1

 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure

(19 CFR § 207.2(f)).

 

2

 Vice Chairman Hillman and Commissioner Miller dissenting.

 

3

 Commissioner Bragg dissenting.

UNITED STATES INTERNATIONAL TRADE COMMISSION

LAWN AND GARDEN STEEL FENCE POSTS FROM CHINA

Investigation No. 731-TA-1010 (Preliminary)

DETERMINATION AND VIEWS OF THE COMMISSION

(USITC Publication No. 3521, June 2002 )

Investigation No. 731-TA-1010 (Preliminary)

DETERMINATIONS

On the basis of the record1 developed in the subject investigation, the United States International

Trade Commission determines,2 pursuant to section 733(a) of the Tariff Act of 1930 (19 U.S.C.

§ 1673b(a)) (the Act), that there is a reasonable indication that an industry in the United States is

materially injured by reason of imports from China of U-shaped or hat-shaped lawn and garden fence posts

made of steel and/or any other metal, weighing one pound or less per foot, provided for in subheading

7326.90.85 of the Harmonized Tariff Schedule of the United States, that are alleged to be sold in the

United States at less than fair value (LTFV).

On the basis of the record developed in the subject investigation, the Commission also determines,3

pursuant to section 733(a) of the Act, that there is no reasonable indication that an industry in the United

States is materially injured or threatened with material injury, or that the establishment of an industry in the

United States is materially retarded, by reason of imports from China of other fence posts made of steel

and/or other metal including tee, farm, and sign posts weighing one pound or less per foot, provided for in

subheading 7326.90.85 of the Harmonized Tariff Schedule of the United States, that are alleged to be sold

in the United States at LTFV.

COMMENCEMENT OF FINAL PHASE INVESTIGATION

Pursuant to section 207.18 of the Commission’s rules, the Commission also gives notice of the

commencement of the final phase of its investigation. The Commission will issue a final phase notice of

scheduling, which will be published in the Federal Register as provided in section 207.21 of the

Commission’s rules, upon notice from the Department of Commerce of an affirmative preliminary

determination in the investigation under section 733(b) of the Act, or, if the preliminary determination is

negative, upon notice of an affirmative final determination in that investigation under section 735(a) of the

Act. Parties that filed entries of appearance in the preliminary phase of the investigation need not enter a

separate appearance for the final phase of the investigation. Industrial users, and, if the merchandise under

investigation is sold at the retail level, representative consumer organizations have the right to appear as

parties in Commission antidumping and countervailing duty investigations. The Secretary will prepare a

public service list containing the names and addresses of all persons, or their representatives, who are

parties to the investigation.

BACKGROUND

On May 1, 2002, a petition was filed with the Commission and Commerce by Steel City

Corporation, Youngstown, OH, alleging that an industry in the United States is materially injured or

threatened with material injury by reason of LTFV imports of lawn and garden steel fence posts from

China. Accordingly, effective May 1, 2002, the Commission instituted antidumping duty investigation No.

731-TA-1010 (Preliminary).
 

1

 Commissioner Lynn M. Bragg finds that there is a reasonable indication that an industry in the United States

is materially injured by reason of imports of U-shaped or hat-shaped lawn and garden fence posts made of steel

and/or other metal, weighing 1 pound or less per foot, and other fence posts made of steel and/or other metal

including tee, farm, and sign posts weighing 1 pound or less per foot from China. Commissioner Bragg finds one

domestic like product coterminous with the scope of the investigation. See footnotes 52 and 53 of these Views. 

Commissioner Bragg joins parts I, II, III, and IV of these views except to the extent otherwise indicated. 

 

2

 Vice Chairman Hillman and Commissioner Miller found no reasonable indication of material injury or threat

thereof by reason of subject imports from China. See their Dissenting Views.

 

3

 Whether the establishment of an industry is materially retarded is not an issue in this investigation.

 

4

 19 U.S.C. §§ 1671b(a), 1673b(a); see also American Lamb Co. v. United States, 785 F.2d 994, 

1001-04 (Fed. Cir. 1986); Ranchers-Cattlemen Action Legal Foundation v. United States, 74 F. Supp.2d 1353,

1368-69 (Ct. Int’l Trade 1999). We note that no party argued that the establishment of an industry is materially

retarded by reason of the allegedly unfairly traded imports.

 

5 American Lamb, 785 F.2d at 1001 (Fed. Cir. 1986); see also Texas Crushed Stone Co. v. United States, 35

F.3d 1535, 1543 (Fed. Cir. 1994).

 

6 American Lamb, 786 F.2d at 1004.

 

7 Texas Crushed Stone Co. v. United States, 35 F.3d 1535, 1543 (Fed. Cir. 1994).

4

VIEWS OF THE COMMISSION

Based on the record in this investigation, we determine that there is a reasonable indication that an

industry in the United States is materially injured by reason of imports of U-shaped or hat-shaped lawn and

garden fence posts made of steel and/or any other metal, weighing 1 pound or less per foot, from China that

are allegedly sold in the United States at less than fair value (LTFV).1 2

Based on the record in this investigation, we also determine that there is no reasonable indication

that an industry in the United States is materially injured or threatened with material injury by reason of

imports of other fence posts made of steel and/or other metal, including tee, farm, and sign posts weighing

1 pound or less per foot, from China that are allegedly sold in the United States at LTFV.3

I. THE LEGAL STANDARD FOR PRELIMINARY DETERMINATIONS

 The legal standard for preliminary antidumping and countervailing duty determinations requires

the Commission to determine, based upon the information available at the time of the preliminary

determination, whether there is a reasonable indication that a domestic industry is materially injured,

threatened with material injury, or whether the establishment of an industry is materially retarded, by

reason of the allegedly unfairly traded imports.4 In applying this standard, the Commission weighs the

evidence before it and determines whether “(1) the record as a whole contains clear and convincing

evidence that there is no material injury or threat of such injury; and (2) no likelihood exists that contrary

evidence will arise in a final investigation.”5

The Court of Appeals for the Federal Circuit has stated that the purpose of preliminary

determinations is to avoid the cost and disruption to trade caused by unnecessary investigations and that the

“reasonable indication” standard requires more than a finding that there is a “possibility” of material

injury.6 It also has noted that, in a preliminary investigation, the “[t]he statute calls for a reasonable

indication of injury, not a reasonable indication of need for further inquiry.”7 Moreover, the U.S. Court of

International Trade recently has reaffirmed that in applying the reasonable indication “standard for making
 

8 R-CALF, 74 F.Supp. 2d at 1368 (Ct. Int’l Trade 1999).

 

9

 Commissioner Bragg dissenting.

 

10 19 U.S.C. § 1677(4)(A).

 

11 Id.

 

12 19 U.S.C. § 1677(10).

 

13 See, e.g., NEC Corp. v. Department of Commerce, 36 F. Supp.2d 380, 383 (Ct. Int’l Trade 1998); Nippon

Steel Corp. v. United States, 19 CIT 450, 455 (1995); Torrington Co. v. United States, 747 F. Supp. 744, 749, n.3

(Ct. Int’l Trade 1990), aff’d, 938 F.2d 1278 (Fed. Cir. 1991) (“every like product determination ‘must be made on

the particular record at issue’ and the ‘unique facts of each case’”). The Commission generally considers a number

of factors including: (1) physical characteristics and uses; (2) interchangeability; (3) channels of distribution; (4)

customer and producer perceptions of the products; (5) common manufacturing facilities, production processes,

and production employees; and, where appropriate, (6) price. See Nippon, 19 CIT at 455, n.4; Timken Co. v.

United States, 913 F. Supp. 580, 584 (Ct. Int’l Trade 1996).

 

14 See, e.g., S. Rep. No. 96-249, at 90-91 (1979).

 

15 Nippon Steel, 19 CIT at 455; Torrington, 747 F. Supp. at 748-49; see also S. Rep. No. 96-249, at 90-91

(1979) (Congress has indicated that the domestic like product standard should not be interpreted in “such a narrow

fashion as to permit minor differences in physical characteristics or uses to lead to the conclusion that the product

and article are not ‘like’ each other, nor should the definition of ‘like product’ be interpreted in such a fashion as

(continued...)

5

a preliminary determination regarding material injury or threat of material injury, the Commission may

weigh all evidence before it and resolve conflicts in the evidence.”8

As discussed below, we determine that there is a reasonable indication that the domestic industry

producing U-shaped or hat-shaped lawn and garden fence posts made of steel and/or any other metal,

weighing 1 pound or less per foot, is materially injured by reason of the subject imports. However, we also

determine that the record of this preliminary investigation contains clear and convincing evidence that the

domestic industry producing other fence posts made of steel and/or other metal, including tee, farm, and

sign posts weighing 1 pound or less per foot is neither materially injured nor threatened with material injury

by reason of the subject imports.9

II. DOMESTIC LIKE PRODUCT

A. In General

To determine whether there is a reasonable indication that an industry in the United States is

materially injured or threatened with material injury by reason of imports of the subject merchandise, the

Commission first defines the “domestic like product” and the “industry.”10 Section 771(4)(A) of the Tariff

Act of 1930, as amended (“the Act”), defines the relevant domestic industry as the “producers as a [w]hole

of a domestic like product, or those producers whose collective output of a domestic like product

constitutes a major proportion of the total domestic production of the product.”11 In turn, the Act defines

“domestic like product” as “a product which is like, or in the absence of like, most similar in characteristics

and uses with, the article subject to an investigation ....”12

The decision regarding the appropriate domestic like product(s) in an investigation is a factual

determination, and the Commission has applied the statutory standard of “like” or “most similar in

characteristics and uses” on a case-by-case basis.13 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.14 The

Commission looks for clear dividing lines among possible like products, and disregards minor variations.15
 

15 (...continued)

to prevent consideration of an industry adversely affected by the imports under consideration.”).

 

16 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (Commission may find single

domestic like product corresponding to several different classes or kinds defined by Commerce); Torrington, 747 F.

Supp. at 748-52 (affirming Commission’s determination of six domestic like products in investigations where

Commerce found five classes or kinds).

 

17 67 FR 37388, 37388 (May 29, 2002).

6

Although the Commission must accept the determination of the Department of Commerce (“Commerce”) as

to the scope of the imported merchandise allegedly subsidized or sold at less than fair value, the

Commission determines what domestic product is like the imported articles Commerce has identified.16

B. Product Description

The scope of this investigation as defined by Commerce in its notice of initiation covers the

following imported merchandise:

all lawn and garden steel fence posts, in whatever form, shape, or size, that are produced in

the PRC. The fence posts included within the scope of this investigation weigh up to 1

pound per foot and are made of steel and/or any other metal. Imports of these products are

classified under the following categories: fence posts, studded with corrugations, knobs,

studs, notches or similar protrusions with or without anchor [plates]. These posts are

normally “U” shaped or “hat” shaped or any other similar shape excluding round or square

tubing or pipes. 

These posts are normally made in two different classes, light and heavy duty. 

Light duty lawn and garden posts are normally made of 14 gauge steel (0.068 inches -

0.082 inches thick), 1.75 inches wide, in 3, 4, 5, or 6 foot lengths. These posts normally

weigh approximately 0.45 pounds per foot and are packaged in mini-bundles of 10 posts

and master bundles of 400 posts. Heavy duty lawn and garden fence posts are normally

made of 13 gauge steel (0.082 inches - 0.095 inches thick), 3 inches wide, in 5, 6, 7, and 8

foot lengths. Heavy duty posts normally weigh approximately 0.90 pounds per foot and

are packaged in mini-bundles of 5 and master bundles of 200. Both light duty and heavy

duty posts are included within the scope of the investigation. 

Imports of these products are classified under the following Harmonized Tariff

Schedules of the United States (HTSUS) subheading: 7326.90.85.35. Fence posts

classified under subheading 7308.90 are also included within the scope of the investigation

if the fence posts are made of steel and/or metal.

Specifically excluded from the scope are “tee” posts, farm posts, and sign posts,

provided that the posts weigh over 1 pound per foot. Although the HTSUS subheadings

are provided for convenience and U.S. Customs Service (“Customs”) purposes, the written

description of the merchandise under investigation is dispositive.17 

The products at issue are metal posts that weigh up to 1 pound per foot. These posts are

produced in a variety of forms, shapes, and sizes, but do not include round or square tubing or pipes. 

“Lawn and garden fence posts” (or “U-posts”) are made of cold-worked mild steel and/or other

metal, are U-shaped or hat-shaped, are characterized by a row of holes and tabs to help secure fencing to
 

18 Confidential Report, as revised by Memoranda INV-Z-091, June 13, 2002, and INV-Z-093, June 14, 2002,

(“CR”) at I-3, n.13, I-6, and I-9; Public Report (“PR”) at I-3, n.13, I-5, and I-7 to I-8.

 

19 CR at I-6; PR at I-5; Conference Transcript (“Tr.”) at 61-62 (Mr. Lee); Steel City Corporation (“Steel City”)

Postconference Brief at 8-9.

 

20 CR at I-5; PR at I-4 to I-5.

 

21 CR at I-3, n.10 and I-11 to I-12; PR at I-3, n.10 and I-9.

 

22 CR at I-7 and nn.30 and 34; PR at I-6 and nn.30 and 34.

 

23 CR at I-7 and n.32; PR at I-5 to I-6 and n.32.

 

24 CR at I-9, I-11 and n.50; PR at I-7, I-9 and n.50.

 

25 Petitioner is Steel City Corporation (“Steel City”).

 

26 See, e.g., Conference Tr. at 10-11 (Mr. Speece). 

 

27 See, e.g., Petition at 6, n.4; Conference Tr. at 23-24 (Ms. Stras).

 

28 We note that Petitioner, Steel City, and its counsel mistakenly believed, and failed to confirm, that there was

no domestic production of other metal fence posts weighing 1 pound or less per foot, despite having included these

products in the proposed scope of the investigation.

 

29 Respondent is Midwest Air Technologies (“MAT”).

 

30 See, e.g., Conference Tr. at 48-49 (Mr. Lee). 

7

them by bending the tabs over the fence material, and weigh up to 1 pound per foot.18 An anchor plate is

crimped or riveted near the lower end of the post to stabilize it once driven into the ground.19 Lawn and

garden fence posts are designed to support fencing in home and garden applications.20

Other metal posts weighing 1 pound or less primarily consist of tee-posts and angle-posts. Teeposts weighing 1 pound or less per foot are made by rolling red-hot high-carbon steel into a “T” shape.21

Tee-posts normally have an attached anchor plate for added stability in the ground. These posts may be

smooth or have a row of studs molded along their length to support fencing but require wire clips to hold

the fence material to the post.22 Tee-posts have primarily farm and industrial uses, including containing

animals, supporting plants and trees and controlling erosion.23 

Angle-posts weighing 1 pound or less per foot are likewise produced from hot-rolled high-carbon

steel, and are sturdy enough to support plants and trees as grape stakes and orchard stakes. These posts

are normally characterized by evenly spaced holes or notches along their length and require wire, plastic

ties, or other fasteners to secure the plant or tree.24

C. Domestic Like Product

Petitioner,25 Steel City, contends that the domestic like product in this investigation should be lawn

and garden steel fence posts.26 Despite focusing on U-posts, Steel City specifically requested that

Commerce define the scope of this investigation to include all metal posts weighing 1 pound or less per foot

because of concern over circumvention attempts by Chinese producers if an antidumping duty order were to

be issued against Chinese imports of lawn and garden steel fence posts.27 28

Respondent,29 MAT, does not dispute Petitioner’s proposed like product definition for purposes of

this preliminary phase of the investigation.30

Despite the Petitioner’s focus on U-posts, the Commission cannot limit its analysis of the domestic

like product to only lawn and garden fence posts. The Commission must define the domestic like

product(s) in reference to the articles “subject to investigation,” not just those that have actually been
 

31 See, e.g., 19 U.S.C. § 1677(10); Fresh Garlic from the People’s Republic of China, Inv. No. 731-TA-683

(Final), USITC Pub. 2825 (November 1994) at I-7.

 

32 CR at III-1; PR at III-1 to III-2.

 

33 CR at I-6; PR at I-5.

 

34 CR at I-5; PR at I-4.

 

35 Light-duty lawn and garden posts are normally made of 14 gauge steel (.068 inch - .082 inch thick), 1 3/4

inches wide by 3 feet, 4 feet, 5 feet, and 6 feet long. These posts weigh approximately 0.45 pound per foot. Heavyduty lawn and garden posts are usually made of 13 gauge steel (.082 inch - .095 inch thick), 3 inches wide by 5

feet, 6 feet, 7 feet, and 8 feet long. These posts normally weigh 0.90 pound per foot. See, e.g., Petition at 10.

 

36 CR at I-7; PR at I-5 to I-6.

 

37 CR at I-7 and nn.30 and 34; PR at I-6 and nn.30 and 34.

 

38 CR at I-7 to I-8, n.35; PR at I-6 and n.35.

 

39 CR at I-9; PR at I-7. See also CR at I-7, n.34; PR at I-6, n.34.

8

imported.31 Because there is domestic production of other fence posts made of steel and/or other metal,

including tee, farm, and sign posts weighing 1 pound or less per foot that correspond to the scope of

investigation,32 the Commission must address whether it should find a single domestic like product of

domestically produced articles coextensive with the scope, or two domestic like products -- one consisting

of lawn and garden fence posts and the other consisting of other fence posts made of steel and/or other

metal, including tee, farm, and sign posts weighing 1 pound or less per foot (hereinafter “tee- and angleposts”).

1. Physical Characteristics and Uses

Lawn and garden fence posts are produced from cold-worked mild steel formed into “U” or “hat”

shapes. Lawn and garden fence posts are characterized by a row of holes and tabs to help secure fencing to

them by bending the tabs over the fence material.33 Homeowners in suburban and rural areas use lawn and

garden fence posts for numerous home and garden applications, including pet containment, plant and

sapling supports, garden protection, property boundaries, and safety barriers.34 Lawn and garden steel

fence posts are made in both light-duty and heavy-duty weight classes.35

Tee-posts, whether under or over 1 pound per foot, are used to support plants and trees, fencing on

farms and ranches (e.g., for cattle and horse containment), and erosion-control fencing (silt posts).36 Teeposts normally have an attached anchor plate for added stability in the ground. These posts may be smooth

or have a row of studs molded along their length to support fencing but require wire clips to hold the fence

material to the post.37 Tee-posts weighing 1 pound or less per foot are sturdier than Steel City’s lawn and

garden steel fence posts of comparable weight because of the hardness and tensile strength of the steel.38

Steel angle-posts, whether under or over 1 pound per foot, are also strong enough to support plants and

trees as grape stakes and orchard stakes. Like smooth tee-posts, angle-posts are normally characterized by

holes or notches along their length and require wire, plastic ties, or other fasteners to secure the plant or

tree.39

2. Interchangeability

Although there are overlaps in general uses of lawn and garden fence posts and other metal posts,

there are limitations to the degree of interchangeability. On the one hand, tee- and angle-posts are not

typically employed by residential users because there is no convenient way to attach the wire. According to
 

40 See e.g., Conference Tr. at 15-16 (Mr. Speece).

 

41 CR at I-15; PR at I-11.

 

42 CR at I-15; PR at I-11. Conference Tr. at 16 (Mr. Speece).

 

43 Steel City and importers of U-shaped fence posts weighing 1 pound per foot or less reported *** as their

customers. Two or three of the domestic producers of tee-posts and angle-posts weighing 1 pound or less per foot

cited their customers as ***. CR at I-16, nn.71-72; PR at I-12, nn.71-72.

 

44 CR at I-13; PR at I-10; Conference Tr. at 15, 34-35, 40-41 (Mr. Speece) and 38-39 (Mr. Hendricks).

 

45 CR at I-13; PR at I-11; Steel City Postconference Brief at 2-3.

 

46 CR at I-13 to I-14; PR at I-11.

 

47 CR at III-1 and n.2; PR at III-1 and n.2.

9

Petitioner, customers value the convenience of “user-friendly” lawn and garden fence posts. On the other

hand, lawn and garden fence posts are not strong enough for use in agriculture and farm fencing and are

not preferred in erosion control.40

3. Channels of Distribution

In general, both lawn and garden fence posts and tee- and angle-posts are sold to distributors,

rather than end users.41 Steel City contends that lawn and garden fence posts are usually sold in homeimprovement or home-hardware retail stores while tee-posts are sold in farm and ranch supply stores. 

Although Steel City acknowledges that tee-posts may also be sold in home-improvement stores with lawn

and garden fence posts, it maintains that these retail stores usually only stock one size of tee-post while

displaying a wide range of sizes and lengths of lawn and garden fence posts.42 Steel City’s reported

customer list for its lawn and garden steel fence posts *** overlap with other domestic producers’ customer

lists for their tee- and angle-posts weighing 1 pound or less per foot.43

4. Customer and Producer Perceptions

Steel City contends that its lawn and garden fence posts are not interchangeable with any other

domestic product, including grape stakes, tee-posts, farm posts, and sign posts.44 Petitioner asserts that

these other posts, which are produced in steel mills from reheated railway rail or other scrap steel, are very

hard and will break rather than bend like lawn and garden fence posts.45 Other producers of metal posts

weighing 1 pound or less per foot agree. *** domestic producers of tee-posts and angle-posts weighing 1

pound or less per foot reported that their posts do not compete with Steel City’s lawn and garden steel fence

posts.46

*** of overlap in customers purchasing lawn and garden fence posts and tee- and angle-posts

suggests that customers also perceive these two products to be distinct.

5. Manufacturing Facilities and Production Processes

No U.S. producer produces both lawn and garden fence posts and other metal posts weighing 1

pound or less per foot.47 Steel City produces lawn and garden steel fence posts either by stamping or by

roll forming mild steel strip. Both stamping and roll forming are cold-working processes that do not

require the steel to be heated prior to being bent into “U” or “hat” shaped profiles. Instead, Steel City
 

48 CR at I-9 to I-10; PR at I-7 to I-8.

 

49 CR at I-11; PR at I-9.

 

50 CR at I-11 to I-12; PR at I-9 to I-10.

 

51 CR at I-16 to I-17; PR at I-12.

 

52 Commissioner Bragg defines a single domestic like product consisting of all lawn and garden steel fence

posts weighing 1 pound or less per foot, coterminous with the scope of the investigation. Commissioner Bragg

finds that the preliminary record provides insufficient evidence to support a division of the products covered by

Commerce’s scope into two or more domestic like products. Although the record in the preliminary phase of this

investigation indicates differences in manufacturing facilities and processes, producers’ perceptions, price, and

physical characteristics, the limited record data do indicate some similarities in uses and channels of distribution

among U-shaped and T-shaped posts, farm posts, and sign posts weighing 1 pound or less per foot. CR at I-4 n.16,

I-5, I-7-9, I-15; PR at I-3 n.16, I-4-7. In addition, the record is incomplete as to interchangeability and customer

perceptions for T-shaped posts, farm posts, and sign posts weighing 1 pound or less per foot. CR at I-4; PR at I-3-

4. Importantly, neither party addressed the question of two separate like products for all lawn and garden fence

posts weighing 1 pound or less per foot, which has limited the record information available for the Commission’s

review. Accordingly, Commissioner Bragg finds that the record does not provide a clear dividing line between the

various products upon which clear distinctions among product types may be made. Rather, Commissioner Bragg

finds that there is insufficient evidence in this preliminary record investigation to support two separate domestic

like products, and therefore defines one like product consisting of all lawn and garden steel fence posts,

coterminous with the scope. 

Furthermore, in accordance with the American Lamb standard for preliminary phase investigations,

Commissioner Bragg finds that an outcome determinative definition of the domestic like product at this

preliminary stage is not appropriate given the incomplete and mixed information regarding the definition of the

(continued...)

10

fabricates steel strip into U-posts at ambient temperature through a combination of forming and piercing

dies (stamping) and successive rolls (roll forming).48

Tee- and angle-posts, whether under or over 1 pound per foot, are hot-rolled from either scrapped

railway rail or newly cast rail-quality billet steel, rather than being cold-stamped from sheared mild-steel

strip or cold-rolled from slit mild-steel coil like Petitioner’s product.49 In the rolling process, either split

portions of reheated rail in a re-rolling mill or newly cast steel billets in a minimill pass through a series of

mill stands with grooved rolls that progressively reduce and shape the hot steel into posts. After rolling,

posts are cut to desired lengths.50

6. Price

According to questionnaire responses, per-pound unit values for Steel City’s commercial U.S.

shipments of lawn and garden fence posts ranged from $*** to $*** during the reporting period –

considerably higher than the unit values of $*** to $*** per pound for domestic tee- and angle-posts

weighing 1 pound or less per foot.51 

As a whole, the differences between lawn and garden fence posts and other metal posts weighing 1

pound or less per foot in physical characteristics, channels of distribution, producer perceptions,

manufacturing facilities and processes, and price constitute a clear dividing line for purposes of this like

product analysis. Therefore, based on the foregoing, we find two domestic like products in this preliminary

phase investigation. The first domestic like product consists of U-shaped or hat-shaped lawn and garden

fence posts made of steel and/or any other metal (“lawn and garden fence posts” or “U-posts”). The second

domestic like product consists of other fence posts made of steel and/or other metal, including tee, farm,

and sign posts weighing 1 pound or less per foot (“tee- and angle-posts” or “other metal posts”).52 53
 

52 (...continued)

like product. Even if the current record reasonably supported a finding of two separate like products, there

nonetheless remain significant ambiguities regarding the likelihood of imminent threat of material injury by reason

of subject imports of T-shaped posts, farm posts, and sign posts, especially in light of the concerns highlighted by

the petitioner about possible product shifting by subject producers toward T-shaped posts, farm posts, and sign

posts, as well as the respondents’ concern about the possible unreliability of the HTS data due to inclusion of

nonsubject merchandise. Therefore, Commissioner Bragg defines a single like product consisting of all lawn and

garden steel fence posts weighing 1 pound or less per foot, coterminous with Commerce’s scope.

 

53 Commissioner Bragg also considered whether to expand the domestic like product definition beyond the

scope of the investigation to include lawn and garden fence posts weighing over 1 pound per foot. The evidence in

the record of this preliminary phase of the investigation indicates that there are differences in physical

characteristics, uses, channels of distribution, customer perceptions, price, manufacturing facilities, and

interchangeability between U-shaped lawn and garden metal fence posts weighing 1 pound or less per foot and Tshaped posts, farm posts, and sign posts weighing over 1 pound per foot. CR at I-7-8, I-11, I-16-17; PR at I-5-7, I9, I-12-13. In addition, Commissioner Bragg finds that there is limited data in the record concerning all T-shaped

posts, farm posts, and sign posts. Thus, for the purposes of the preliminary investigation, Commissioner Bragg

does not expand the definition of the domestic like product beyond the scope to include T-shaped posts, farm posts,

and sign posts weighing over 1 pound per foot.

 

54 There is no issue regarding related parties in this preliminary phase investigation.

 

55 19 U.S.C. § 1677(4)(A).

 

56 See United States Steel Group v. United States, 873 F. Supp. 673, 681-84 (Ct. Int’l Trade 1994), aff’d, 96 F.

3d 1352 (Fed. Cir. 1996).

 

57 The companies listed are those that responded to the Commission’s questionnaires in this investigation. CR

at III-1 to III-2; PR at III-1 to III-2. 

 

58 Based upon her definition of a single domestic like product, Commissioner Bragg finds that the domestic

industry consists of all domestic producers of lawn and garden steel fence posts weighing 1 pound or less per foot,

including all U.S. producers of U-shaped posts, T-shaped posts, farm posts, and sign posts. 

 

59 There is no issue regarding negligibility because imports of lawn and garden fence posts from China

constitute 100 percent of total imports of those products. CR/PR at Table IV-2.

 

60 Commissioner Bragg finds that subject imports are not negligible given that imports from China constitute

virtually all U.S. imports for the 12-month period preceding the filing of the petition. CR/PR at Table IV-2.

11

III. DOMESTIC INDUSTRY 54

The domestic industry is defined as “the producers as a [w]hole of a domestic like product ....”55

In defining the domestic industry, the Commission’s general practice has been to include in the industry all

domestic production of the domestic like product, whether toll-produced, captively consumed, or sold in the

domestic merchant market.56

Based on our finding that there are two domestic like products, we determine that there are two

domestic industries in this investigation. One domestic industry consists of all domestic producers of lawn

and garden fence posts, which is only Steel City. The second domestic industry consists of all domestic

producers of other metal posts weighing 1 pound or less per foot, which includes Cascade Steel Rolling

Mills, Inc., Jersey Shore Steel Co., SMI Steel Arkansas/Southern Post Co., and W. Silver, Inc.57 58

IV. REASONABLE INDICATION OF MATERIAL INJURY BY REASON OF ALLEGEDLY

LTFV IMPORTS OF LAWN AND GARDEN FENCE POSTS59 60
 

61 19 U.S.C. §§ 1671b(a), 1673b(a).

 

62 19 U.S.C. § 1677(7)(B)(i). The Commission “may consider such other economic factors as are relevant to the

determination” but shall “identify each [such] factor . . . [a]nd explain in full its relevance to the determination.”

19 U.S.C. § 1677(7)(B); see also Angus Chemical Co. v. United States, 140 F.3d 1478 (Fed. Cir. 1998).

 

63 19 U.S.C. § 1677(7)(A).

 

64 19 U.S.C. § 1677(7)(C)(iii).

 

65 19 U.S.C. § 1677(7)(C)(iii).

 

66 The record of this investigation indicates that other forms of metal posts are not directly interchangeable with

lawn and garden fence posts. Steel City’s reported customer list for its lawn and garden steel fence posts ***

overlap with other domestic producers’ customer lists for their tee-posts and angle-posts weighing 1 pound or less

per foot. *** domestic producers of tee-posts and angle-posts weighing 1 pound or less per foot reported that their

posts do not compete with Steel City’s lawn and garden steel fence posts. Moreover, Steel City’s belief that the

only domestically produced products covered by the scope of this investigation were its lawn and garden steel fence

posts indicates that it was completely unaware of other metal posts weighing 1 pound or less per foot in its

domestic market. CR at I-13 to I-14, I-16; PR at I-10 to I-12; Conference Tr. at 22-25 (Ms. Stras).

 

67 CR/PR at Table C-4.

 

68 See, e.g., Conference Tr. at 27-28, 36 (Mr. Hendricks).

 

69 See, e.g., MAT Postconference Brief at 4. MAT also maintains that, in order to reduce administrative costs

and streamline orders, purchasers consider non-price factors, such as a high level of service, sufficient production

capacity, and broad product mix, when choosing a supplier and that these requirements preclude Steel City from

selling its product to “big box” purchasers. See, e.g., MAT Postconference Brief at 6-8. 

12

In the preliminary phase of antidumping duty investigations, the Commission determines whether

there is a reasonable indication that an industry in the United States is materially injured by reason of the

imports under investigation.61 In making this determination, the Commission must consider the volume of

imports, their effect on prices for the domestic like product, and their impact on domestic producers of the

domestic like product, but only in the context of U.S. production operations.62 The statute defines

“material injury” as “harm which is not inconsequential, immaterial, or unimportant.”63 In assessing

whether there is a reasonable indication that the domestic industry is materially injured by reason of subject

imports, we consider all relevant economic factors that bear on the state of the industry in the United

States.64 No single factor is dispositive, and all relevant factors are considered “within the context of the

business cycle and conditions of competition that are distinctive to the affected industry.”65

For the reasons discussed below, we determine that there is a reasonable indication that the

domestic industry is materially injured by reason of lawn and garden fence posts from China that are

allegedly sold in the United States at less than fair value.

A. Conditions of Competition

The following conditions of competition for lawn and garden fence posts are pertinent to our

analysis in this investigation.

Demand for lawn and garden fence posts is driven by residential housing needs in the United

States.66 Apparent U.S. consumption of lawn and garden fence posts increased by *** percent between

1999 and 2000 and by *** percent between 2000 and 2001, before declining by *** percent in the first

quarter of 2002 when compared to the first quarter of 2001.67 Steel City anticipates continued increases in

demand if the market for new housing continues to grow at its current pace.68 MAT agrees with Steel City

that demand for lawn and garden fence posts has been increasing over the period examined.69
 

70 See, e.g., Steel City Postconference Brief at 14-15 and Conference Tr. at 27 (Mr. Hendricks).

 

71 See, e.g., Conference Tr. at 27 (Mr. Hendricks).

 

72 Although Steel City is the only domestic producer of lawn and garden steel fence posts today, another larger

domestic producer of lawn and garden steel fence posts, Gilbert & Bennett, closed its operations in 1998. See, e.g.,

Conference Tr. at 9 (Mr. Speece).

 

73 Hangzhou is not the only Chinese manufacturer/exporter, although it claims to represent *** percent of

production and exports. All of the *** importers other than *** appear to be supplied by Chinese producer(s)

other than Hangzhou. CR at VII-1, n.1; PR at VII-1, n.1.

 

74 CR/PR at Table C-4. These data appear to reflect a more reasonable estimate of capacity than the estimate

that appears in Steel City’s postconference brief, which is highly dependent upon certain expectations concerning

number of worker shifts and use of idled equipment. In any final investigation, we intend to explore further the

domestic industry’s ability to supply the U.S. market and the implications arising from this supply situation.

 

75 CR/PR at Table C-4.

 

76 CR/PR at Table VII-1.

 

77 CR/PR at Table VII-2.

 

78 See, e.g., Steel City Postconference Brief at 8-9; Conference Tr. at 13 (Mr. Speece) and 79 (Ms. Stras).

 

79 See, e.g., MAT Postconference Brief at 8-9.

 

80 See, e.g., MAT Postconference Brief at 9.

13

The record indicates that lawn and garden fence post demand is seasonal. The *** of Steel City’s

sales of such posts are made on a contract basis. Steel City typically signs contracts in August, September,

and/or October of the year preceding the delivery of the product to the customer. It produces the product

from November through February, and ships the product to customers from March through June.70 About

65 to 70 percent of Steel City’s lawn and garden fence posts are shipped during the Spring season.71

The only two known sources of supply of lawn and garden fence posts in the domestic market are

U.S. and Chinese producers. Steel City is the only known U.S. producer of lawn and garden fence posts,72

whereas Hangzhou Hongyuan Sportsware Co., Ltd. (hereinafter called “Hangzhou”) was the only reporting

producer of lawn and garden fence posts in China.73 Steel City, which supplies a relatively small, and

declining, share of the U.S. market, is only operating at *** of its reported capacity of *** pounds.74

Moreover, Steel City maintains *** inventories that are equivalent to about *** of its annual sales.75

Hangzhou is operating at nearly *** of its *** pound capacity and its output is *** to U.S. sales.76

Although Hangzhou maintains *** inventories in China, there are inventories of lawn and garden fence

posts from China totaling approximately *** pounds in the United States.77

The degree of substitutability between lawn and garden fence posts produced in the United States

and those produced in China is a point of contention between Steel City and MAT. Steel City

acknowledges that the anchor plates on its lawn and garden fence posts are crimped to the post while the

anchor plates on the Chinese imports are riveted to the post; however, Steel City contends that its

customers have never questioned the quality of Steel City’s lawn and garden fence posts, focusing instead

on price.78 Respondent, MAT, argues that it is not in direct competition with Steel City because MAT can

supply its customers with a higher-quality product, broader product mix, and larger production volumes

than Steel City.79 According to MAT, home center purchasers also prefer the Chinese post because of its

riveted anchor post and powder-based paint finish.80

The record indicates that U.S. and Chinese lawn and garden fence posts are used interchangeably. 

While the conflicting claims between the parties regarding quality cannot be resolved based on the record in

the preliminary phase of this investigation, the lower prices offered by Chinese suppliers (for at least some
 

81 CR/PR at Tables V-1 to V-4 (price differences); CR at V-11 to V-12 (***); PR at V-5.

 

82 Based on her definition of the domestic industry, Commissioner Bragg finds the following additional

conditions of competition to be pertinent to her analysis. Apparent U.S. consumption decreased irregularly over

the POI from *** pounds in 1999 to *** pounds in 2001 (equal to a *** percent decrease overall), but between

interim (January through March) 2001 and interim 2002, apparent U.S. consumption increased *** percent. 

Regarding supply to the U.S. market, although petitioner manufactures 100 percent of U-shaped fence posts

production in the United States, petitioner accounts for only *** percent of production of the single, broader like

product in the United States. Importantly, Commissioner Bragg finds that the record evidence is limited regarding

the market competition between U-shaped posts and other fence posts covered by the scope of the investigation. 

In addition, Commissioner Bragg notes that there is a seasonal business cycle for the U.S. steel fence post

industry based on the fact that a majority of orders are placed in August through October, with shipments sent

March through June. Given that the seasonality may influence both volume and price data, it will be important in

any final investigation to further examine the seasonal business cycle of the domestic industry for a more complete

analysis.

 

83 19 U.S.C. § 1677(7)(C)(i).

 

84 Commissioner Bragg finds that despite the decrease in apparent U.S. consumption, the volume of U.S.

shipments of subject imports irregularly increased by *** percent between 1999 and 2001, from *** pounds in

1999 to *** pounds in 2001. CR/PR at Table C-1. Between the interim periods, the volume of U.S. shipments of

subject imports increased by another *** percent from interim 2001 to interim 2002. Subject imports’ share of the

U.S. market increased from *** percent in 1999 to *** percent in 2001, but the market share of subject imports

*** declined between the interim periods. U.S. importers captured market share at the expense of the domestic

producer, as the domestic producer’s share of the U.S. market declined over the POI from *** percent in 1999 to

*** percent in 2001, and then to *** percent in interim 2002. Nonsubject imports were not present in the U.S.

market throughout the POI.

Respondents contend, however, that there is a problem with the petitioner’s volume analysis because the

HTS numbers used were allegedly inflated due to the inclusion of metal or steel fence posts weighing more than 1

pound per foot. Nonetheless, the questionnaire data compiled by Commission staff indicate that the volume of

subject imports has increased significantly. Furthermore, on a value basis, U.S. shipments of subject imports

increased by *** percent between 1999 and 2001, and decreased by *** percent between interim periods. CR/PR

at Table C-1. Thus, notwithstanding Respondents concerns regarding the import data, the preliminary record

provides a reasonable indication that the absolute and relative volume of subject imports increased significantly. 

 

85 CR/PR at Table IV-2. We note that all imports of metal posts weighing 1 pound or less per foot were lawn

and garden steel fence posts.

14

sizes) and the absence of apparent quality concerns expressed by *** do not suggest that the Chinese

product is viewed in the market as superior to the domestic product.81 82

B. Volume of the Subject Imports of Lawn and Garden Fence Posts

Section 771(C)(i) of the Act provides that the “Commission shall consider whether the volume of

imports of the merchandise, or any increase in that volume, either in absolute terms or relative to

production or consumption in the United States, is significant.”83 84

By quantity, imports of lawn and garden fence posts from China declined from *** pounds in 1999

to *** pounds in 2000, but then increased to *** pounds in 2001.85 Between interim 2001 and interim

2002, subject imports decreased from *** pounds to *** pounds. By value, subject imports initially
 

86 CR/PR at Table IV-2.

 

87 Although MAT is the *** U.S. importer of U-posts from China, *** importers (presumably unable to sell ***

to the home centers emphasized by MAT) have increased their import volumes since 1999, collectively rising from

*** pounds in 1999 to *** pounds in 2000 and to *** pounds in 2001. In the first quarter of 2002, such imports

were *** pounds compared to *** pounds in the first quarter of 2001. Derived from Confidential Report and

importer questionnaires.

 

88 CR/PR at Table C-4.

 

89 CR/PR at Table C-4.

 

90 CR/PR at Table C-4.

 

91 CR/PR at Table C-4.

 

92 In addition, we note that subject imports increased significantly relative to production in the United States. 

CR/PR at Tables C-1 and C-4.

 

93 19 U.S.C. § 1677(7)(C)(ii).

 

94 CR at II-4; PR at II-3.

 

95 Light-duty lawn and garden fence posts are normally made of 14 gauge steel (.068 inch - .082 inch thick), 1

(continued...)

15

decreased from $*** in 1999 to $*** in 2000, but then increased to $*** in 2001. Between interim 2001

and 2002, subject imports declined in value from $*** to $***.86 87

By quantity, subject imports’ market share of U.S. shipments was substantial and continued to

grow over the period examined, increasing from *** percent in 1999 to *** percent in 2000 and to ***

percent in 2001. Between interim periods 2001 and 2002, subject imports’ market share of U.S. shipments

increased from *** percent to *** percent.88

The volume of subject imports increased at the expense of the domestic industry, whose shipments

continually declined from *** pounds in 1999 to *** pounds in 2000 to *** pounds in 2001, and from ***

pounds in interim 2001 to *** pounds in interim 2002.89

By quantity, the market share of the domestic industry declined from *** percent in 1999, its

highest level during the period examined, to *** percent in 2000 and to *** percent in 2001.90 The

domestic industry’s market share was *** percent, compared with *** percent in interim 2001.91

For purposes of this preliminary determination, we find the volume of subject imports and the

increase in volume to be significant in absolute terms and relative to consumption in the United States.92

C. Price Effects of the Subject Imports of Lawn and Garden Fence Posts

Section 771(C)(ii) of the Act provides that, in evaluating the price effects of the subject imports,

the Commission shall consider whether –

(I) there has been significant price underselling by the imported merchandise as compared with the

price of domestic like products of the United States, and

(II) the effect of imports of such merchandise otherwise depresses prices to a significant degree or

prevents price increases, which otherwise would have occurred, to a significant degree.93

The available data in this investigation indicate that domestic lawn and garden fence posts and

subject imports are largely interchangeable.94 Lawn and garden fence posts are produced in eight standard

sizes, which suggests that these posts are not a highly differentiated product.95
 

95 (...continued)

3/4 inches wide by 3 feet, 4 feet, 5 feet, and 6 feet long. These posts weigh approximately 0.45 pound per foot. 

Heavy-duty lawn and garden fence posts are normally made of 13 gauge steel (.082 inch - .095 inch thick), 3

inches wide by 5 feet, 6 feet, 7 feet, and 8 feet long. These posts weigh about 0.90 pound per foot. See, e.g.,

Petition at 10. 

 

96 Pricing Product 1 consists of light-duty lawn and garden fence posts, 14 gauge thick, 1-3/4 inches wide by 4

feet tall. Pricing Product 2 consists of light-duty lawn and garden fence posts, 14 gauge thick, 1-3/4 inches wide

by 5 feet tall. CR at V-3; PR at V-2.

 

97 Pricing Product 3 consists of heavy-duty lawn and garden fence posts, 13 gauge thick, 3 inches wide by 5 feet

tall. Pricing Product 4 consists of heavy-duty lawn and garden fence posts, 13 gauge thick, 3 inches wide by 6 feet

tall. CR at V-3; PR at V-2.

 

98 For pricing product 1, the Chinese product was priced above the U.S. product in 3 quarters, with margins

ranging from *** to *** percent and averaging 1.1 percent. In the other 10 quarters (for pricing product 1), the

Chinese product was priced below the U.S. product, with margins ranging from *** to *** percent and averaging

7.0 percent. For pricing product 2, the Chinese product was priced below the U.S. product in all 13 quarters, with

margins ranging from *** to *** percent and averaging 13.7 percent. CR at V-4; PR at V-3; CR/PR at Tables V-1

and V-2.

 

99 For pricing product 3, the Chinese product was priced above the U.S. product in all 13 quarters, with margins

ranging from *** to *** percent and averaging 27.9 percent. For pricing product 4, the Chinese product was

priced above the U.S. product in 12 quarters, with margins ranging from *** to *** percent and averaging 8.7

percent. In the remaining quarter (for pricing product 4), the Chinese product was priced below the U.S. product,

with a margin of *** percent. CR at V-11; PR at V-4; CR/PR at Tables V-3 and V-4.

 

100 We note, however, that record evidence regarding prices is mixed. The parties did not argue that Chinese

prices were higher than domestic prices, as the data for heavy-duty U-posts suggest. Moreover, import AUVs (and

export AUVs) for Chinese U-posts generally are *** than domestic shipment AUVs, even though the importers’

U.S. shipment AUVs are *** than the domestic AUVs. Finally, quotations for Chinese U-posts from two suppliers

(both from February 2002) indicate prices below Steel City’s price list for all products – Shandong offered a range

of light-duty U-posts at 49-56 percent below Steel City’s list price, and heavy-duty U-posts at 31-35 percent below

Steel City’s list price; Jackson Wire offered a range of light-duty U-posts at 30-42 percent below Steel City’s list

price, and heavy-duty U-posts at 6-11 percent below Steel City’s list price. See, e.g., Petition exhibits 1 and 6.

 

101 CR/PR at Tables V-1 to V-4. The price of the *** Chinese product (pricing product 2) has been erratic and

has declined in recent quarters. CR/PR at Table V-2.

 

102 CR/PR at Tables V-1 to V-4.

16

The Commission collected pricing data for four lawn and garden steel fence post products: two

light-duty lawn and garden fence post products (pricing products 1 and 2)96 and two heavy-duty lawn and

garden fence post products (pricing products 3 and 4).97 Price comparisons for pricing products 1, 2, 3,

and 4 were possible in a total of 13 quarters from January 1999 through March 2002. Underselling by the

subject imports was mixed. The record indicates that prices for Chinese light-duty lawn and garden fence

posts (with *** sales volumes) were generally at or below prices for Steel City’s product throughout the

period examined.98 In contrast, the record indicates that prices for Chinese heavy-duty lawn and garden

fence posts generally were above prices for Steel City’s product.99 100

Chinese prices for lawn and garden fence posts increased between 1999 and 2000, and generally

*** since the first quarter of 2000.101 Domestic prices for lawn and garden fence posts also generally ***

throughout the period examined.102
 

103 In any final phase investigation, we intend to explore further MAT’s argument that “big box” stores such as

Home Depot, Lowe’s, and Menard’s prefer suppliers with a broader product mix and higher production capacity. 

The record in the preliminary phase of this investigation is not clear as to whether Steel City is “qualified” to

supply “big box” retailers.

 

104 The domestic industry’s unit (per pound) COGS increased from $*** in 1999 to $*** in 2000 to $*** in

2001, and from $*** in interim 2001 to $*** in interim 2002. The domestic industry’s COGS to net sales ratio

increased from *** percent in 1999 to *** percent in 2000 to *** percent in 2001, and from *** percent in interim

2001 to *** percent in interim 2002. CR/PR at Table C-4.

 

105 Commissioner Bragg finds that the preliminary record provides a reasonable indication of significant

negative effects on the U.S. prices by reason of the subject imports. The pricing data show that price levels for

both subject imports and the domestic like product were relatively *** or increased *** over the POI. CR/PR at

Tables V-1-4 & Figures V-1-4. More specifically, quarterly price comparisons were mixed, as the Chinese product

was priced below the U.S. product in 24 out of 52 quarters, equal to a 46.2 percent incidence of underselling, with

underselling margins averaging 10.9 percent. CR at V-4; PR at V-3; CR/PR at Tables V-1-4. In addition, the

average unit values of U.S. shipments and net sales declined by *** percent and *** percent, respectively, despite

the *** unit COGS from 1999 to 2001. CR/PR at Table C-1. Thus, the increasing ratio of COGS/sales from ***

percent in 1999 to *** percent in 2000, and to *** percent in 2001 corroborates that the domestic industry is

experiencing a cost/price squeeze driven by declining price levels influenced by subject imports. CR/PR at Table

C-1.

 

106 CR at V-11 to V-13; PR at V-4-5. *** indicated that ***, and that ***. It did not give further details about

its ***. ***. CR at V-11 to V-12 and n.11; PR at V-5 and n.11.

 

107 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851 and 885 (“In material injury determinations, the

Commission considers, in addition to imports, other factors that may be contributing to overall injury. While these

factors, in some cases, may account for the injury to the domestic industry, they also may demonstrate that an

industry is facing difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.” Id. at

885).

17

Steel City does not appear to adjust its prices in response to competition from the subject

imports.103 There is some evidence, however, that domestic prices have been suppressed relative to costs. 

The industry’s unit cost of goods sold (COGS) has increased by *** percent between 1999 and 2001, and

the ratio of cost of goods sold to net sales has also steadily risen over the period examined.104 We intend to

examine more closely the possible price suppressing effects of subject imports in any final phase

investigation.105

Two of Steel City’s allegations of lost sales remain unconfirmed because the purchasers in

question, ***, have refused to respond to the Commission’s inquiries. A third purchaser, ***, has denied

Steel City’s lost sales allegation, but to date has refused to provide important details.106

The limited record in the preliminary phase of this investigation is mixed with respect to

underselling, indicates stable domestic prices, and does not support allegations of lost sales due to the

subject imports. Therefore, on balance, we do not find the price effects of the subject imports to be

significant.

D. Impact of the Subject Imports of Lawn and Garden Fence Posts

In examining the impact of the subject imports on the domestic industry, we consider all relevant

economic factors that bear on the state of the industry in the United States.107 These factors include output,

sales, inventories, capacity utilization, market share, employment, wages, productivity, profits, cash flow,

return on investment, ability to raise capital, and research and development. No single factor is dispositive
 

108 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Invs. Nos. 701-

TA-386 and 731-TA-812 to 813 (Prelim.), USITC Pub. 3155 at 25, n.148 (Feb. 1999).

 

109 The statute instructs the Commission to consider the “magnitude of the dumping margin” in an antidumping

duty proceeding as part of its consideration of the impact of imports. See 19 U.S.C. § 1677(7)(C)(iii)(V). In its

notice of initiation, Commerce estimated a dumping margin of 51 to 89 percent for subject Chinese product. 67 FR

37388, 37390 (May 29, 2002).

 

110 Commissioner Bragg notes that she does not ordinarily consider the magnitude of the margin of dumping to

be of particular significance in evaluating the effects of subject imports on domestic producers. See Separate and

Dissenting Views of Commissioner Lynn M. Bragg in Bicycles from China, Inv. No. 731-TA-731 (Final), USITC

Pub. 2968 (June 1996).

 

111 Steel City *** export sales of lawn and garden fence posts. Steel City’s U.S. shipments, by quantity,

declined from *** pounds in 1999 to *** pounds in 2000 to *** pounds in 2001 and from *** pounds in interim

2001 to *** pounds in interim 2002. CR/PR at Table C-4.

 

112 Apparent U.S. consumption of lawn and garden fence posts, by quantity, increased from *** pounds in 1999

to *** pounds in 2000 to *** pounds in 2001, and decreased *** from *** pounds in interim 2001 to *** pounds

in interim 2002. CR/PR at Table C-4.

 

113 U.S. shipments by Chinese importers of lawn and garden fence posts increased from *** pounds in 1999 to

*** pounds in 2000 to *** pounds in 2001 and from *** pounds in interim 2001 to *** pounds in interim 2002. 

CR/PR at Table C-4.

 

114 CR/PR at Table C-4.

 

115 Steel City’s production of lawn and garden fence posts decreased from *** pounds in 1999 to *** pounds in

2000, then increased *** to *** in 2001. Between interim periods 2001 and 2002, Steel City’s production

increased from *** pounds to *** pounds. CR/PR at Table C-4. 

 

116 CR/PR at Table C-4.

 

117 Steel City’s inventory of lawn and garden fence posts, by quantity, decreased from *** pounds in 1999 to

*** pounds in 2001, but increased *** from *** pounds in interim 2001 to *** pounds in interim 2002. Hours

worked by Steel City’s employees declined from *** hours in 1999 to *** hours in 2001. Between interim periods

2001 and 2002, hours worked *** at *** hours. Wages paid decreased from $*** in 1999 to $*** in 2001. From

interim 2001 to interim 2002, wages paid declined from $*** to $***. CR/PR at Table C-4.

 

118 Steel City’s production workers numbered *** in 1999, but declined to *** in 2000 and to *** in 2001. 

(continued...)

18

and all relevant factors are considered “within the context of the business cycle and conditions of

competition that are distinctive to the affected industry.”108 109 110

With respect to the impact of the subject imports, available data indicate that Steel City has

experienced declining U.S. sales throughout the period examined,111 despite an increase in apparent U.S.

consumption.112 Conversely, sales of lawn and garden fence posts from China increased throughout the

period examined.113 As a result, Steel City has seen its market share decline from *** percent in 1999 to

*** percent in 2001, and to *** percent in the first quarter of 2002.114 Steel City’s production of lawn and

garden fence posts fell by nearly *** in 2000, and remained more than *** percent below 1999 levels in

2001.115 Capacity utilization fell from *** percent in 1999 to *** percent in 2000, *** percent in 2001,

and *** percent in the first quarter of 2002.116

Consistent with the decline in production and sales volumes, Steel City reduced its inventory levels

by more than *** between 1999 and 2001 and cut levels of hours worked and wages paid by nearly ***

percent.117 These reductions allowed the company to maintain manageable inventory levels (*** percent of

annual shipments), generally *** levels of productivity for its work force of *** (down from ***), and ***

unit labor costs of *** throughout the period examined.118
 

118 (...continued)

Between interim 2001 and interim 2002, the number of Steel City’s production workers *** at ***. Steel City’s

productivity decreased from *** pounds per hour in 1999 to *** pounds per hour in 2001. From interim 2001 to

interim 2002, Steel City’s productivity increased from *** pounds per hour to *** pounds per hour. CR/PR at

Table C-4.

 

119 Steel City’s net sales, by quantity, declined from *** pounds in 1999 to *** pounds in 2000 to *** pounds in

2001 and from *** pounds in interim 2001 to *** pounds in interim 2002. CR/PR at Table C-4.

 

120 Steel City’s net sales, by value, decreased from $*** in 1999 to $*** in 2000 and to $*** in 2001, and from

$*** in interim 2001 to $*** in interim 2002. CR/PR at Table C-4.

 

121 Staff Worksheet dated June 13, 2002.

 

122 Steel City’s unit SG&A expense increased from $*** in 1999 to $*** in 2000, but *** at $*** in 2001,

interim 2001, and interim 2002. Steel City’s SG&A expenses were consistently equivalent to *** percent of its net

sales. See, e.g., CR/PR at Tables C-4 and VI-2.

 

123 CR/PR at Table C-4.

 

124 CR/PR at Table C-4.

 

125 Based on her definition of the domestic industry, Commissioner Bragg finds that U.S. production decreased

by *** percent from *** pounds in 1999 to *** pounds in 2001, and decreased by an additional *** percent

between interim periods. CR/PR at Table C-1. In addition, U.S. shipments, number of production workers, net

sales, and capital expenditures, also dropped over the POI. CR/PR at Table C-1. The deterioration of the domestic

industry’s performance is further evidenced by declines in operating income of *** percent over the POI, from ***

in 1999 to only *** in 2001, and the ratio of operating income/sales, which decreased from *** percent in 1999 to

*** percent in 2001. CR/PR at Table C-1. Thus, the preliminary record provides a reasonable indication that the

increased presence of lower-priced subject imports in the U.S. market has had a significant adverse impact on the

domestic industry. 

19

Steel City’s financial performance declined over the period examined, as the quantity of net sales

fell by *** percent between 1999 and 2001, and was *** percent lower in the first quarter of 2002 than in

the first quarter of 2001.119 The value of net sales followed a similar trend, as unit sales values *** at $***

per pound throughout the period examined.120 Steel City’s costs, however, did not remain stable, as a result

of continuously increasing factory overhead.121 The company’s unit cost of goods sold (COGS) rose from

*** in 1999 to *** in 2000, *** in 2001, and *** in the first quarter of 2002, while its unit SG&A expense

fluctuated *** over the period examined.122 As a result, Steel City saw its operating income decline from

*** in 1999 to *** in 2000 and to *** in 2001. Operating income of *** in the first quarter of 2002 was

*** below the company’s operating income level in the first quarter of 2001.123 As a result, Steel City has

essentially *** capital expenditures.124

Thus, the record in this investigation indicates that, by gaining significant market share at the

expense of Steel City, imports of lawn and garden fence posts from China have had a significant adverse

impact on the domestic industry, as reflected in the declining levels of shipments, production, and

employment combined with rising levels of volume-dependent costs, and a marked decline in

profitability.125

CONCLUSION

For the reasons stated above, we determine that there is a reasonable indication that the domestic

industry producing U-shaped or hat-shaped lawn and garden fence posts made of steel and/or any other
 

126 Commissioner Bragg finds, on balance, the record as well as the significant data concerns that arise under

the American Lamb standard for preliminary investigations warrants an affirmative determination that there is a

reasonable indication that an industry in the United States is presently, materially injured by reason of imports of

all lawn and garden steel fence posts weighing 1 pound or less per foot from China that are allegedly sold in the

United States at less than fair value. 

 

127 Commissioner Bragg does not join Section V of these Views.

 

128 This case presents the novel question of how the negligiblity provision of the statute, 19 U.S.C. § 1677(24),

which requires termination of investigations where imports account for less than 3 percent of total imports, is to be

applied when there are no imports of the product from any country. Thus, the total of subject imports of these

products is the same as, not less than, the total imports from all countries. While one could argue that zero imports

of “other” fence posts from China is less than three percent of “total” imports of those articles, even though there

are no “total” imports, the issue is essentially moot as we find no reasonable indication of material injury or threat

of material injury by reason of subject imports from China.

 

129 CR at I-3, n.10; PR at I-3, n.10. Tee-posts have primarily farm and industrial uses. They are used for

supporting plants and trees, and have been adopted by the construction industry as the “method of choice” for

erosion control. Angle-posts are sturdy enough to support plants and trees as grape or orchard stakes. CR at I-7,

n.32, and I-9; PR at I-6, n.32, and I-7.

 

130 CR at II-3; PR at II-2.

 

131 Apparent U.S. consumption was *** percent higher in the first quarter of 2002 than in the first quarter of

2001. CR/PR at Table C-5. 

 

132 CR/PR at Table C-5; Petition at 6, n.4. Imports of tee, farm, and sign posts currently weigh more than 1

pound per foot. CR/PR at Tables C-2 and C-5.

 

133 CR/PR at Table III-1.

 

134 Capacity for the domestic industry has *** pounds on an annual basis throughout the period examined. 

CR/PR at Table C-5.

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metal, weighing 1 pound or less per foot, is materially injured by reason of subject imports from China that

are allegedly sold in the United States at less than fair value.126

V. NO REASONABLE INDICATION OF MATERIAL INJURY BY

REASON OF SUBJECT IMPORTS OF OTHER METAL POSTS127 128

A. Conditions of Competition

The following conditions of competition for tee- and angle-posts are pertinent to our analysis in this

investigation.

Demand for tee- and angle-posts is driven by agricultural and industrial needs in the United

States.129 Demand for tee- and angle-posts has not experienced the same growth as demand for lawn and

garden fence posts. Tee-post producers characterize demand as “stable.”130 Apparent U.S. consumption of

tee- and angle-posts, in fact, decreased by *** percent in 2000 and by *** percent in 2001.131

Domestic producers are the only known source of supply of tee- and angle-posts in the U.S.

market. There are no known imports of tee- and angle-posts in the relevant weight range.132 There are four

known producers of tee- and angle-posts weighing 1 pound or less per foot in the United States: SMI,

W.Silver, Jersey Shore Steel, and Cascade Steel.133

U.S. producers’ capacity has *** throughout the period examined.134 Capacity utilization was

generally *** during the period examined, rising from *** percent in 1999 to *** percent in 2000 and to
 

135 CR/PR at Table C-5.

 

136 CR/PR at Table C-5.

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*** percent in 2001.135 U.S. producers’ end-of-period inventories increased by *** percent from 1999 to

2001, but were lower in interim 2002 to interim 2001.136
 

137 CR/PR at Table C-5.

 

138 CR/PR at Table C-5.

 

139 CR/PR at Table V-6.

 

140 CR/PR at Table C-5.

 

141 CR/PR at Table C-5.

 

142 19 U.S.C. § 1677d(b) and 1677(7)(F)(ii).

 

143 19 U.S.C. § 1677(&)(F)(ii). An affirmative threat determination must be based upon “positive evidence

tending to show an intention to increase the levels of importation.” Metallverken Nederland B.V. v. United States,

744 F. Supp. 281 (Ct. Int’l Trade 1990), citing American Spring Wire Corp. v. United States, 590 F. Supp. 1273,

1280 (Ct. Int’l Trade 1984); see also Calabrian Corp. v. United States, 794 F. Supp. 377, 387-88 (Ct. Int’l Trade

1992), citing H.R. Rep. No. 98-1156 at 174 (1984).

 

144 19 U.S.C. § 1677(7)(F)(i). Factors I (regarding countervailing subsidies) and VII (regarding raw and

processed agricultural products) are inapplicable to this antidumping duty investigation.

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B. Volume of the Subject Imports of Other Metal Posts

We do not find volume of the subject imports to be significant because there is no

subject import volume of other metal posts weighing 1 pound or less per foot.137

C. Price Effects of the Subject Imports of Other Metal Posts

We do not find significant price effects by reason of subject imports because there are no subject

imports of other metal posts weighing 1 pound or less in the domestic market.138 None of the U.S.

producers reported any lost sales or lost revenues attributable to the subject tee- or angle-posts.139

D. Impact of the Subject Imports of Other Metal Posts

The performance of the domestic industry deteriorated between 1999 and 2001, before recovering

somewhat in the first quarter of 2002.140 These trends, however, are consistent with trends in apparent

U.S. consumption during the period examined. We do not find a significant impact by reason of subject

imports on the domestic industry because there are no subject imports of other metal posts weighing 1

pound or less per foot.141

VI. NO REASONABLE INDICATION OF THREAT OF MATERIAL INJURY BY REASON

OF SUBJECT IMPORTS OF OTHER METAL POSTS FROM CHINA

Section 771(7)(F) of the Act directs the Commission to determine whether an industry in the United

States is threatened with material injury by reason of the subject imports by analyzing whether “further

dumped or subsidized imports are imminent and whether material injury by reason of imports would occur

unless an order is issued or a suspension agreement is accepted.”142 The Commission may not make such a

determination “on the basis of mere conjecture or supposition,” and considers the threat factors “as a

whole.”143 In making our determination, we have considered all factors that are relevant to this

investigation.144 Based on an evaluation of the relevant statutory factors, we determine that there is no

reasonable indication that an industry in the United States is threatened with material injury by reason of

imports of other metal posts weighing 1 pound or less per foot from China that are allegedly sold in the

United States at less than fair value.
 

145 Apparent U.S. consumption, by quantity, declined from *** pounds in 1999 to *** pounds in 2000, and to

*** pounds in 2001. Apparent U.S. consumption increased from *** pounds in interim 2001 to *** pounds in

interim 2002. CR/PR at Table C-5.

 

146 CR/PR at Table C-5.

 

147 Petition at 6, n.4.

 

148 CR at I-13 to I-14 (lack of competition), CR at I-16 to I-17 and n.73 (different prices and unit values); PR at

I-10 to I-11 (lack of competition), PR at I-12 and n.73 (different prices and unit values).

 

149 CR at VII-1, n.1; PR at VII-1, n.1.

 

150 We also note there is no evidence of antidumping duty findings or orders on the subject merchandise in other

countries. 

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We note that, consistent with the decrease in apparent U.S. consumption over the period examined,

the domestic industry is experiencing decline in profitability as well as other performance indicators.145

However, we nonetheless find no reasonable indication of a threat of material injury by reason of the

subject imports.

The evidence in the preliminary phase of this investigation indicates that there are no imports of

other metal posts weighing 1 pound or less per foot.146 We note that Petitioner has expressed concern that

Chinese suppliers “may” produce light-weight tee, farm, or sign posts for sale as lawn or garden fence

posts in contrast with current practice.147 The record suggests that this concern is highly speculative,

especially in light of the lack of competition that currently exists between domestically produced lawn and

garden fence posts and tee- and angle-posts, notwithstanding the fact that the latter appear to be priced

substantially lower than the former on a per-pound basis.148 Because there have been no imports of the

subject merchandise, we find no likelihood of substantially increased imports. We also note that the record

indicates that Hangzhou, which accounted for *** percent of Chinese production of all subject merchandise

(including lawn and garden fence posts), has shipped only lawn and garden fence posts, but not other metal

posts in the requisite weight range, to the United States during the period examined, and has *** to add or

change production capacity or production in China.149 We therefore find that there is no evidence of excess

capacity that likely would result in a substantial increase in imports of “other” fence posts in the imminent

future.150 Given the lack of pricing effects we found above, we see no likelihood that any future imports

will have significant adverse price effects. For similar reasons, there is little, if any, indication in this

investigation that Hangzhou is maintaining significant inventories of subject merchandise or that Hangzhou

is planning to engage in product-shifting in the imminent future. As previously discussed, we found no

adverse impact suffered by the domestic industry due to subject imports of other metal posts. Thus, there

have been no negative effects on the domestic industry’s development and production efforts, by reason of

subject imports. Finally, for the reasons stated above, we do not find any other demonstrable adverse

trends that would indicate imminent harm to the domestic industry by subject imports.

CONCLUSION

For the reasons stated above, we determine that there is no reasonable indication that the domestic

industry producing other fence posts made of steel and/or other metal including tee, farm, and sign posts

weighing 1 pound or less per foot is materially injured or threatened with material injury by reason of

subject imports from China that are allegedly sold in the United States at less than fair value.

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