from 
data obtained from the Web site of the Indian Ministry of Railways and 
distance data obtained from an Indian transportation company, InFreight 
Technologies India Limited. See http://www.indianrailways.gov.in/ and 
http://www.infreight.com/. See Factor Value Memorandum.
    We valued brokerage and handling using a simple average of the 
brokerage and handling costs that were reported in public submissions 
that were filed in three antidumping duty cases. Specifically, we 
averaged the public brokerage and handling expenses reported by Agro 
Dutch Industries Ltd. in the antidumping duty administrative review of 
certain preserved mushrooms from India, Kejirwal Paper Ltd. in the LTFV 
investigation of certain lined paper products from India, and Essar 
Steel in the antidumping duty administrative review of hot-rolled 
carbon steel flat products from India. See Certain Preserved Mushrooms 
From India: Final Results of Antidumping Duty Administrative Review, 71 
FR 10646 (March 2, 2006); see also Notice of Preliminary Determination 
of Sales at Less Than Fair Value, Postponement of Final Determination, 
and Affirmative Preliminary Determination of Critical Circumstances in 
Part: Certain Lined Paper Products From India, 71 FR 19706 (April 17, 
2006), unchanged in Notice of Final Determination of Sales at Less Than 
Fair Value, and Negative Determination of Critical Circumstances: 
Certain Lined Paper Products from India, 71 FR 45012 (August 8, 2006) 
and Certain hot-Rolled Carbon Steel Flat Products From India: 
Preliminary Results of Antidumping Duty Administrative Review, 71 FR 
2018, 2021 (January 12, 2006) (unchanged in Certain Hot-Rolled Carbon 
Steel Flat Products From India: Final Results of Antidumping 
Administrative Review, 71 FR 40694 (July 18, 2006). Since the resulting 
value is not contemporaneous with the POI, we inflated the rate using 
the WPI. See Factor Value Memorandum.
    We valued marine insurance using a publicly available price quote 
from a marine insurance provider at http://www.rjgconsultants.com/
insurance.html.
    We valued factory overhead, selling, general, and administrative 
expenses, and profit, using the 2007-2008 audited financial statements 
of Graphite India Limited. Record evidence indicates that Graphite 
India Limited is an Indian company that produces subject merchandise. 
The financial statements of Graphite India Limited were placed on the 
record by both the petitioners and the respondents and are the only 
surrogate financial statements on the record. See Factor Value 
Memorandum.
    In accordance with 19 CFR 351.301(c)(3)(i), interested parties may 
submit publicly available information with which to value factors of 
production in the final determination within 40 days after the date of 
publication of the preliminary determination.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank of 
the United States.

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
the information upon which we will rely in making our final 
determination.

Combination Rates

    In the Initiation Notice, the Department stated that it would 
calculate combination rates for certain respondents that are eligible 
for a separate rate in this investigation. See Initiation Notice. This 
change in practice is described in Policy Bulletin 05.1:

    (W)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

[[Page 49417]]

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.

Preliminary Determination

    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                     Exporter & producer                        margin
                                                               (percent)
------------------------------------------------------------------------
Fushun Jinly Petrochemical Carbon Co., Ltd..................      132.80
    Produced by: Fushun Jinly Petrochemical Carbon Co., Ltd.
Fushun Carbon Co., Ltd......................................      147.80
    Produced by: Fushun Carbon Co., Ltd.
Fangda Carbon New Material Co., Ltd.........................      147.80
    Produced by: Fangda Carbon New Material Co., Ltd.
Beijing Fangda Carbon Tech Co., Ltd.........................      147.80
    Produced by: Chengdu Rongguang Carbon Co., Ltd.; Fangda
     Carbon New Material Co., Ltd.; or Fushun Carbon Co.,
     Ltd.
Chengdu Rongguang Carbon Co., Ltd...........................      147.80
    Produced by: Chengdu Rongguang Carbon Co., Ltd.
Jilin Carbon Import and Export Company......................      140.30
    Produced by: Sinosteel Jilin Carbon Co., Ltd.
Guangham Shida Carbon Co., Ltd..............................      140.30
    Produced by: Guangham Shida Carbon Co., Ltd.
Nantong River--East Carbon Joint Stock Co., Ltd.............      140.30
    Produced by: Nantong River--East Carbon Co., Ltd.; or
     Nantong Yangzi Carbon Co., Ltd.
Xinghe County Muzi Carbon Co. Ltd...........................      140.30
    Produced by: Xinghe County Muzi Carbon Co., Ltd.
Brilliant Charter Limited...................................      140.30
    Produced by: Nantong Falter New Energy Co., Ltd.; or
     Shanxi Jinneng Group Co., Ltd.
Shijiazhuang Huanan Carbon Factory..........................      140.30
    Produced by: Shijiazhuang Huanan Carbon Factory
Shenyang Jinli Metals & Minerals Imp & Exp Co., Ltd.........      140.30
    Produced by: Shenyang Jinli Metals & Minerals Imp. &
     Exp. Co., Ltd.
Shanghai Jinneng International Trade Co., Ltd...............      140.30
    Produced by: Shanxi Jinneng Group Datong Energy
     Development Co., Ltd.
Dalian Thrive Metallurgy Import and Export Co., Ltd.........      140.30
    Produced by: Linghai Hongfeng Carbon Products Co., Ltd.;
     Tianzhen Jintian Graphite Electrodes Co., Ltd.; Jiaozuo
     Zhongzhou Carbon Products Co., Ltd.; Heilongjiang
     Xinyuan Carbon Products Co., Ltd.; Xuzhou Jianglong
     Carbon Manufacture Co., Ltd.; or Xinghe Xinyuan Carbon
     Products Co., Ltd.
GES (China) Co., Ltd........................................      140.30
    Produced by: Shanghai GC Co., Ltd.; Fushun Jinli
     Petrochemical Carbon Co., Ltd.; Xinghe County Muzi
     Carbon Plant and Linyi County Lubei Carbon Co., Ltd.
     Shandong Province
Qingdao Haosheng Metals & Minerals Imp & Exp Co., Ltd.......      140.30
    Produced by: Sinosteel Jilin Carbon Co., Ltd.
PRC-Wide Entity.............................................      159.34
------------------------------------------------------------------------

Disclosure

    We will disclose the calculations performed to parties in this 
proceeding within five days of the date of the public announcement of 
the preliminary determination in accordance with 19 CFR 351.224(b).

Suspension of Liquidation

    As noted above, the Department has found that critical 
circumstances exist with respect to imports of subject merchandise from 
the Fangda Group and the separate rate companies. Therefore, in 
accordance with section 733(d) of the Act, we will instruct CBP to 
suspend liquidation of all entries of graphite electrodes from the 
Fangda Group and the separate rate applicants \17\ entered, or 
withdrawn from warehouse, for consumption on or after 90 days prior to 
the date of publication of this notice in the Federal Register. For 
Fushun Jinly and the PRC wide entity, we will instruct CBP to suspend 
liquidation of all entries of graphite electrodes entered, or withdrawn 
from warehouse, for consumption upon the date of publication of this 
notice in the Federal Register. We will instruct CBP to require a cash 
deposit or the posting of a bond equal to the weighted-average amount 
by which the NV exceeds U.S. price, as indicated above. The suspension 
of liquidation will remain in effect until further notice.
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    \17\ As noted above, the separate rate applicants are Jilin 
Carbon; Guangham Shida Carbon Co., Ltd; Nantong River East Carbon 
Co. Ltd.; Xinghe County Muzi Carbon Co. Ltd.; Brilliant Charter 
Limited; Shijiazhuang Huanan Carbon Factory; Shenyang Jinli Metals & 
Minerals Imp & Exp Co., Ltd.; Shanghai Jinneng International Trade 
Co., Ltd.; Dalian Thrive Metallurgy Import and Export Co., Ltd.; GES 
(China) Co., Ltd.; and Qingdao Haosheng Metals & Minerals Imp & Exp 
Co., Ltd.
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International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary affirmative determination of sales at LTFV. 
Section 735(b)(2) of the Act requires the ITC to make its final 
determination as to whether the domestic industry in the United States 
is materially injured, or threatened with material injury, by reason of 
imports of graphite electrodes, or sales (or the likelihood of sales) 
for importation, of the subject merchandise within 45 days of our final 
determination.

Public Comment

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Import Administration no later than seven days 
after the date the final verification report is issued in this 
proceeding and rebuttal briefs, limited to issues raised in case 
briefs, no later than five days after the deadline for

[[Page 49418]]

submitting case briefs. See 19 CFR 351.309(c)(1)(i) and 19 CFR 
351.309(d)(1). A list of authorities used and an executive summary of 
issues should accompany any briefs submitted to the Department. This 
summary should be limited to five pages total, including footnotes.
    In accordance with section 774 of the Act, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs. If a request 
for a hearing is made, we intend to hold the hearing three days after 
the deadline of submission of rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Ave, NW., Washington, DC 20230, 
time and room to be determined. Parties should confirm by telephone the 
date, time, and room location of the hearing two days before the 
scheduled hearing date.
    Interested parties that wish to request a hearing, or to 
participate in a hearing if one is requested, must submit a written 
request to the Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Room 1870, within 30 days after the date of 
publication of this notice. See 19 CFR 351.310(c). Requests should 
contain the party's name, address, and telephone number, the number of 
hearing participants, and a list of the issues to be discussed in the 
hearing. At the hearing, each party may make an affirmative 
presentation only on issues raised in that party's case brief and may 
make rebuttal presentations only on arguments included in that party's 
rebuttal brief.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on July 30, 2008, Fushun 
Jinly and the Fangda Group, respectively, requested that in the event 
of an affirmative preliminary determination in this investigation, the 
Department postpone its final determination by 60 days. At the same 
time, Fushun Jinly and the Fangda Group agreed that the Department may 
extend the application of the provisional measures prescribed under 19 
CFR 351.210(e)(2) from a 4-month period to a 6-month period. In 
accordance with section 733(d) of the Act and 19 CFR 351.210(b), we are 
granting the request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register because (1) our preliminary determination is 
affirmative, (2) the requesting exporters account for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist. Suspension of liquidation will be extended 
accordingly.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: August 14, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-19412 Filed 8-20-08; 8:45 am]

BILLING CODE 3510-DS-P