1-Hydroxyethylidene-1, 1-Diphosphonic

Acid (HEDP) from 

China and India

Investigation Nos. 731-TA-1146-1147 (Preliminary)

Publication 3998 May 2008

Washington, DC 20436
U.S. International Trade Commission

COMMISSIONERS

Daniel R. Pearson, Chairman

Shara L. Aranoff, Vice Chairman

Deanna Tanner Okun

Charlotte R. Lane

Irving A. Williamson

Dean A. Pinkert

Robert A. Rogowsky

Director of Operations

Staff assigned

Nathanael Comly, Investigator

Stephen Wanser, Industry Analyst

James Fetzer, Economist

David Boyland, Accountant

June Brown, Attorney

Mara Alexander, Statistical Specialist

Douglas Corkran, Supervisory Investigator

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436
U.S. International Trade Commission

Washington, DC 20436

www.usitc.gov

1-Hydroxyethylidene-1, 1-Diphosphonic

Acid (HEDP) from 

China and India

Investigation Nos. 731-TA-1146-1147 (Preliminary)

Publication 3998 May 2008

i

C O N T E N T S

Page

Determination .................................................................. 1

Views of the Commission ......................................................... 3

Part I: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Statutory criteria and organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Statutory criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Organization of report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

U.S. market summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Summary data and data sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Previous and related investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Nature and extent of alleged sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

The subject merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Commerce’s scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

The domestic like product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Description and applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Manufacturing processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

Part II: Conditions of competition in the U.S. market ................................ II-1

U.S. market characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Supply and demand considerations ................................................ II-1

U.S. supply ............................................................... II-1

U.S. demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3

Substitutability issues .......................................................... II-4

Factors affecting purchasing decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5

Comparisons of domestic products and subject imports ............................. II-5

Comparisons of domestic products and nonsubject imports .......................... II-7

Comparisons of subject imports and nonsubject imports ............................ II-8

Comparisons of subject products from the subject countries ......................... II-8

Part III: U.S. producers’ production, shipments, and employment ...................... III-1

U.S. producers of HEDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

U.S. capacity, production, and capacity utilization ................................... III-2

U.S. producers’ shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-4

U.S. producers’ imports and purchases ............................................. III-4

U.S. employment, wages, and productivity ......................................... III-4

Part IV: U.S. imports, apparent U.S. consumption, and market shares . . . . . . . . . . . . . . . . . . IV-1

U.S. importers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

The question of negligible imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4

Cumulation considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4

Apparent U.S. consumption and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4

Ratio of imports to U.S. production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-6
ii

C O N T E N T S

Page

Part V: Pricing and related information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Factors affecting prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Raw material costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Transportation costs to the U.S. market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

U.S. inland transportation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Pricing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Sales terms and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Lost sales and lost revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Part VI: Financial experience of the U.S. producer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Operations on HEDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Capital expenditures, research and development expenses, assets, 

and return on investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-4

Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-4

Actual negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-4

Anticipated negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-4

Part VII: Threat considerations and Bratsk information .............................. VII-1

The industry in China .......................................................... VII-2

The industry in India ........................................................... VII-5

U.S. imports subsequent to December 31, 2007 ...................................... VII-6

 U.S. importers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-6

Antidumping duty orders in third-country markets ................................... VII-7

Information of nonsubject sources ................................................ VII-8

“Bratsk” considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-8

Nonsubject source information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-8

Appendixes ....................................................................

A. Federal Register notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

B. List of conference witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

C. Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

D. Price data for nonsubject countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

Note.--Information that would reveal confidential operations of individual concerns may not be published

and therefore has been identified with asterisks ( *** ) in this report.
 1

 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR § 207.2(f)).

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation Nos. 731-TA-1145-1146 (Preliminary)

1-HYDROXYETHYLIDENE-1,1-DIPHOSPHONIC ACID (HEDP) FROM CHINA AND INDIA

DETERMINATION

On the basis of the record1

 developed in the subject investigations, the United States International

Trade Commission (Commission) determines, 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 and India of 1-hydroxyethylidene-1, 1-diphosphonic

acid (HEDP), provided for in subheading 2931.00 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).

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 investigations. 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 (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

investigations need not enter a separate appearance for the final phase of the investigations. 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 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 investigations.

BACKGROUND

On March 19, 2008, a petition was filed with the Commission and Commerce by Compass

Chemical International LLC, Huntsville, TX, alleging that an industry in the United States is materially

injured or threatened with material injury by reason of LTFV imports of 1-hydroxyethylidene-1,1-

diphosphonic acid from China and India. Accordingly, effective March 19, 2008, the Commission

instituted antidumping duty investigation Nos. 731-TA-1146-1147 (Preliminary).

Notice of the institution of the Commission’s investigations and of a public conference to be held

in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S.

International Trade Commission, Washington, DC, and by publishing the notice in the Federal Register

of March 26, 2008 (73 FR 16058). The conference was held in Washington, DC, on April 9, 2008, and

all persons who requested the opportunity were permitted to appear in person or by counsel.

 1

 19 U.S.C. §§ 1671b(a), 1673b(a); see, e.g., Co-Steel Raritan, Inc. v. United States, 357 F.3d 1294 (Fed. Cir.

2004); American Lamb Co. v. United States, 785 F.2d 994, 1001-04 (Fed. Cir. 1986); Aristech Chemical Corp. v.

United States, 20 CIT 353, 354 (1996). No party argued that the establishment of an industry is materially retarded

by reason of the allegedly unfairly traded imports.

 2

 American Lamb, 785 F.2d at 1001; see also Texas Crushed Stone Co. v. United States, 35 F.3d 1535, 1543

(Fed. Cir. 1994).

 3

 Petition at 2.

-3-

VIEWS OF THE COMMISSION

Based on the record in the preliminary phase of these investigations, we find a reasonable

indication that an industry in the United States is materially injured by reason of imports of 1-

hydroxyethylidene-1, 1-diphosphonic acid (HEDP) from China and India that are allegedly sold in the

United States at less than fair value.

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.1

 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.”2

II. BACKGROUND

Compass Chemical International LLC (“Compass”) filed an antidumping duty petition on March

19, 2008, regarding allegedly unfairly traded imports of HEDP from China and India. Headquartered in

Huntsville, Texas, Compass produces HEDP at its facility in Smyrna, Georgia, which it acquired in July

2006.3

 Representatives of Compass appeared at the staff conference accompanied by counsel, and

Compass filed a postconference brief. Also appearing at the staff conference and filing postconference

briefs were representatives of Aquapharm Chemicals Pvt. Ltd. (an Indian producer, exporter, and

importer of HEDP), Buckman Laboratories, Inc. (an end user), and Zibex, Inc. (a distributor),

accompanied by their counsel (hereinafter, “Indian Respondents”); a representative of Uniphos, Inc. (an

HEDP importer); and counsel representing Chinese HEDP producers Jiangsu Jianghai Chemical Group

Co., Ltd., Changzhou Kewei Fine Chemical Co., Ltd., Wujin Fine Chemical Factory Co., Ltd., and

Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer Factory

(collectively, the Ad Hoc Water Treatment Chemical Producers Committee; hereinafter, “Chinese

Respondents”).

III. DOMESTIC LIKE PRODUCT

A. In General

In determining 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
 4

 19 U.S.C. § 1677(4)(A).

 5

 19 U.S.C. § 1677(4)(A).

 6

 19 U.S.C. § 1677(10).

 7

 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).

 8

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

 9

 Nippon, 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 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 to prevent

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

 10 See, e.g., USEC, Inc. v. United States, Slip Op. 01-1421at 9 (Fed. Cir. April 25, 2002) (“The ITC may not

modify the class or kind of imported merchandise examined by Commerce.”); Algoma Steel Corp. v. United States,

688 F. Supp. 639, 644 (Ct. Int’l Trade 1988), aff’d, 865 F.3d 240 (Fed. Cir.), cert. denied, 492 U.S. 919 (1989).

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

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

Supp. at 748-52 (affirming Commission determination of six like products in investigations where Commerce found

five classes or kinds).

 12 Acciai Speciali Terni S.p.A. v. United States, 118 F. Supp. 2d 1298, 1304-05 (Ct. Int’l Trade 2000); Nippon,

19 CIT at 455; Asociacion Colombiana de Exportadores de Flores v. United States, 693 F. Supp. 1165, 1169 n.5 (Ct.

(continued...)

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Commission first defines the “domestic like product” and the “industry.”4 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.”5

 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.”6

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.7

 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.8

 The

Commission looks for clear dividing lines among possible like products and disregards minor variations.9

Although the Commission must accept the determination of Commerce as to the scope of the allegedly

unfairly traded imported merchandise,10 the Commission determines what domestic product is like the

imported articles Commerce has identified.11 The Commission must base its domestic like product

determination on the record in these investigations. The Commission is not bound by prior

determinations, even those pertaining to the same imported products, but may draw upon previous

determinations in addressing pertinent like product issues.12
 12 (...continued)

Int’l Trade 1988) (particularly addressing like product determination); Citrosuco Paulista, S.A. v. United States, 704

F. Supp. 1075, 1087-88 (Ct. Int’l Trade 1988).

 13 73 Fed. Reg. 20023 (April 14, 2008).

 14 Confidential Report (“CR”) at I-6, Public Report (“PR”) at I-4-5.

 15 CR at 1-6-8, PR at I-4-6; Petition at 3-6.

 16 Petition at 22-24.

-5-

B. Product Description

In its notice of initiation, Commerce defined the imported merchandise within the scope of these

investigations as:

all grades of aqueous, acidic (non-neutralized) concentrations of 1-hydroxyethylidene-1,

1-diphosphonic acid, also referred to as hydroxyethylidenediphosphonic acid,

hydroxyethanediphosphonic acid, acetodiphosphonic acid, and etidronic acid. The CAS

(Chemical Abstract Service) registry number for HEDP is 2809-21-4. The merchandise

subject to these investigations is currently classified in the Harmonized Tariff Schedule

of the United States (HTSUS) at subheading 2931.00.9043. It may also enter under

HTSUS subheading 2811.19.6090. While HTSUS subheadings are provided for

convenience and customs purposes only, the written description of the scope of these

investigations is dispositive.13

C. Analysis and Conclusion

Compass asks the Commission to define a single domestic like product, consisting of all HEDP

consistent with the scope. No party objects to the Petitioner’s proposed definition. We considered

whether the domestic like product should be expanded to include chemical products similar to HEDP. 

As we explain below, we define the domestic like product as all HEDP, coextensive with the scope of

these investigations.

Physical Characteristics and Uses. HEDP belongs to a class of chemicals known as

phosphonates, which are added to water to increase the solubility of certain ions and to inhibit the

precipitation of certain mineral compounds. Other phosphonates include ATMP and other AMPs

(aminomethylenephosphonates), as well as PBTC (2-Phosphabutane-1, 2, 4-tricarboxylic acid). A second

group of chemicals, known as polyphosphates, has similar uses. As “chelating agents,” certain

phosphonates and polyphosphates are used to treat water systems by inactivating metal ions in the water.14

The polyphosphates include SHMP (sodium hexametaphosphate).15

HEDP possesses a unique chemical formula and physical properties. It is water-soluble, white or

pale yellow in color, has a chloride level of less than 0.1 percent, and is generally sold commercially in a

60-percent aqueous solution. With respect to similar products, while PBTC and all AMPs are liquid like

HEDP, polyphosphates are generally solids. ATMP contains almost 1 percent chloride, and other AMPs

contain as much as 15 percent, whereas HEDP, PBTC, and the polyphosphates contain less than 0.1

percent chloride. While HEDP and PBTC are nearly colorless and are chlorine stable, AMPs are amber

and darker in color and polyphosphates are generally white solids, and neither AMPs nor polyphosphates

are chlorine (or hypochlorite, i.e., bleach) stable.16

In addition to differences in physical and chemical properties, the other phosphonates and

polyphosphates differ from HEDP with respect to use. Among these products, only HEDP is suitable for
 17 Petition at 6-7, 22-24.

 18 Petition at 5.

 19 CR at II-6, PR at II-4; Petition at 22-24.

 20 CR at I-9-11, PR at I-7; Petition at 25.

 21 CR at I-8-9, PR at I-6-7.

 22 Petition at 26-27.

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all the following uses: industrial water treatment, such as cooling and boiler water treatment, to prevent

the formation of scales that can foul heat transfer surfaces; in municipal water systems, to prevent the

precipitation of iron and manganese oxides from turning the water red or black; to inhibit scale in

desalination; in swimming pool applications, for stain and scale control; in industrial and institutional

detergents and cleansers and personal care products; and for peroxide bleach stabilization. Due to its

hydrolytic stability and ability as a scale inhibitor, HEDP is preferred over polyphosphates, such as

SHMP, in industrial water treatment. Among the phosphonates, PBTC and other AMPs cannot be used in

boiler water treatment, PBTC cannot be used in desalination and for peroxide stabilization, and, according

to Petitioner, HEDP is the only phosphonate used in municipal water treatment and for personal care

products, specifically bar soap preservation.17

Interchangeability. All HEDP is inherently technical grade, meaning there is no food grade. All

domestically produced HEDP is certified by the National Sanitation Foundation (“NSF”) under its

Standard 60 as a potable or drinking water additive, based on the product’s purity and its manufacturing

process.18 As indicated above, different physical and chemical properties limit the interchangeability of

HEDP with the polyphosphates and other phosphonates. For example, polyphosphates do not possess

hydrolytic stability or chlorine stability and degrade under many of the high temperature conditions in

which phosphonates are used. Because of its instability in the presence of chlorine, its darker color, and

its higher chlorine level, ATMP is not completely interchangeable with HEDP. Other AMPs are not fully

interchangeable with HEDP as calcium carbonate scale inhibitors because of their sensitivity to chlorine,

higher level of chlorides, and darker color. According to Petitioner, there are no real substitutes for

HEDP in municipal water treatment, swimming pool stain and scale control and as a bar soap

preservative.19

Channels of distribution. HEDP and the other phosphonates, as well as polyphosphates, are all

sold in the same channels of distribution: to distributors or resellers; to compounders or formulators who

blend the chemical product with other components to form a complete treatment system; and occasionally

to end users. Distributors and compounders both buy in bulk tank truck quantities or in truckload drum

quantities. End-users generally buy directly from producers when they have a bulk requirement.20

Common Manufacturing Facilities, Production Processes, and Production Employees. HEDP is

generally manufactured in glass-lined reactors, using as the raw material either phosphorus acid or

phosphorus trichloride. Both processes generate acetic acid as the co-product.21 Compass uses the same

production employees to make both HEDP and ATMP, but the equipment is generally dedicated to the

manufacture of HEDP, which employs a two-reactor system, whereas other phosphonates require only

one reactor.22

Producer/Customer Perceptions. Producers and customers generally perceive HEDP as having

distinct physical, chemical, and functional properties such that polyphosphates, ATMP and other AMPs
 23 CR at II-6, PR at II-4; Petition at 25-26.

 24 Petition at 27.

 25 19 U.S.C. § 1677(4)(A).

 26 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).

 27 CR at III-4-5, PR at III-2-3.

 28 Because Compass’s acquisition of the HEDP facility occurred in July 2006, staff included in the period

examined not only data for full years 2005, 2006, and 2007, but also for the periods July-December 2006 and JulyDecember 2007.

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and phosphonates are not viable substitutes. Customers select HEDP for its performance or costperformance advantages over other phosphonates and polyphosphates.23

Price. There are price differences between HEDP and the other phosphonates and

polyphosphates due to differences in the manufacturing process and the cost of raw materials. For

example, PBTC is more expensive to manufacture because of higher cycle times and raw material costs;

therefore, its selling price is higher than that for HEDP.24

Thus, the evidence supports defining the like product as HEDP, coextensive with the scope. 

While other phosphonates and polyphosphates can be used in some of the same applications as HEDP,

overlap in end uses is limited because of HEDP’s unique chemical, physical, and functional properties. 

None of these products can be used in all of the applications in which HEDP is used. The general

perception among customers, as well as producers, is that the products are not generally interchangeable. 

While ATMP is made using the same employees as HEDP, the reactor equipment is dedicated to the

manufacture of HEDP alone. Differences in the manufacturing processes and raw materials used result in

differences in the prices of HEDP as compared to the other products. While HEDP generally moves in

the same channels of distribution as the other phosphonates and polyphosphates, this factor alone does not

warrant expanding the like product.

In light of these facts and in the absence of any contrary arguments, we define the domestic like

product as coextensive with the scope and consisting of all HEDP.

IV. DOMESTIC INDUSTRY

The domestic industry is defined 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.”25 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.26

A. Domestic Producers

The evidence gathered in this preliminary phase indicates that Compass is currently the sole

domestic producer of HEDP. In July 2006, Compass acquired its HEDP manufacturing facility in

Smyrna, Georgia, from Lynx Chemical Group, which is no longer in business. From 2005 through June

2006, Lynx was the sole U.S. producer of HEDP, and ***.27 Given our definition of the domestic like

product as HEDP, we find that the domestic industry includes all domestic producers of HEDP during the

period examined.28
 29 19 U.S.C. § 1677(4)(B).

 30 The statute defines related parties in terms of direct or indirect control: 

(B) RELATED PARTIES. – 

(i) If a producer of a domestic like product and an exporter or importer of the subject merchandise

are related parties, or if a producer of the domestic like product is also an importer of the subject

merchandise, the producer may, in appropriate circumstances, be excluded from the industry.

19 U.S.C. § 1677(4)(B). A producer and an exporter or importer shall be considered to be related parties if the

producer directly or indirectly controls the exporter or importer, the exporter or importer directly or indirectly

controls the producer, a third party directly or indirectly controls the producer and the exporter or importer, or the

producer and the exporter or importer directly or indirectly control a third party. 19 U.S.C. § 1677(4)(B)(ii). Direct

or indirect control exists when “the party is legally or operationally in a position to exercise restraint or direction

over the other party.” 19 U.S.C. § 1677(4)(B). 

 31 19 U.S.C. § 1677(4)(B). The primary factors the Commission has examined in deciding whether appropriate

circumstances exist to exclude a related party include:

(1) the percentage of domestic production attributable to the importing producer;

(2) the reason the U.S. producer has decided to import the product subject to investigation,

i.e., whether the firm benefits from the LTFV sales or subsidies or whether the firm must

import in order to enable it to continue production and compete in the U.S. market, and 

(3) the position of the related producer vis-a-vis the rest of the industry, i.e., whether

inclusion or exclusion of the related party will skew the data for the rest of the industry.

See, e.g., Torrington Co. v. United States, 790 F. Supp. 1161 (Ct. Int’l Trade 1992), aff’d mem., 991 F.2d 809 (Fed.

Cir. 1993). The Commission has also considered the ratio of import shipments to U.S. production for related

producers and whether the primary interest of the related producer lies in domestic production or importation. See,

e.g., Open-End Spun Rayon Singles Yarn from Austria, Inv. No. 731-TA-751 (Prelim.), USITC Pub. 2999 at 7 n.39

(Oct. 1996). These latter two considerations were cited as appropriate factors as well in Allied Mineral Products,

Inc. v. United States, Slip Op. 04-139 at 6 (Ct. Int’l Trade Nov. 12, 2004).

 32 CR/PR at Table III-1, CR at III-4, PR at III-3.

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B. Related Parties

The related parties provision of the statute requires the Commission to determine whether any

producer of the domestic like product should be excluded from the domestic industry pursuant to section

19 U.S.C. § 1677(4)(B). That provision allows the Commission, if appropriate circumstances exist, to

exclude from the domestic industry producers that are related to an exporter or importer of subject

merchandise or which are themselves importers.29 Applying the provision involves two steps. First, the

Commission must determine whether a domestic producer meets the definition of a related party.30

Second, if a producer is a related party, the Commission may exclude it from the domestic industry if 

“appropriate circumstances” exist.31

Compass meets the definition of a related party, but no party argues that appropriate

circumstances exist for its exclusion under the related parties provision. In 2007, Compass merged with

Cathay Pigments USA, Inc., to form Cathay Industries (USA), which is a wholly-owned subsidiary of

Cathay Pigments (Holdings) Ltd. (“Cathay”). Compass’s parent also owns ***. Compass is therefore

affiliated with a Chinese exporter of HEDP through its parent, Cathay.32 In addition, Compass, which

was solely an importer of HEDP before it acquired the Smyrna, Georgia, facility, continued to import

HEDP from China even after it acquired the facility and began domestic production of HEDP. 
 33 CR/PR at Table III-5. 

 34 CR/PR at Table III-5; Conference Tr. at 23. Compass also purchased a *** amount of subject imports in 2007

(*** pounds), reportedly ***. CR at III-11, PR at III-4. 

 35 CR/PR at Table III-5.

 36 Compass’s Importer’s Questionnaire Response at II-4.

 37 Conference Tr. at 21.

 38 CR at IV-6-7, PR at IV-4, CR/PR at Table IV-3.

 39 CR at III-4, n.7, PR at III-2, n.7; Conference Tr. at 21-22.

 40 See Tetrahydrofurfuryl Alcohol from China, Inv. No. 731-TA-1046 (Preliminary), USITC Pub. 3620 (August

2003) at n.20 (“As it has been the sole domestic producer throughout the POI, however, appropriate circumstances

do not exist to exclude it from the domestic industry.”). See also, Industrial Nitrocellulose from Brazil, China,

France, Germany, Japan, Korea, the United Kingdom, and Yugoslavia, Inv. Nos. 731-TA-96 and 439-445 (Review),

USITC Pub. 3342 (August 2000) at 8 (sole domestic producer not excluded); Drafting Machines from Japan, Inv.

No. 731-TA-432 (Review), USITC Pub. 3252 (November 1999) at 5.

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Compass’s status as an importer of subject product and arguably its affiliation with a Chinese exporter of

HEDP make it a related party under the statute.

Despite importing *** quantities of subject merchandise, Compass’s primary interest has shifted

to domestic production. Compass began domestic production in the second half of 2006 and increased its

domestic production from *** pounds in 2006 to *** pounds in 2007.33 Meanwhile, Compass’s imports

of subject merchandise fell from *** pounds in 2006 to *** pounds in 2007, and it reportedly ceased

importing subject merchandise in the first quarter of 2008.34 The ratio of Compass’s subject imports to its

U.S. production fell from *** percent in 2006 to *** percent in 2007, consistent with Compass’s shift in

focus from imports to U.S. production.35 Compass reported that it continued to import because the ***.36

Compass asserts, however, that its goal in acquiring the Lynx facility was to supply its customers with

domestic product rather than imports.37 While Compass’s imports from China decreased by *** percent

in 2007, imports from China by all other importers increased by *** percent over the same period.38

In these investigations, although Compass’s subject imports during the period were considerable,

they did decline, and Compass most recently has reportedly ceased all imports and appears committed to

its domestic production, having invested in excess of $2 million in capital improvements at its plant site.39

Moreover, where the sole domestic producer is also a related party, the Commission previously has found

that appropriate circumstances do not exist to exclude that producer (essentially leaving no domestic

industry) under the related parties provision.40

We therefore find that the domestic industry consists of all U.S. producers of HEDP, with

Compass and its predecessor being the sole domestic producer during the period examined, and do not

find it appropriate to exclude any producer under the related parties provision.
 41 Pursuant to Section 771(24) of the Act, imports from a subject country of merchandise corresponding to a

domestic like product that account for less than three percent of all such merchandise imported into the United States

during the most recent 12 months for which data are available preceding the filing of the petition shall be deemed

negligible. 19 U.S.C. §§ 1671b(a), 1673b(a), 1677(24)(A)(i)(i). For purposes of deciding negligibility, the

Commission is authorized to make “reasonable estimates on the basis of available statistics” of pertinent import

levels. 19 U.S.C. § 1677(24)(C); see also The Uruguay Round Agreements Act, Statement of Administrative

Action, H.R. Doc. No. 103-316, Vol. 1 at 186 (1994) (“SAA”).

No party argued that subject imports from China or India are negligible. Petitioner asserted that the only

other source of imports of HEDP into the U.S. market during the period examined was the United Kingdom, and the

evidence gathered in this preliminary phase does not indicate other sources of non-subject imports. CR at IV-3, n.4,

PR at IV-1, n.4. 

Because the HTS subheadings for HEDP also include non-subject merchandise, staff relied on importer

questionnaire data for the import statistics presented in the staff report. These data indicate that in 2007, the most

recent 12-month period preceding the filing of the petition for which data were available, subject imports from China

accounted for *** percent of total HEDP imports and subject imports from India accounted for *** percent of total

HEDP imports. CR at IV-8, PR at IV-4. Clearly, then, subject imports from each country were well above the three

percent negligibility threshold under the statute, and we find that subject imports from China and India are not

negligible.

 42 19 U.S.C. § 1677(7)(G)(i).

 43 See Certain Cast-Iron Pipe Fittings from Brazil, the Republic of Korea, and Taiwan, Invs. Nos. 731-TA-278-

280 (Final), USITC Pub. 1845 (May 1986), aff’d, Fundicao Tupy, S.A. v. United States, 678 F. Supp. 898 (Ct. Int’l

Trade), aff’d, 859 F.2d 915 (Fed. Cir. 1988).

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V. CUMULATION41

A. In General

For purposes of evaluating the volume and price effects for a determination of material injury by

reason of the subject imports, section 771(7)(G)(i) of the Act requires the Commission to cumulate

subject imports from all countries as to which petitions were filed and/or investigations self-initiated by

Commerce on the same day, if such imports compete with each other and the domestic like product in the

U.S. market.42 In assessing whether subject imports compete with each other and with the domestic like

product, the Commission has generally considered four factors:

(1) the degree of fungibility between the subject imports from different countries and

between imports and the domestic like product, including by reference to specific

customer requirements and other quality-related questions;

(2) the presence of sales or offers to sell subject imports from different countries and

the domestic like product in the same geographic markets;

(3) the existence of common or similar channels of distribution for subject imports

from different countries and the domestic like product; and

(4) whether the subject imports and domestic like product are simultaneously present

in the market.43

Although no single factor is necessarily determinative, and the list of factors is not exhaustive,

these factors are intended to provide the Commission with a framework for determining whether the
 44 See, e.g., Wieland Werke, AG v. United States, 718 F. Supp. 50 (Ct. Int’l Trade 1989).

 45 Commissioner Lane notes that, with respect to fungibility, her analysis does not require such similarity of

products that a perfectly symmetrical fungibility is required and that this factor would be better described as an

analysis of whether subject imports from each country and the domestic like product could be substituted for each

other. See Separate Views of Commissioner Charlotte R. Lane, Certain Lightweight Thermal Paper from China,

Germany, and Korea, Inv. Nos. 701-TA-451 and 731-TA-1126-1128 (Preliminary), USITC Pub. 3964 (Nov. 2007).

 46 The SAA states that “the new section will not affect current Commission practice under which the statutory

requirement is satisfied if there is a reasonable overlap of competition.” SAA at 848 (citing Fundicao Tupy, S.A. v.

United States, 678 F. Supp. 898, 902 (Ct. Int’l Trade 1988)), aff’d 859 F.2d 915 (Fed. Cir. 1988); Goss Graphic

Systems, Inc. v. United States, 33 F. Supp. 2d 1082, 1087 (Ct. Int’l Trade 1998) (“cumulation does not require two

products to be highly fungible”); Wieland, 718 F. Supp. at 52 (“Completely overlapping markets are not required.”).

 47 Petitioner’s Postconference Brief at 10-13.

 48 Petitioner’s Postconference Brief at 8-10.

 49 Chinese Respondents’ Postconference Brief at 8-10.

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subject imports compete with each other and with the domestic like product.44 45 Only a “reasonable

overlap” of competition is required.46

B. Parties’ Arguments

Petitioner. Compass argues for cumulation of subject imports from China and India. With

respect to fungibility, Compass characterizes HEDP as a commodity product, not a “specialty chemical.”

It argues that importer questionnaire responses all indicated that the Chinese and Indian products are

“sometimes,” “frequently,” or “always” interchangeable. Petitioner urges the Commission to reject the

Indian Respondents’ argument that the NSF certification of the Indian product limits its competition with

the Chinese product, pointing out that one of the *** Chinese producers, Wujin Fine Chemical Factory, is

NSF-certified; the percentage of the U.S. market that requires NSF-certified product is relatively small,

estimated to range from 5 to 20 percent; and not all imports from India are NSF-certified.47 With respect

to the other cumulation factors, Compass argues that the subject imports were simultaneously present in

the U.S. market; the channels of distribution are similar in that the majority of domestically produced

HEDP and of subject imports from both countries was sold to compounders in 2007; and there is overlap

in geographic markets for the subject imports and the domestic product.48

Chinese Respondents. The Chinese Respondents argue that cumulation is appropriate and point

out that Aquapharm is the only Indian producer that is NSF-certified, that other Indian producers sell

HEDP into the U.S. market, and that at least one Chinese producer has become NSF-certified.49 

Indian Respondents. Indian Respondents argue against cumulation on the basis that the majority

of HEDP imported into the U.S. market from India is NSF-certified, whereas subject imports from China

generally are not NSF-certified. They state that Indian exporter Aquapharm, which accounted for *** of

all HEDP exported from India in 2007, sells 80 percent of its U.S. exports to Buckman Laboratories,

which only purchases NSF-certified product. Only NSF-certified HEDP can be used in swimming pool

and spa applications, as well as in desalination. According to Indian Respondents, NSF certification of an

HEDP plant takes about six months, including the submission to NSF authorities in the United States of

samples for testing and an on-site inspection by U.S. officials of the plant abroad. NSF-certified HEDP is

“of high quality with only low trace minerals.” Because most Chinese HEDP does not meet the quality

levels necessary to obtain NSF certification, it is not interchangeable with Indian HEDP for those

customers who require NSF certification. Regardless of the size of the U.S. market requiring NSF
 50 Indian Respondents’ Postconference Brief at 6-9.

 51 See 19 U.S.C. § 1677(7)(G)(ii).

 52 CR at I-9, PR at I-7; Petition at 5.

 53 CR at 1-10-11, II-8, PR at I-7, II-5, CR/PR at Table VII-1.

 54 Conference Tr. at 32, 106.

 55 Conference Tr. at 143.

 56 CR/PR at Table II-1.

 57 Conference Tr. at 90, 106.

 58 Conference Tr. at 43.

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certification, which is estimated to range from 5 to 20 percent, Indian product is concentrated in this

market sector, in which Chinese product does not compete, according to the Indian Respondents.50

C. Analysis

In these investigations, the threshold criterion is satisfied because the antidumping duty petition

with respect to both of the subject countries was filed on the same day. None of the cumulation

exceptions apply.51 Subject imports from China and India thus are eligible for cumulation. We

consequently examine whether there is a reasonable overlap of competition between subject imports from

China and India, as well as between subject imports and the domestic like product. 

1. Fungibility

While HEDP, as described above, has a variety of applications, its physical and chemical

properties are distinct and do not change according to end use. All HEDP is inherently technical grade,

meaning there is no food grade.52 All domestically produced HEDP is NSF-certified as a potable or

drinking water additive, based on the product’s purity and its manufacturing process. The largest Indian

producer and exporter to the United States, Aquapharm, and one of the *** Chinese producers, Wujin

Fine Chemical Factory, are also NSF-certified.53 While NSF-certified HEDP may be considered of higher

quality, fully traceable, and with fewer impurities, and may be required by certain customers, the portion

of the market requiring NSF certification is estimated at only 5 to 20 percent.54 The Petitioner

characterizes HEDP generally as a commodity chemical, noting that NSF-certified product is sold for all

applications.55 Importer questionnaire responses all indicated that the Chinese and Indian product are

“sometimes,” “frequently,” or “always” interchangeable and that the U.S. product is “frequently” or

“always” interchangeable with the Indian product and “sometimes,” “frequently,” or “always”

interchangeable with the Chinese product.56 Buckman, a compounder, and Zibex, a distributor, testified

that they purchase both U.S. and Indian product, indicating that the two are interchangeable.57 In

addition, Compass indicated that it often commingles its domestic production with its imports from China

and that certain customers are indifferent as to the country of origin of the HEDP they purchase.58

Despite the higher proportion of subject imports from India that are NSF-certified, the subject

imports from each country appear to be relatively interchangeable with each other and the domestic like

product. HEDP is all technical grade, and the portion of the market requiring NSF certification is

relatively small. Moreover, NSF-certified product can be used in all applications and is not limited to

uses involving potable water, such as municipal water systems, spas and swimming pools. Thus, there
 59 U.S. Producer’s Questionnaire Response at IV-11.

 60 CR/PR at Table IV-4.

 61 Indian Respondents’ Postconference Brief at 5, Ex. 2.

 62 CR/PR at II-1, Table I-3; Conference Tr. at 80-81.

 63 CR/PR at II-1.

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appears to be a reasonable degree of fungibility among the subject imports from each country and the

domestic like product. 

2. Geographic Overlap

The record indicates that in 2007, most of the U.S. product (*** percent) was shipped to the

Midwest, followed by *** percent to the Northeast, *** percent to the Southeast, *** percent to the

Central Southwest, and *** percent) to the Pacific Coast.59 These proportions vary somewhat for the

subject imports, due to factors such as transportation costs, with a higher percentage of certain imports

being shipped to the Pacific Coast, for example. Although the proportions differ, however, subject

imports generally serve many of the same geographic markets as the U.S. product. In 2007, the largest

single share of subject imports from China (*** percent) was shipped to the Midwest, followed by ***

percent to the Pacific Coast, *** percent to the Northeast, *** percent to the Southeast, *** percent to the

Central Southwest, and *** percent to the Mountain States. For imports from India, *** percent was

shipped to the Southeast, *** percent to the Central Southwest, *** percent to the Midwest, and ***

percent to the Northeast.60 While these data indicate a somewhat limited geographic overlap between

subject imports from China and India with respect to current sales, the Indian Respondents have also

acknowledged offers to sell during the period to customers in diverse geographic regions.61 On balance,

therefore, the record indicates a reasonable degree of geographic overlap among the subject imports from

each country and the domestic product.

3. Channels of Distribution

Both domestic and imported HEDP are sold *** to distributors and to compounders or

formulators, who blend HEDP with other components and sell it to an end user, such as an oil refinery or

a steel producer. A *** proportion of HEDP is sold directly to end users, such as electric utilities.62

According to questionnaire responses, the U.S. producer shipped *** HEDP to end users in 2007, and its

shipments to compounders increased from *** percent of U.S. shipments in 2005 to *** percent in 2007,

with *** to distributors in each year of the period examined. For subject imports from China, shipments

to compounders decreased from *** percent of U.S. shipments in 2005 to *** percent in 2007, and

shipments to distributors increased from *** percent in 2005 to *** percent in 2007, with the remainder

to end users. For subject imports from India, shipments to compounders decreased from *** percent of

U.S. shipments in 2005 to *** percent in 2007, and shipments to distributors increased from *** percent

in 2005 to *** percent in 2006, and then fell to *** percent in 2007.63 The record thus indicates a

reasonable overlap in the channels of distribution for subject imports from China and India and the

domestic like product.
 64 CR/PR at Table C-1.

 65 19 U.S.C. §§ 1671b(a), 1673b(a).

 66 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 ... {and} explain in full its relevance to the determination.” 

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

 67 19 U.S.C. § 1677(7)(A).

 68 19 U.S.C. § 1677(7)(C)(iii).

 69 19 U.S.C. § 1677(7)(C)(iii).

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4. Simultaneous Presence

The record indicates that domestic shipments of HEDP, as well as HEDP produced in China and

India, were present in the U.S. market throughout the period for which data were collected.64

5. Conclusion

For all of the above reasons, we conclude that there is a reasonable overlap of competition

between subject imports from China and India and between subject imports from both countries and the

domestic like product. We therefore cumulatively assess the volume and effects of subject imports for

purposes of determining whether there is a reasonable indication of material injury to the domestic

industry by reason of subject imports.

VI. REASONABLE INDICATION OF MATERIAL INJURY BY REASON OF 

SUBJECT IMPORTS OF HEDP FROM CHINA AND INDIA

In the preliminary phase of antidumping or countervailing 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.65 In making this determination, the Commission

must consider the volume of subject 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.66 The statute defines “material injury” as “harm which is not inconsequential, immaterial, or

unimportant.”67 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.68 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.”69 For the reasons stated below, we determine that there is a reasonable indication

that the domestic industry producing HEDP is materially injured by reason of subject imports from China

and India.
 70 The applicability of the captive production provision, which requires the Commission to focus its analysis

primarily on the merchant market, 19 U.S.C. § 1677(7)(C)(iv), does not appear to be an issue in these investigations,

even though the domestic producer internally consumes some of the HEDP it produces. It does not appear that the

threshold criterion of the statute is satisfied here. That criterion requires that “domestic producers internally transfer

significant production of the domestic like product for the production of a downstream article,” in addition to selling

significant production of the domestic like product in the merchant market. 19 U.S.C. § 1677(7)(C)(iv) (emphasis

added). In this case, the domestic producer’s internal consumption of HEDP, as a percentage of its total production,

ranged from *** percent in 2005 to *** percent in 2006 and *** percent in 2007. See CR/PR at Tables III-2, III-3,

n.1. Given the insignificant percentage of HEDP that is internally consumed by the domestic producer, we find the

threshold criterion is not met and the captive production provision is therefore not applicable. See, e.g., DRAMs

and DRAM Modules from Korea, Inv. No. 701-TA-431 (Preliminary), USITC Pub. 3569 (December 2002) at 14,

n.73 (captive production provision not applicable where threshold criterion not met).

 71 CR at I-9, PR at I-7.

 72 Conference Tr. at 143.

 73 Conference Tr. at 86-87.

 74 CR at II-8, PR at II-5.

 75 CR at II-6, PR at II-4; Petition at 22-24.

 76 CR at II-6, PR at II-4.

 77 CR at II-6-7, PR at II-4; Conference Tr. at 53-54, 115-116; ***.

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A. Conditions of Competition and the Business Cycle

The following conditions of competition70 inform our analysis of whether there is a reasonable

indication of material injury by reason of the subject imports.

1. Product Considerations

All HEDP is considered technical grade, and there is no food grade.71 Compass asserts that

HEDP is a commodity product,72 with subject imports and the domestic like product competing mostly on

the basis of price. Indian producer Aquapharm characterizes the HEDP it produces, which is all NSFcertified, as a “semi-specialty product.” It notes that it seeks to accommodate its customers’ special

needs, providing them logistical, analytical, and applications support for the HEDP they purchase.73

Some customers consider HEDP produced in an NSF-certified plant to be of higher quality, with

lower trace elements than non-certified HEDP. As noted above, Compass’s production and that of Indian

producer Aquapharm and of Chinese producer Wujin Fine Chemical Factory are all NSF-certified.74

Compass argues that no single chemical product can substitute for HEDP in all of its end uses.75

Respondents and importers indicated that there are at least some substitutes for HEDP.76

The reported share of the total cost of end products accounted for by HEDP is generally low for

most products, ranging from 20 to 25 percent for typical applications, such as water treatment and

desalination, but accounting for as much as 100 percent for ***.77

2. Demand Considerations

As described above, HEDP can be used for several applications, and HEDP demand thus varies

according to the demand for these end-use products. Apparent U.S. consumption of HEDP increased
 78 CR/PR at Table C-1.

 79 Conference Tr. at 39 (Failon).

 80 CR at II-5, PR at II-3-4.

 81 Chinese Respondents’ Postconference Brief at 2-5.

 82 Conference Tr. at 129-130; Indian Respondents’ Postconference Brief at 2, 3-4.

 83 CR/PR at Tables IV-6, C-1.

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overall during the period examined in this preliminary phase from *** pounds in 2005 to *** pounds in

2007.78 Compass characterized HEDP as a growth product, with applications such as desalination,

municipal water treatment, and swimming pool use expected to continue to drive growth in demand.79

Five of ten importers responding to the Commission’s questionnaires said demand in the United

States has not changed since 2005, while two importers said it had increased, two said it had fluctuated,

and one said it had decreased. The U.S. producer and the importers generally agreed that demand outside

the United States has increased since 2005.80

The Chinese Respondents assert that the availability of HEDP is more important to purchasers

than price and that there is a “real question” whether the domestic industry can supply all U.S. demand. 

They further note that customers want to have alternate sources in the event of supply disruptions due to

plant shutdowns because of chemical spills or explosions, adverse weather conditions, and normal work

stoppages.81

The Indian Respondents emphasize the importance of long-term relationships between customers

and suppliers of HEDP. Purchasers of both Indian and U.S. product testified that they value the product

being delivered when needed and with the necessary technical support.82

We will explore further in any final phase of these investigations the importance of non-price

factors, such as availability and reliability of supply, technical support, and long-term relationships, in

purchasing decisions.

3. Supply Considerations

There are three sources of supply in the U.S. market: imports of subject merchandise from China

and India, non-subject imports from the United Kingdom, and domestically produced HEDP. U.S.

producers’ share of the quantity and value of apparent U.S. consumption of HEDP decreased overall from

2005 to 2007, while the market share held by subject imports from China and India both increased overall

in terms of quantity and value. The domestic industry’s market share by quantity was *** percent in

2005, *** percent in 2006, and *** percent in 2007. The market share of subject imports from China by

quantity was *** percent in 2005, *** percent in 2006, and *** percent in 2007. The market share of

subject imports from India by quantity was *** percent in 2005, *** percent in 2006, and *** percent in

2007. Throughout the period for which data were collected, non-subject imports from the United

Kingdom accounted for a substantial share of the U.S. market, at *** percent by quantity in 2005, ***

percent in 2006, and *** percent in 2007.83

a. The Domestic Producer/Importer

Compass is the only known current producer of HEDP in the United States. Compass acquired

its HEDP manufacturing plant in Smyrna, Georgia, in July 2006 from Lynx Chemical Group, which is no
 84 CR at III-4-5, n.15, PR at III-2-3, n.15.

 85 CR/PR at IV-1, Tables III-1, n.2, IV-1, n.6.

 86 CR/PR at IV-1.

 87 CR/PR at IV-1.

 88 CR at IV-6-7, PR at IV-4.

 89 Conference Tr. at 23.

 90 Petition at 21. In any final phase investigation, we intend to seek additional information on Compass’s

acquisition of the Smyrna facility, including its business plan associated with the purchase of the facility.

 91 The Chinese Respondents assert that, when Compass was solely importing and not producing HEDP, it drove

out all the other U.S. producers, destabilized the market, and, with a monopoly on U.S. production, now seeks to

limit competition from imports. Chinese Respondents’ Postconference Brief at 2-3.

 92 CR at IV-1, VII-6, PR at IV-1, VII-5.

 93 CR at VII-6-8, PR at VII-5, CR/PR at Table VII-3.

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longer in business. Lynx owned and operated the plant from 2004 through June 2006, when it

manufactured HEDP under an agreement with ***.84 Although ***. ***.85

From 2005 through June 2006, when Lynx owned and operated the only HEDP production

facility in the United States, Compass was solely an importer of HEDP, and it continued to import after it

became a U.S. producer in July 2006.86 Compass accounted for *** percent of the quantity of HEDP

imported from China in 2005, *** percent in 2006, and *** percent in 2007.87 Subject imports by

Compass increased by *** percent from 2005 to 2006. After it acquired the Smyrna, Georgia, facility, its

imports decreased as it increased its domestic production. Between 2006 and 2007, Compass reduced its

subject imports from China by *** percent.88 As noted earlier, Compass reported no subject imports of

HEDP by the end of the first quarter of 2008.89

Compass asserts that it desires solely to manufacture HEDP in the United States and to cease

importing product from China but cannot cut costs deeply enough to meet the price levels of the dumped

imports, particularly for business on the West Coast, where imports are “prevalent” and the delivered

costs of the domestic like product are the highest. According to Petitioner, “there is a significant value

associated with having a domestic supply of HEDP, i.e., to help meet the growing U.S. demand for

industrial and drinking water.”90 91

b. Foreign Producers

The record indicates that Aquapharm, the *** producer of HEDP in India, accounted for ***

percent of Indian production and *** percent of imports from India to the United States in 2007. Indian

producer Excel Industries Ltd. accounted for most of the remaining exports to the United States from

India during the period examined.92 Aquapharm reported that *** percent of its total shipments of HEDP

in 2007 were to the United States. These shipments were to only two customers, Buckman, a

compounder and distributor, and Zibex, a distributor. Aquapharm stated that it had increased its HEDP

production capacity over the period in order to meet demand in the European Union and planned to

expand its capacity from *** pounds in 2007 to *** pounds in 2009 in anticipation of growth in its sales

to ***.93
 94 CR at VII-2-4, PR at VII-2-3, CR/PR at Table VII-2.

 95 CR/PR at Table IV-2.

 96 CR/PR at IV-1; Importer’s Questionnaire Response of ***.

 97 CR/PR at IV-1.

 98 CR at VI-4-5, PR at VI-1-2.

 99 CR at III-5, n.15, PR at III-3, n.15.

 100 Conference Tr. at 62-67.

 101 CR at VI-2-5, PR at VI-1-2.

 102 CR/PR at V-1.

 103 CR/PR at Table VI-2. The domestic industry’s reported raw material costs for Compass and its predecessor

are not directly comparable in that ***. CR at VI-2-5, PR at VI-1-2.

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 The Commission received questionnaire responses from four Chinese producers, estimated to

account for *** percent of Chinese HEDP production and *** percent of exports to the United States

from China in 2007. Chinese capacity increased by 37.6 percent from 2005 through 2007, and Chinese

production increased by 36.0 percent.94

The only known non-subject source of HEDP imports during the period examined was the United

Kingdom. Imports from the United Kingdom by quantity were *** pounds in 2005, *** pounds in 2006,

and *** pounds in 2007.95 Solutia accounted for *** percent of imports from the United Kingdom in

2007 and reported ***.96 Rhodia, which imports HEDP from ***, accounted for *** percent of imports

from the United Kingdom in 2005, *** percent in 2006, and *** percent in 2007.97 As noted, from 2005

through June 2006, when Lynx operated the Smyrna, Georgia, HEDP facility, Rhodia marketed Lynx’s

U.S. production in the United States.

4. Raw Materials

The primary raw materials used to manufacture HEDP are acetic anhydride and either phosphorus

acid or phosphorus trichloride.98 Compass currently uses phosphorus acid, which it imports from ***

China. Phosphorus acid is less hazardous and therefore environmentally superior to phosphorus

trichloride.99 When Lynx ran the Smyrna, Georgia, plant, it used phosphorus trichloride supplied by

Rhodia,100 but Compass stated that it switched to phosphorus acid in 2007 because ***.101

Petitioner reports that the cost of raw materials used in HEDP production increased by ***

percent from 2005 through 2007.102 The domestic industry’s per unit cost of goods sold, however, which

reflects raw material, direct labor, and other factory costs, less HEDP by-product revenue, decreased from

2005 to 2007 and was also lower in 2007 as compared to July-December 2006.103 We will seek more

information in any final phase investigation on how the switch to phosphorus acid as a raw material has

affected Compass’s operating results.

5. Purchasing Practices

Suppliers of HEDP indicated that they use a variety of methods to determine the prices they

charge for HEDP, including transaction-by-transaction negotiations, set price lists, contracts, and reverse
 104 CR at V-2, PR at V-1; Conference Tr. at 128 (Zibrida), 143 (McCaul).

 105 CR/PR at V-2.

 106 CR at V-4, PR at V-3.

 107 19 U.S.C. § 1677(7)(C)(i).

 108 CR/PR at Table IV-2.

 109 CR/PR at Tables IV-5, C-1.

 110 CR/PR at Table IV-2. The drop in subject imports from China was *** attributable to Compass, which

reduced its subject imports of Chinese product by *** percent from *** pounds in 2006 to *** pounds in 2007;

subject imports from China by all other importers increased by *** percent from 2006 to 2007. CR/PR at Table IV3, CR at IV-6-7, PR at IV-4. 

 111 CR/PR at Tables IV-6, C-1.

 112 CR/PR at Table IV-7.

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auctions.104 The majority of sales by both the U.S. producer and importers are made from inventory.105 A

large portion of HEDP sales in the U.S. market are made through short-term contracts and spot sales. 

Compass reported that *** percent of its HEDP sales are made on a short-term (***) contract basis, and

the rest are made by spot sales. Half of the importers responding to the Commission’s questionnaires sell

the vast majority of their HEDP on a spot sales basis, and the rest of the importers reported a mix of shortterm (one-month to one-year) contract sales and spot sales.106 We will explore further in any final

investigation how the prices of HEDP are negotiated in the U.S. market.

B. Cumulated Volume of Subject Imports

Section 771(7)(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.”107 For purposes of the preliminary phase

of these investigations, we find that the cumulated subject import volume was significant during the

period examined, both in absolute terms and relative to consumption and production in the United States.

In absolute terms, the volume of cumulated subject imports increased during the period from 5.4

million pounds in 2005 to 8.5 million pounds in 2007.108 U.S. shipments of cumulated subject imports

increased by 37.5 percent over the period.109 The absolute volume of cumulated subject imports declined

slightly from 2006 to 2007 from 8.8 million pounds to 8.5 million pounds, due to a decline in the volume

of subject imports from China from *** pounds in 2006 to *** pounds in 2007.110

The share of apparent U.S. consumption held by the cumulated subject imports, by quantity,

increased steadily by *** percentage points over the period, rising from *** percent in 2005 to ***

percent in 2006 and *** percent in 2007. During this same period, which saw a rise in total apparent U.S.

consumption of *** percent, the quantity of the U.S. producer’s U.S. shipments increased by *** percent. 

Consistent with Compass’s increase in its domestic production after acquiring the HEDP facility, the U.S.

industry’s market share by quantity was higher in 2007 (*** percent) than in 2006 (*** percent), but its

market share declined overall from *** percent in 2005 to *** percent in 2007.111 Relative to U.S.

production, the volume of cumulated subject imports was equivalent to *** percent of domestic

production in 2005, *** percent in 2006, and *** percent in 2007.112

From 2005 to 2007, non-subject imports, essentially all from the United Kingdom, were an

important presence in the U.S. market, accounting for *** percent of the market in 2005, *** percent in
 113 CR/PR at Tables IV-6, C-1.

 114 CR/PR at Table IV-2.

 115 19 U.S.C. § 1677(7)(C)(ii).

 116 CR at V-4, PR at V-3. Compass reported that *** percent of its HEDP sales are on a short-term (***)

contract basis and the rest are on a spot sales basis. Half of the importers responding to the Commission’s

questionnaires sell the vast majority of their HEDP on a spot sales basis, and the rest of the importers reported a mix

of short-term (one-month to one-year) contracts and spot sales. CR at V-4, PR at V-3.

 117 Petitioner’s Postconference Brief at 12.

 118 CR/PR at Table II-2, CR at II-8, PR at II-5.

 119 Chinese Respondents’ Postconference Brief at 3-5; Conference Tr. at 129-130; Indian Respondents’

Postconference Brief at 2, 3-4.

 120 Chinese Respondents’ Postconference Brief at 3-5.

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2006, and *** percent in 2007.113 The absolute volume of imports from the United Kingdom was ***

pounds in 2005, *** pounds in 2006, and *** pounds in 2007.114 While *** in volume, non-subject

imports fell in market share from 2005 to 2007, while the market share held by subject imports increased,

as noted above.

Based on the above information, we find, for purposes of this preliminary phase, that the volume

of cumulated subject imports was significant during the period examined, both in absolute terms and

relative to consumption and production in the United States.

C. Price Effects of the Cumulated Subject Imports

Section 771(C)(ii) of the Act provides that, in evaluating the price effects of 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.115

A large portion of HEDP sales in the U.S. market, as noted, are made through short-term

contracts and spot sales.116 Compass characterizes HEDP as a commodity chemical.117 The record in this

preliminary phase indicates that price is a relatively important factor in purchasing decisions, although at

least 80 percent of responding importers indicated that differences other than price between the U.S.

product and subject imports were at least “sometimes” a significant factor in their sales of HEDP.118 In

addition, the availability of HEDP, long-term relationships with HEDP suppliers, and technical support

appear to be important factors to some purchasers.119 Customers also appear to value having alternate

supply sources in case supply is disrupted due to chemical spills or explosions, adverse weather

conditions, or normal work stoppages.120 We intend to explore the importance of non-price factors in

purchasing decisions in any final phase investigations. 

In these investigations, two U.S. producers (***), nine importers of HEDP from China (including

***), and two importers of product from India provided quarterly pricing data for four HEDP products: 

(1) HEDP sold in truckload drums to distributors; (2) HEDP sold in bulk tank truck to compounders; (3)

HEDP sold in truckload drums to compounders; and (4) HEDP sold in less than truckload (LTL) drums to
 121 CR at V-4-5, PR at V-3-4.

 122 CR at V-5, PR at V-4.

 123 CR/PR at Tables V-1 through V-5.

 124 CR/PR at Tables V-1 through V-5.

 125 CR/PR at Table V-6.

 126 CR/PR at Tables V-1 through V-4.

 127 Chinese Respondents’ Postconference Brief at 2-3; Indian Respondents’ Postconference Brief at 11.

 128 Derived by staff from U.S. Producer and Importers’ Questionnaire Responses.

 129 We will also consider how, if at all, any such effect should factor into our analysis.

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compounders.121 By quantity, pricing data reported by the responding firms accounted for about ***

percent of the domestic industry’s U.S. commercial shipments of HEDP, about *** percent of U.S.

commercial shipments of subject imports from China, and about *** percent of U.S. commercial

shipments of subject imports from India.122

Weighted average quarterly sales prices for the U.S.-produced products fluctuated during the

period examined, with prices lower in the final quarter of the period than at the beginning for three of the

four products. The exception was product 2, which represented the *** of U.S. product and whose

weighted average sales price generally fluctuated downward until late 2007, when prices increased to

levels higher than during the first quarter of the period examined.123 The prices of the subject imports

fluctuated over the period, with the prices for product 1 from *** being higher at the end of period, the

prices for products 2 and 3 from *** being lower at the end of the period, and the prices for product 4

from *** being *** higher.124

The pricing data collected in the preliminary phase of these investigations showed mostly

underselling by the subject imports. Subject imports undersold the domestic like product in 35 of 52

comparisons, with margins of underselling ranging from 0.9 percent to 60.0 percent. Subject imports

from China undersold the domestic product in 27 of 40 comparisons, with margins ranging from 0.9

percent to 60.0 percent, and subject imports from India undersold the domestic product in 8 of 12

comparisons, with margins ranging from 12.1 percent to 51.5 percent.125 For product 1, subject imports

undersold the domestic product in all comparisons; for product 2, in 4 of 12 comparisons; for product 3,

in 8 of 11 comparisons; and for product 4, in 14 of 20 comparisons.126

Respondents maintain that Compass itself is responsible in large part for any underselling and

adverse price effects by subject imports that occurred during the period.127 In evaluating that assertion,

we note that if Compass’s importer prices are excluded from the data for the entire period, subject imports

from China undersold the U.S. product in *** of *** comparisons. If Compass’s importer prices are

removed only for the period July 2006 through December 2007, when Compass was also a U.S. producer,

imports from China undersold the U.S. product in *** of *** comparisons.128 (The instances of

underselling by the Indian product remain the same.) Thus, the record indicates underselling regardless

of whether Compass’s importer data are included in the price comparisons. Given Compass’s

participation in the market as an importer of subject merchandise, however, we intend in any final

investigations to examine more fully the extent to which Compass’s importer prices affected prices in the

U.S. market.129

Although the U.S. producer’s prices generally declined over the period, there were some price

increases. According to Compass, it was able to announce three price increases in 2007, for a total of
 130 Petitioner’s Postconference Brief at 15-16.

 131 Petition at 32-33, CR at V-14-17, PR at V-5.

 132 Commissioner Lane notes that, although its *** before SG&A expenses declined from 2005 to 2007, the

domestic industry was unable to charge prices that *** throughout the period examined. She finds this to be

evidence of suppression of needed price increases.

 133 In its notice of initiation, Commerce estimated the dumping margin for subject imports from China to be

72.42 percent and the dumping margin for subject imports from India to be 42.74 percent. 73 Fed. Reg. 20023,

20026 (April 14, 2008).

 134 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.”)

 135 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, 731-TA-812-813 (Prelim.), USITC Pub. 3155 at 25 n.148 (Feb. 1999).

 136 CR/PR at Table C-1.

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$0.15 per pound, although it received at most an increase of *** per pound.130 In addition, Compass

alleged several instances of sales and revenue lost to subject imports during the period, although

purchasers contacted by staff confirmed only one lost sale allegation, for *** pounds of HEDP, valued at

$***.131 

Given the general decline in HEDP prices and the prevalence of underselling over the period, we

find for purposes of this preliminary phase that subject imports have depressed prices for the domestic

product to a significant degree.132 We intend, as noted, to seek further information on the price effects of

the cumulated subject imports in any final phase investigations.

D. Impact of the Cumulated Subject Imports133

Section 771(7)(C)(iii) provides that the Commission, in examining the impact of the subject

imports on the domestic industry, “shall evaluate all relevant economic factors which have a bearing on

the state of the industry.”134 These factors include output, sales, inventories, capacity utilization, market

share, employment, wages, productivity, profits, cash flow, return on investment, ability to raise capital,

research and development, and factors affecting domestic prices. 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.”135

The industry’s performance and financial data indicate some improvements in the industry’s

overall condition after Compass acquired the HEDP plant, but also reveal an industry that continues to

operate at a loss due in part to the presence of low-priced subject imports in the market.

The industry’s capacity has remained steady over the period, at *** pounds. From 2005 to 2006,

however, its production dropped from *** pounds to *** pounds, and its capacity utilization fell from

*** percent to *** percent. From 2005 to 2006, productivity declined by *** percent, net sales value

dropped by *** percent, and the cost of goods sold rose by *** percent. The industry’s *** from $*** in

2005 to $*** in 2006. Its *** operating margin dropped even lower, from *** percent in 2005 to ***

percent in 2006.136

The declines observed from 2005 to 2006 may be due in part, however, to the change in

ownership of the HEDP plant in July 2006, as various indicators showed improvement from 2006 to

2007. Production increased from *** pounds in 2006 to *** pounds in 2007, and capacity utilization
 137 CR/PR at Table III-2.

 138 CR at VI-5, PR at VI-2.

 139 CR/PR at Table III-3.

 140 Petitioner’s Postconference Brief at 18.

 141 CR at VI-2, PR at VI-1.

 142 CR at VI-2-5, PR at VI-1-2.

 143 CR at VI-6, PR at VI-3.

 144 CR at VI-8, PR at VI-4, CR/PR at Table VI-3.

 145 CR/PR at Table C-1.

 146 CR at VI-6, PR at VI-3.

 147 CR/PR at Table C-1.

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improved to ***.137 The trends in capacity utilization are consistent with Compass’s somewhat lower

average direct labor costs and other factory costs in full year 2007 compared to the second half of 2006.138

Both the quantity and value of the domestic industry’s shipments increased, and its productivity improved

by *** percent from 2006 to 2007.139

Although the domestic industry’s average unit values of U.S. shipments and net sales declined

between 2005 and 2007, Compass reports it was able to increase the price of its U.S. product *** between

the second half of 2006 and 2007.140 Thus, while the industry’s average HEDP sales value was lower at

the end of the period compared to 2005 and declined in 2006 compared to 2005, it showed a *** increase

in 2007 over 2006.141 The industry also reduced its average fixed costs because of its higher production

volumes, and its per unit cost of goods sold, which reflects raw material, direct labor, and other factory

costs, less HEDP by-product revenue, decreased from 2005 to 2007 and was also lower in 2007 than in

July-December 2006.142 

The industry’s selling, general and administrative (SG&A) expenses as a percent of sales and on

an average per pound basis declined *** from 2005 through 2007.143 The industry’s research and

development expenses declined ***, but its capital expenditures increased, from $*** in 2005 to $*** in

2006 and $*** in 2007. These expenses reportedly represented equipment upgrades by Compass that had

been postponed by Lynx.144

Along with improvements in certain performance and financial indicators, the industry’s ***

declined from 2006 to 2007. Its operating margin, although ***, improved to *** percent in 2007, as

compared to *** percent in 2006 and *** percent in the second half of 2006.145 The primary factors

contributing to Compass’s *** operating margin in 2007 as compared to the second half of 2006 were

lower average raw material costs in conjunction with a *** higher average sales value, as well as declines

in average direct labor and other factory costs, which were partially offset by higher average SG&A

expenses.146

Despite these improvements, the domestic industry continues to operate ***, even as apparent

U.S. consumption of HEDP increased by *** percent from 2005 to 2007.147 Under the reasonable

indication standard applied in preliminary phase investigations, we find the domestic industry’s generally

poor financial state attributable in significant part to subject imports, which were generally substitutable
 148 In these preliminary phase investigations, our evaluation of industry trends was impeded by the fact that data

on certain production costs incurred by Lynx were unavailable. See CR/PR at VI-1. Certain trends may also have

been masked by operational inefficiencies attendant to the change in ownership of the Smyrna facility and as

production adapted to the use of phosphorus acid as a key raw material input. We expect that additional data

gathered in any final phase will permit a more complete analysis of industry trends.

 149 While non-subject imports of HEDP have been present in the U.S. market during the period examined, we

note that there is limited information on the record regarding such imports. In any final phase investigations, we will

seek information on the role of non-subject imports of HEDP in the U.S. market. We invite parties to comment in

any final phase investigations on whether Bratsk Aluminium Smelter v. United States, 444 F.3d 1369 (Fed. Cir.

2006), is applicable to the facts of these investigations. We also invite parties to comment on what additional

information the Commission should collect to address the issues raised by the Court, how that information should be

collected, and which of the various non-subject sources should be the focus of additional information gathering by

the Commission in any final phase investigations.

 150 Chairman Pearson and Commissioner Okun do not join the preceding footnote. They note that the record is

unclear as to whether the predicates of the Bratsk test are satisfied. There were conflicting arguments by the parties

as to whether HEDP is a commodity product. Compass considers it to be a commodity, whereas the Indian

Respondents claim that NSF certification limits the interchangeability of subject imports from China with those from

India. All HEDP regardless of its application has a unique chemical formulation and unique physical properties. 

Importers regard HEDP as generally interchangeable regardless of its source. On balance, the record supports a

finding that HEDP is a commodity product for purposes of these preliminary investigations. We will examine this

issue further in any final investigations. 

With respect to whether non-subject imports are price competitive, in its importers’ questionnaires the

Commission requested product-specific price data from the United Kingdom, the only source of non-subject imports. 

The limited data show mixed underselling and overselling of the domestic like product by non-subject imports. The

prices of non-subject imports compared to subject imports were also mixed. For ***, the non-subject imports were

sometimes priced lower than the subject imports, and for the remaining products for which data were available the

non-subject imports were primarily priced higher than the subject imports. CR/PR at Tables V-I-V-4, D-1. On

balance, it appears that non-subject imports are price-competitive with the domestic like product, but we intend to

investigate this factor further in any final investigations. 

As to whether price-competitive non-subject imports are a significant factor in the U.S. market, the record

in the preliminary phase of these investigations suggests that non-subject imports from the United Kingdom were a

significant factor in the market. They accounted for about *** percent of imports in 2007 and about *** percent of

the U.S. market. CR/PR at Tables IV-2, IV-6. For purposes of the preliminary phase of these investigations, and

assuming the product is a commodity, we find the second Bratsk triggering factor is met. Assuming that the Bratsk

test is triggered for purposes of the preliminary phase of these investigations, we now consider whether non-subject

imports are likely to replace subject imports and continue to cause injury to the domestic industry. One of the

relevant factors we must examine in assessing this issue is the size of the non-subject U.K. industry and the amount

of excess capacity in that industry. There is no information on the record concerning the capacity of non-subject

producers, or their capacity utilization rates. In any final phase of these investigations, in order to complete our

analysis under Bratsk, we will seek information on production capacity of major non-subject producers of HEDP,

and the extent to which non-subject imports by domestic producers would be impacted if orders are imposed. For

purposes of these preliminary determinations, we determine that non-subject imports would not negate any benefit to

the domestic industry from the imposition of the orders.

For a complete statement of Chairman Pearson and Commissioner Okun’s interpretation of Bratsk in a

preliminary investigation, see Separate and Additional Views of Chairman Daniel R. Pearson and Commissioner

Deanna Tanner Okun Concerning Bratsk Aluminium Smelter v. United States in Sodium Hexametaphosphate from

China, Inv. No. 731-TA-1110 (Prelim.), USITC Pub. 3912 at 19-25 (Apr. 2007). In any final phase of these

(continued...)

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with the domestic product and significant in volume and which undersold the domestic product in a clear

majority of quarterly pricing comparisons.148

Based on the foregoing, we find for purposes of this preliminary determination that subject

imports are having a significant adverse impact on the domestic HEDP industry.149 150
 150 (...continued)

investigations, any party holding a contrary view should so indicate, and provide a basis for its view, at the time

written comments on the draft questionnaires are submitted.

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CONCLUSION

For the reasons stated above, we find that there is a reasonable indication that an industry in the

United States is materially injured by reason of allegedly unfairly traded subject imports of HEDP from

China and India that are sold in the U.S. market.

 1

 A complete description of the imported product subject to these investigations is presented in The Subject

Merchandise section located in Part I of this report.

 2 Federal Register notices cited in the tabulation are presented in app. A.

I-1

PART I: INTRODUCTION

BACKGROUND

These investigations result from a petition filed on March 19, 2008, by Compass Chemical

International, LLC. (“Compass”), alleging that an industry in the United States is materially injured or is

threatened with material injury by reason of imports from China and India of 1-hydroxyethylidene-1,

1-diphosphonic acid (“HEDP”)1

 that are allegedly sold in the United States at less-than-fair-value

(“LTFV”). Information relating to the background of these investigations is provided below.2

Effective date Action

March 19, 2008

Petition filed with Commerce and the Commission; Commission institutes investigation

(73 FR 16058, March 26, 2008)

April 9, 2008 Commission’s conference1

April 14, 2008 Initiation of investigations by Commerce (73 FR 20023, April 14, 2008)

May 2, 2008 Commission’s vote

May 5, 2008 Commission’s determinations transmitted to Commerce

May 12, 2008 Commission’s views transmitted to Commerce

 1

 A list of witnesses that appeared at the conference is presented in app. B.

STATUTORY CRITERIA AND ORGANIZATION OF THE REPORT

Statutory Criteria

Section 771(7)(B) of the Tariff Act of 1930 (the “Act”) (19 U.S.C. § 1677(7)(B)) provides that in

making its determinations of injury to an industry in the United States, the Commission--

shall consider (I) the volume of imports of the subject merchandise, (II) the effect of

imports of that merchandise on prices in the United States for domestic like products,

and (III) the impact of imports of such merchandise on domestic producers of

domestic like products, but only in the context of production operations within the

United States; and. . . may consider such other economic factors as are relevant to

the determination regarding whether there is material injury by reason of imports.

Section 771(7)(C) of the Act (19 U.S.C. § 1677(7)(C)) further provides that--

In evaluating the volume of imports of merchandise, 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.

. . . 
I-2

In evaluating the effect of imports of such merchandise on prices, 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.

. . .

In examining the impact required to be considered under subparagraph (B)(i)(III),

the Commission shall evaluate (within the context of the business cycle and

conditions of competition that are distinctive to the affected industry) all relevant

economic factors which have a bearing on the state of the industry in the United

States, including, but not limited to

. . . 

(I) actual and potential declines in output, sales, market share, profits, productivity,

return on investments, and utilization of capacity, (II) factors affecting domestic

prices, (III) actual and potential negative effects on cash flow, inventories,

employment, wages, growth, ability to raise capital, and investment, (IV) actual and

potential negative effects on the existing development and production efforts of the

domestic industry, including efforts to develop a derivative or more advanced

version of the domestic like product, and (V) in {an antidumping investigation}, the

magnitude of the margin of dumping.

Organization of Report

Information on the subject merchandise, alleged margins of dumping, and domestic like product

is presented in Part I. Information on conditions of competition and other relevant economic factors is

presented in Part II. Part III presents information on the condition of the U.S. industry, including data on

capacity, production, shipments, inventories, and employment. The volume and pricing of imports of the

subject merchandise are presented in Parts IV and V, respectively. Part VI presents information on the

financial experience of U.S. producers. Part VII presents the statutory requirements and information

obtained for use in the Commission’s consideration of the question of threat of material injury and the

judicial requirements and information obtained for use in the Commission’s consideration of Bratsk

issues. 

U.S. MARKET SUMMARY

HEDP is generally added to water to increase solubility of certain ions and to inhibit the

precipitation of certain mineral compounds. The U.S. market for HEDP totaled approximately $*** and

*** pounds in 2007. Currently, one firm, Compass, produces HEDP in the United States; Compass

accounted for all U.S. production of HEDP in 2007. At least 15 firms have imported HEDP from China,

India, or the United Kingdom since 2005. During 2005-07, Compass accounted for *** percent of the

imports of HEDP from China. Aquapharm was the leading importer of Indian HEDP and accounted for

*** of the imports of HEDP from India during 2005-07. 

U.S. producers’ U.S. shipments of HEDP totaled *** pounds valued at $*** in 2007, and

accounted for *** percent of apparent U.S. consumption by quantity (*** percent by value). U.S.

shipments of imports from China totaled *** pounds in 2007, and accounted for *** percent of apparent

U.S. consumption by quantity (*** percent by value), while U.S. shipments of imports from India totaled

*** pounds, and accounted for *** percent of apparent U.S. consumption by quantity (*** percent by

value). U.S. shipments of imports from all other sources totaled *** pounds, and accounted for ***

percent of apparent U.S. consumption by quantity (*** percent by value). 
 3 Notice of institution of antidumping duty investigations and scheduling of preliminary phase investigations: 

Aminotrimethylenephosphonic Acid (ATMP) and 1-Hydroxyethylidene-1,1- Diphosphonic Acid (HEDP) From China

and India, 73 FR 1366, January 8, 2008.

 4 Notice of withdrawal of petition in antidumping investigations: Aminotrimethylenephosphonic Acid (ATMP)

and 1-Hydroxyethylidene-1,1- Diphosphonic Acid (HEDP) From China and India, 73 FR 5211, January 28, 2008.

 5 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from the Republic of India and the People’s Republic of China:

Initiation of Antidumping Duty Investigations; 73 FR 20023, April 14, 2008.

 6

 C2H8O7P2 or C(CH3)(OH)(PO3H2)2

 7 1–Hydroxyethylidene–1, 1– Diphosphonic Acid from the Republic of India and the People's Republic of China:

Initiation of Antidumping Duty Investigations; 73 FR 20023, April 14, 2008.

I-3

SUMMARY DATA AND DATA SOURCES

A summary of data collected in these investigations is presented in appendix C. Except as noted,

U.S. industry data are based on questionnaire responses of the two current or former U.S. producers that

accounted for all of U.S. production of HEDP during 2005-07. U.S. import and foreign industry data are

based on responses to the Commission’s U.S. importers’ and foreign producers’ questionnaires, as official

statistics are properly covered by a statistical reporting number that is broader than the subject product.

PREVIOUS AND RELATED INVESTIGATIONS

HEDP has been the subject of one prior antidumping duty investigation in the United States. On

December 31, 2007, Compass filed a petition alleging that an industry in the United States was materially

injured or threatened with material injury, by reason of imports from China and India of HEDP and

Aminotrimethylenephosphonic Acid (“ATMP”). The Commission subsequently instituted preliminary

phase antidumping duty investigations Nos. 731–TA–1138 and 1139.3

 On January 17, 2008, before

Commerce had initiated its investigations, Commerce and the Commission received a letter from

Compass withdrawing its petition. Subsequently, the Commission discontinued its antidumping

investigations concerning HEDP and ATMP from China and India.4

NATURE AND EXTENT OF ALLEGED SALES AT LTFV

On April 14, 2008, Commerce published a notice in the Federal Register of the initiation of its

antidumping investigations on HEDP from China and India.5

 Commerce has initiated antidumping duty

investigations based on estimated dumping margins of 42.74 percent for HEDP from India and 72.42

percent for HEDP from China.

THE SUBJECT MERCHANDISE

Commerce’s Scope

Commerce has defined the scope of these investigations as follows:

All grades of aqueous, acidic (non–neutralized) concentrations of 1–hydroxyethylidene–

1, 1–diphosphonic acid,6

 also referred to as hydroxethlylidenendiphosphonic acid,

hydroxyethanediphosphonic acid, acetodiphosphonic acid, and etidronic acid. The CAS

(Chemical Abstract Service) registry number for HEDP is 2809–21–4.7
 8

 *** reported importing into the United States subject and nonsubject products also classified under statistical

reporting numbers 2931.00.9041 (covering a particular organo-phosphorus compound by structure) and

2931.00.9050 (the residual category for the subheading).

 9

 Petitioner’s postconference brief, p. 4.

 10 Conference transcript, p. 111 (Levinson and Collias).

 11 Much of this background information comes from a “Technical Update on Chelation,” Monsanto Corp., August

1995, fax from ***, April 8, 2008.

 12 In aqueous solutions, positively charged metal ions (such as Ca+2, Fe+3, Cu+2) are surrounded by negatively

charged ions and water molecules. Metals can form a complex with the negatively charged molecules. When the

metal complexes with negatively charged molecules at two (or more) sites a ring structure is created. The reaction is

(continued...)

I-4

Tariff Treatment

HEDP is classifiable in the Harmonized Tariff Schedule of the United States (“HTSUS”) under

subheading 2931.00.90 and imports covered by statistical reporting number 2931.00.9043.8

 This

subheading contains many other products besides HEDP. Table I-1 presents current tariff rates for

HEDP.

Table I-1

HEDP: Tariff rates, 2008

HTS provision Article description

General1 Special2 Column 23

Rates (percent ad valorem)

2931.00

2931.00.90

2931.00.9043

Other organo-inorganic compounds:

 Other............................................................................

 Other......................................................................

 

3.7% (4

) 25%

 1

 Normal trade relations, formerly known as the most-favored-nation duty rate. 

 2

 Special rates not applicable when General rate is free.

 3

 Applies to imports from a small number of countries that do not enjoy normal trade relations duty status.

 4

 General note 3(c)(i) defines the special duty program symbols enumerated for this provision. 

Source: Harmonized Tariff Schedule of the United States (2008).

THE DOMESTIC LIKE PRODUCT 

The Commission’s decision regarding the appropriate domestic products that are “like” the

subject imported products is based on a number of factors including: (1) physical characteristics and

uses; (2) common manufacturing facilities and production employees; (3) interchangeability; (4) customer

and producer perceptions; (5) channels of distribution; and (6) price. Information regarding the physical

characteristics and uses, the manufacturing process, and the channels of distribution of HEDP are

discussed below. 

The petitioner contends that the Commission should find one domestic like product that is

coextensive with the scope of merchandise subject to the investigation.9

 Both respondents noted that they

were not challenging the definition of the domestic like product.10

Overview11

Organophosphonates (phosphonates) (of which HEDP is a prominent example) constitute a class

of chelating agents used extensively in industrial water treatment (including swimming pools), in

industrial and household cleaning products, and personal care products.12 “Chelating agents (or
 12 (...continued)

called chelation, the anionic ion is called a ligand or chelating agent, and resulting ring structure is called a complex

or chelate. 

 13 ***.

 14 Petition, p. 4. In fact, the petition refers to generations of chelating agents, with each newer generation having

an improved degree of activity or efficiency. Polyphosphates (which are not phosphonates) were referred to as first

generation antiscalants/sequestrants, aminomethylmethyl phosphonates were referred to as the second generation,

HEDP was referred as the third generation, and PBTC was referred to as a newer, more specialized phosphonate.

 15 ***.

 16 Phosphonates can remove soap scum with bar soap and eliminate graying with laundry soap. Metal ions such

as magnesium or calcium can react with soap to form insoluble salts. This can form “bath-tub rings” from bar soap,

or lead to graying or yellowing of fabrics in laundry soap. The addition of a chelating agent (e.g. phosphonate), will

solubilize the metal and prevent it from reacting with the soap or settling on the fabric. 

 17 In water supplies, the presence of iron or manganese will color the water; and although not dangerous it is not

aesthetically pleasing (and will generate customer complaints). Adding chelating agents can sequester the metal ions

and prevent them from coloring the water. 

 18 A problem in industrial water supplies is “scale” build-up. Scale consists mainly of calcium, magnesium, and

iron salts. These products can build up on the walls of commercial water systems; but the condition can be

alleviated by adding a “crystal growth modifier” to the system. These products, at very small concentrations, appear

to distort and prevent crystal growth. The mechanism of prevention is different from sequestering, but phosphonates

are very effective crystal growth modifiers in boilers and heat exchangers, particularly since they are stable at high

temperatures over long periods of time. 

 19 An important application for phosphonates is preventing bleaches from decomposing in the presence of trace

amounts of metals such as iron, chromium, and nickel. Again, chelating agents can be introduced to sequester (tie

up) the offending ions.

I-5

chelants)” include a number of compounds, all having the ability to coordinate with metal ions at a

minimum of two sites. Typically, this bidentate coordination solubilizes or otherwise inactivates these

metals, reducing any adverse effects these metals might have on the system on which they are used.13 

Phosphonates are a relatively new class of chelating agent used for industrial water treatment. They may

have certain properties in common with other classes of chelating agents (particularly the

polyphosphates).14 However, unlike other chelating agents, phosphonates are structurally stable at very

high temperature and in strong acids. In 2006, U.S. phosphonate consumption accounted for

approximately *** of the total U.S. consumption of the major industrial chelating agents related to

industrial water treatment.15

Phosphonates, acting as chelating agents, perform a variety of functions to improve the quality of 

water supplies. The chemical characteristics of chelating agents allow for a number of applications in

household cleaning supplies (soaps and detergents),16 in municipal water supplies,17 in industrial water

systems (heat exchangers, boilers, and cooling towers),18 and in stabilizing bleach.19 

A number of chemical classes of chelating agents used in water treatment, cleaning products, and

in a number of other diverse industrial uses have been developed over the years. The choice of chelating

agent depends on a number of factors (including which metal ions are to be controlled, the pH of the

system, the temperature range of the system, the economics of the system, and more recently,

environmental issues). Table I-2 lists the five largest commercially available phosphonates, of which

HEDP and ATMP are the two largest selling products.
 20 Patented by Proctor & Gamble, January 30, 1968, Patent No. 3,366,675. The chemistry is described in the

chemical literature, “Interaction of Acylating Agents and Phosphorus (III) Sources,” Journal of the American

Chemical Society, August 23, 1972, pp. 6119-24. 

 21 HERA substance team, Human & Environmental Risk Assessment on Ingredients in European Household

Cleaning Products, June 9, 2004, p. 5.

 22 ***.

 23 Much of the technical background was presented by ***, in staff phone conversations, April 3, 2008 and April

14, 2008.

 24 Petition, p. 4.

I-6

Table I-2

Phosphonates: Commercially available phosphonates

Abbreviation Chemical name CAS No.

HEDP (1-hydroxyethylidine) diphosphonic acid 2809-21-4

ATMP Amino tris(methylene phosphonic acid) 6419-19-4

DTPMP Diethylenetriamine penta(methylene phosphonic acid) 15827-60-8

PBTC 2-Phosphobutane-1,2,4-tricarboxylic acid 37971-36-1

BHMT Aminotri(methylenephosphonic acid) 35657-77-3

Source: ***.

Description and Applications 

HEDP is a well-defined,20 odorless, colorless to yellowish liquid. It is very water soluble, as

either the acid or the salt. The finished product is produced as a technical grade, and is not further

modified or purified to become food grade or U.S. Pharmacopoeia (USP) Grade. Once manufactured and

adjusted to the correct aqueous concentration, it needs no further modification before it can be used as a

chelating agent. The product has a long shelf life, and is often added to multi-purpose formulations,

which do not appear to affect the chelating properties. Compared to other chelating agents, the molecule

has multiple phosphonate (acid) groups and is very stable at high temperatures (greater then 1300

 F) and

acid levels; it resists oxidation by chlorine. The stability of the molecule is attributed to the C–P chemical

bond in HEDP. Further, HEDP is considered safe. “The human health risk assessment has demonstrated

that the use of ATMP, HEDP, and DTMP in household laundry and cleaning detergents is safe and does

not cause concern with regard to consumer use.”21

HEDP is a chelating agent that can perform three functions as it treats commercial water. First, it

can sequester heavy metal ions that color water supplies or sequester heavy metals that interfere with the

cleaning function of laundry soap or body soap. Second, it can act as a scale inhibiting agent that

prevents scale formation in commercial heating/cooling systems such as boilers, air conditioners, and

cooling towers. Third, it can prevent the breakdown of oxidizing agents such as peroxide bleach.22

Manufacturing Processes23

There are two commercial methods for producing HEDP.24 The first, more common, method is to

react phosphorus trichloride with acetic anhydride in water. The phosphorus trichloride is converted to

phosphorus acid within the reaction vessel (in situ), and then reacts with the acetic anhydride. Two biproducts, hydrochloric acid (HCL) and acetic acid are produced, and can be sold on the merchant market. 
 25 Staff phone conversations with ***, April 3, 2008 and April 14, 2008.

 26 Conference transcript, p. 132-3 (Zibrida).

 27 Conference transcript, p. 26 (Failon).

 28 Conference transcript, p. 129 (Zibrida).

 29 Conference transcript, p. 111 (Mangwani).

 30 Conference transcript, p. 97 (Collias).

 31 Conference transcript, p. 128 (Collias).

I-7

The balanced equation is:

(1) 2PCL3 + (CH3CO)2O + 6H2O —> C(CH3)(OH)(PO3H2)2 + CH3COOH +6HCL

The second method is a one-step version of the first process. The phosphorus acid is purchased

and then reacted directly with acetic anhydride. The phosphorus acid is anhydrous. As with the reaction

starting with PCL3, the reaction is performed at a high temperature and for at least 10 to 12 hours. The

balanced equation is:

(2) 2H3PO3 + (CH3CO)2O —> C(CH3)(OH)(PO3H2)2 + CH3COOH 

Compass reported that at its manufacturing facility, the starting materials are checked for purity

and the finished product is subject to a quality control inspection, the results of which are kept on file. A

concern is the possibility for chloride contamination from HCL. The finished product is “Technical

Grade;” there is no Food Grade or U.S. Pharmacopeia (USP) grade. At the Compass manufacturing

facilities, the reaction vessels and storage tanks are dedicated to HEDP production. ***.25

Marketing

HEDP is marketed as a superior chelating agent based on its hydrolytic stability and its superior

ability to act as an anti-scaling and sequestering agent. Both domestic manufacturers and importers sell

product to distributors, formulators, and large end users. Table I-3 presents information on U.S.

producers’ and importers’ channels of distribution. 

Table I-3

HEDP: U.S. producers’ and importers’ channels of distribution, 2005-07, July-December 2006, and

July-December 2007

* * * * * * *

At the conference, it was noted the HEDP is often added to a formulation by either a distributor

or formulator, before it is sold to a customer. As formulations change, the demand for HEDP changes.26

At the first point of sale, Compass stated that imported and domestic product are chemically identical, and

once the products have the same level of purity, they can be commingled and sold as one product.27 The

importers argued that service and long-term, personal relationships were important marketing

components.28 However, the importers favored only one-year contracts with all accredited suppliers

competing.29 Further, the importers stated that the National Sanitary Foundation (NSF) accreditation was

a marketing tool as accreditation implied a superior product.30 Bundling was considered an important

marketing tool; because most HEDP is used in a formulation, it can be sold in combination with another

product.31
I-8

Price

Table I-4 presents average unit values for U.S. shipments of HEDP in the United States from

various sources. Pricing practices and prices reported for HEDP in response to the Commission’s

questionnaires are presented in Part V of this report, Pricing and Related Information.

Table I-4

HEDP: Average unit values of U.S. shipments, by source, 2005-07, July-December 2006, and

July-December 2007

* * * * * * *
 1

 Petition, p. 25.

 2

 Petition, p. 25.

 3

 ***.

 4

 Petition, p. 29.

 5

 Petition, p. 29.

II-1

PART II: CONDITIONS OF COMPETITION IN THE U.S. MARKET

U.S. MARKET CHARACTERISTICS

Petitioner indicates that domestic and imported HEDP are sold into common channels of

distribution: distributors (resellers), compounders (formulators), and occasionally, to end-users.1

Petitioner indicates that distributors typically sell to accounts that purchase quantities that are less than

truckload (of drums) quantities while large compounders often buy in bulk tanktruck quantities, but also

in truckload drum quantities, and end-users generally buy from producers only when they have a bulk

requirement for HEDP.2

Shipments of U.S. product to compounders increased from *** percent of U.S. shipments in 2005

to *** percent of such shipments in 2007. Shipments to distributors of U.S. product decreased from ***

percent of U.S. shipments in 2005 to *** percent of such shipments in 2007.3 Shipments to compounders

of imports from China decreased from *** percent of U.S. shipments of those imports in 2005 to ***

percent of such shipments in 2007. Shipments to distributors of imports from China increased from ***

percent of U.S. shipments of those imports in 2005 to *** percent of such shipments in 2007. Shipments

to compounders of imports from India fell from *** percent in 2005 to *** in 2007 and shipments to

distributors of imports from India increased from *** percent in 2005 to *** percent in 2006 and then fell

to *** percent in 2007. Shipments to end users of imports from India increased from *** percent in 2005

to *** percent in 2007.

Petitioner indicated that imported product competes with domestic like product in all geographic

markets in the U.S. and that imported product is typically warehoused and shipped from those warehouse

locations to all geographic areas.4

 Petitioner also indicated that a large portion of the HEDP market is

supplied through national and regional distributors, who obtain their product through Chinese importers,

Indian importers, and or domestic producers.5

Responding U.S. producers reported that in 2007 *** percent of their shipments of HEDP were to

the Midwest region, *** percent of their shipments to the Northeast region, and *** percent of their

shipments to the Southeast region. Responding importers reported that in 2007, *** percent of their

shipments of imports from China were to the Midwest region, *** percent to the Northeast region, ***

percent of their shipments of imports from China were to the Pacific Coast, and *** percent to the

Southeast region. Responding importers also reported that *** percent of their shipments of imports from

India were to the Southeast region and *** percent were to the Central Southwest region. 

SUPPLY AND DEMAND CONSIDERATIONS

U.S. Supply

Domestic Production

Based on available information, U.S. HEDP producers have the ability to respond to changes in

demand with moderate changes in the quantity of shipments of U.S.-produced HEDP to the U.S. market. 

The main contributing factors to the moderate degree of responsiveness of supply are the availability of
 6

 Petition, p. 26.

 7

 Petition, p. 26.

II-2

unused capacity, constrained by an inability to produce alternate products, a limited ability to divert

shipments from alternate markets, and a limited ability to use inventories to increase shipments to the U.S.

market.

Industry capacity

U.S. producers’ capacity utilization increased from *** percent in 2005 to *** percent in 2007. 

This level of capacity utilization indicates that U.S. producers have unused capacity with which they

could increase production of HEDP in the event of a price change. 

Alternative markets

Exports by U.S. producers, as a share of total shipments, decreased from *** percent in 2005 to

*** percent in 2007. These data indicate that U.S. producers have a limited ability to divert shipments to

or from alternative markets in response to changes in the price of HEDP. 

Inventory levels

The ratio of end-of-period inventories to total shipments decreased from *** percent in 2005 to

*** percent in 2007. These data indicate that U.S. producers have a limited ability to use inventories as a

means of increasing shipments of HEDP to the U.S. market.

Production alternatives

According to petitioner, equipment is generally dedicated to the manufacture of HEDP, although

HEDP and ATMP can be manufactured simultaneously in adjacent units.6

 Petitioner indicates that

Compass relies on the same production employees to make both HEDP and ATMP, trained, for example,

as “MayoquestB/phosphonate” operators.7

Subject Imports

Based on available information, Chinese producers have the ability to respond to changes in

demand with large changes in the quantity of shipments of HEDP to the U.S. market, while Indian

producers have the ability to respond with moderate changes in the quantity of shipments of HEDP to the

U.S. market. The main contributing factors to the high degree of responsiveness of supply for Chinese

production is the availability of unused capacity and an ability to divert shipments from alternate markets,

limited by an inability to produce alternate products and a limited availability of inventories. The main

contributing factors to the moderate degree of responsiveness of supply for Indian production is an ability

to divert shipments from alternate markets, limited by an inability to produce alternate products, a limited

availability of inventories, and a limited amount of excess capacity.

Industry capacity

During the period for which data were collected, the capacity utilization rate for Chinese

producers of HEDP decreased from 65.0 percent in 2005 to 64.3 percent in 2007. The capacity utilization

rate for producers in India increased from *** percent in 2005 to *** percent in 2007. These levels of
 8

 Petition, pp. 26-27.

 9

 Petition, pp. 6-7, 24.

 10 Conference transcript, p. 53 (McCaul).

II-3

capacity utilization indicate that Chinese producers have unused capacity with which they could increase

production of HEDP in the event of a price change, and Indian producers have limited capacity with

which they could increase production of HEDP in the event of a price change.

Alternative markets

 Shipments of HEDP from China to markets other than the United States increased from

approximately *** percent of total shipments in 2005 to *** percent in 2007. Shipments of HEDP

from India to markets other than the United States increased from approximately *** percent of total

shipments in 2005 to *** percent in 2007. Available data indicate that subject producers in China and

India have the ability to divert shipments to or from the home market and alternative markets in response

to changes in the price of HEDP. 

Inventory levels

Chinese producers’ inventories, as a share of their total shipments, remained stable between 2005

and 2007 at *** percent. Indian producers’ inventories of subject product in India, as a share of total

shipments, increased from *** percent in 2005 to *** percent in 2007. These data indicate that subject

foreign producers have a limited ability to use inventories as a means of increasing shipments of HEDP to

the U.S. market.

Production alternatives

Petitioner indicates that domestic and imported HEDP are produced in similar manufacturing

facilities, using similar production processes.8

 Accordingly, as with Compass’s U.S. operations, subject

producers are believed to have limited capability to engage in product shifting.

U.S. Demand

Based on the available information it is likely that changes in the price level of HEDP will result

in a small change in the quantity of HEDP demanded. The main contributing factors to the small degree

of responsiveness of demand is the limited substitutability of other products for HEDP and the low cost

share of HEDP in most of its end uses. 

Demand Characteristics

The petitioner indicates that HEDP is used in water treatment such as boiler water treatment,

municipal water treatment, desalination, and swimming pool applications; industrial and institutional

detergents and cleaners; peroxide bleach stabilization; personal care products such as a preservative in bar

soaps and shampoos.9

 The petitioner also indicates that the largest application for HEDP is in industrial

water treatment.10

Five of ten responding importers indicated that demand for HEDP has not changed in the U.S.

since 2005. The only responding U.S. producer and two responding importers indicated that demand has

increased, one responding importer indicated that demand has decreased, and the two remaining
 11 In this and subsequent sections, ***. 

 12 Petition, p. 26.

 13 Petition, p. 24.

 14 Conference transcript, pp. 132-133 (Zibrida) and p. 133 (Collias).

 15 Ibid.

 16 Conference transcript, p. 53-54 (McCaul).

 17 Conference transcript, p. 115-116 (Collias).

II-4

responding importers indicated that demand has fluctuated.11 The only responding U.S. producer and four

of six responding importers indicated that demand for HEDP outside the U.S. has increased since 2005.

Substitute Products

The only responding producer and five of nine responding importers indicated that there were at

least some substitutes for HEDP. Substitutes named included ATMP, PBTC, and EDTA. Two of nine

responding importers indicated that there were no substitutes for HEDP and the two remaining

responding importers indicated that they did not know of any substitutes for HEDP.

The only responding U.S. producer and one of six responding importers reported that the price of

substitutes can affect prices of HEDP. *** indicated that the “plethora” of PBTC imports has depressed

pricing on PBTC, making it more viable as an alternative to HEDP (and noted that this effect has no time

lag). 

Petitioner indicates that customer and producer perceptions are that HEDP has distinct,

characteristic physical, chemical, and functional properties such that polyphosphates, EDTA,

and ATMP and other AMPs are not viable substitutes and that customers select HEDP due to

performance or cost-performance advantages over other phosphonates and polyphosphates.12 According

to petitioner, there are several applications in which there is no real substitute for HEDP, including

municipal water treatment, swimming pool stain and scale control, and bar soap preservative.13

Respondents indicate that there are substitutes for HEDP such as other phosphonates, acrylic

polymers, and glassy phosphates.14 They indicate that although substitution would not occur

simultaneously, it could occur within a few months.15

Cost Share

The reported share of total cost of end uses accounted for by the cost of HEDP is generally low

for most end uses. Compass indicated that the cost share was about 20 to 25 percent for typical

applications, but could range from less than 1 percent to 100 percent for some applications.16 However,

Uniphos indicated that the cost share was less than 3 percent for water treatment chemicals that are used

for cooling applications, process cooling, or comfort cooling.17

SUBSTITUTABILITY ISSUES

The degree of substitution between domestic and imported HEDP depends upon such factors as

relative prices, quality (e.g., grade standards, reliability of supply, defect rates, etc.), and conditions of

sale (e.g., price discounts/rebates, leadtimes between order and delivery dates, payment terms, product

services, etc.). Based on available data, staff believes that there is a high degree of substitutability

between domestically produced HEDP and HEDP imported from subject countries.
 18 Petition, p. 24.

 19 Conference transcript, p. 86 (Mangwani). However, Uniphos indicates that product from Wujin Fine Chemical

Factory has three of its phosphonates that are NSF certified. Conference transcript, p. 97 (Collias).

 20 U.S. producer Compass was also qualified for the NSF/ANSI Standard 60. NSF Product and Service listings,

“http://www.nsf.org/Certified/PwsChemicals/Listings.asp?CompanyName=&TradeName=&ChemicalName=Hydro

xyethylidene+Diphosphonic+Acid&ProductFunction=&PlantState=&PlantCountry=,” retrieved April 16, 2008.

II-5

Factors Affecting Purchasing Decisions

One importer (***) indicated that regardless of the countries compared, availability, customer

service, transportation network, full product offering, technical service and brand recognition are always

factors affecting purchasing decisions in the water treatment industry. Importer *** indicated that it

believes that price is the main factor, although there may be a few customers who prefer to buy U.S. made

material due to patriotic reasons or due to the style of drum openings. An importer of *** indicated that

customers know and trust their sales and technical manager, trust that their product quality will be

acceptable and consistent because they identify the source and provide certificates of analysis upon

request, have an order-to-delivery response time of a few days, and have an economical freight cost from

shipping the product from the warehouse. The importer also indicated that his customers typically order

other chemicals along with HEDP and in some cases, customers have ordered from his company because

other suppliers do not have inventory available or can’t deliver the product on the date needed.

According to petitioner, imports of HEDP from China and imports of HEDP from India are

completely interchangeable with each other as long as the product meets the specifications.18 However,

importer Aquapharm indicates that some product from China does not have NSF certification.19 As of

April 16, 2008, the only foreign firms that had products that qualified for the NSF/ANSI Standard 60 for

drinking water chemicals were Indian producer Aquapharm (Aquacid 105 NS and HEDP), UK producer

Rhodia (Briquest® ADPA-60A), and Chinese producer Wujin Fine Chemical (XF-334 (N) HEDP).20

Comparisons of Domestic Products and Subject Imports

 As indicated in table II-1, the only responding U.S. producer and one-half of responding

importers indicated that HEDP produced in the United States and imported from subject sources is

“always” used interchangeably. At least ninety percent of responding importers indicated that HEDP

produced in the United States and imported from subject sources is at least “frequently” used

interchangeably. 

As indicated in table II-2, the only responding U.S. producer and one-half of responding

importers indicated that differences other than price between HEDP produced in the United States and

imported from subject sources were “sometimes” a significant factor in their firm’s sales of the products. 

At least 80 percent of responding importers indicated that differences other than price between HEDP

produced in the United States and imported from subject sources were at least “sometimes” a significant

factor in their firm’s sales of the products. 
II-6

Table II-1

HEDP: Perceived degree of interchangeability of product produced in the United States and in

other countries1

Country comparison

Number of U.S. producers

reporting

Number of U.S. importers

reporting

A F S N A F SN

U.S. vs. China 1 0 0 0 6 3 1 0

U.S. vs. India 1 0 0 0 4 2 0 0

U.S. vs. United Kingdom 1 0 0 0 5 2 0 0

U.S. vs. other countries 1 0 0 0 3 1 0 0

China vs. India 1 0 0 0 3 1 3 0

China vs. United Kingdom 1 0 0 0 3 4 0 0

China vs. other countries 1 0 0 0 3 1 0 0

India vs. United Kingdom 1 0 0 0 5 2 0 0

India vs. other countries 1 0 0 0 2 1 0 0

 1 Producers and importers were asked if HEDP produced in the United States and in other countries is used

interchangeably.

Note.--“A” = Always, “F” = Frequently, “S” = Sometimes, “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.
 21 Petition, p. 25.

 22 Petition, pp. 25-26.

 23 Conference transcript, p. 96 (Collias), p. 118 (Karve).

II-7

Table II-2

HEDP: Differences other than price between products from different sources1

Country comparison

Number of U.S. producers

reporting

Number of U.S. importers

reporting

A F S N A F SN

U.S. vs. China 0 0 1 0 2 2 6 2

U.S. vs. India 0 0 1 0 2 2 4 0

U.S. vs. United Kingdom 0 0 0 1 2 2 0 3

U.S. vs. other countries 0 0 1 0 1 1 1 1

China vs. India 0 0 0 0 2 3 2 1

China vs. United Kingdom 0 0 0 0 2 2 2 1

China vs. other countries 0 0 0 0 1 1 1 1

India vs. United Kingdom 0 0 0 0 2 1 2 2

India vs. other countries 0 0 0 0 1 1 1 0

 1

 Producers and importers were asked if differences other than price between HEDP produced in the United

States and in other countries are a significant factor in their firms’ sales of HEDP.

Note.--“A” = Always, “F” = Frequently, “S” = Sometimes, “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

Petitioner indicates that domestic and imported HEDP generally are perceived as identical

products by customers and producers alike.21 According to petitioner, customers routinely commingle

imported and domestic material in their bulk storage tanks and assign the same raw material codes to both

and that producers, both domestic and foreign, occasionally swap product amongst themselves when it is

convenient to do so.22

Respondents indicate that the majority of the largest-volume users of HEDP do not store HEDP

in bulk because they would not want to take the risk of commingling product from different sources so

they can trace back to where the product was sourced.23

Comparisons of Domestic Products and Nonsubject Imports

As indicated in table II-1, the only responding U.S. producer and at least 70 percent of

responding importers indicated that HEDP produced in the United States and imported from nonsubject

sources is “always” used interchangeably. As indicated in table II-2, the only responding U.S. producer

indicated that differences other than price between HEDP produced in the United States and imported

from the United Kingdom were “never” a significant factor in their firm’s sales of the products, while 
II-8

differences other than price between HEDP produced in the United States and imported from the other

nonsubject countries were “sometimes” a significant factor. Responding importers provided a variety of

responses. 

Comparisons of Subject Imports and Nonsubject Imports

As indicated in table II-1, the only responding U.S. producer and at least 40 percent of

responding importers indicated that HEDP imported from subject sources and imported from nonsubject

sources is “always” used interchangeably. The remaining responding importers indicated that HEDP

imported from subject sources and imported from nonsubject sources were “frequently” used

interchangeably. 

As indicated in table II-2, at least 70 percent of responding importers indicated that differences

other than price between HEDP imported from subject sources and imported from nonsubject sources

were at least “sometimes” a significant factor in their firm’s sales of the products. No domestic producer

responded to this question.

Comparisons of Subject Products from the Subject Countries

 As indicated in table II-1, the only responding U.S. producer and three of seven responding

importers indicated that HEDP imported from China and imported from India are “always” used

interchangeably. One of the responding importers indicated that HEDP imported from China and

imported from India are “frequently” used interchangeably and the remaining three responding importers

indicated that they are “sometimes” used interchangeably.

As indicated in table II-2, two of eight responding importers indicated that differences other than

price between HEDP imported from China and imported from India were “sometimes” a significant factor

in their firm’s sales of the products, three of eight responding importers indicated that these factors were

“frequently” a significant factor, two responding importers indicated that they were “always” a significant

factor, and the one remaining responding importer indicated that they were “never” a significant factor.
 1

 www.Rhodia-novacare.com has a list of the company’s phosphonate products. Retrieved April 11, 2008.

 2

 Total U.S. production capacity for all forms of organophosphonates in 2006 was estimated to be ***. ***.

 3

 The Commission also sent producers’ questionnaires to the U.S. firms that produce or are capable of producing

other phosphonates. Four firms responded that they did not produce HEDP during the period for which data were

collected (2005-07).

 4

 ***. Petition, pp. 2-3.

III-1

PART III: U.S. PRODUCERS’ PRODUCTION, SHIPMENTS, AND

EMPLOYMENT

The Commission analyzes a number of factors in making injury determinations (see 19 U.S.C. §§

1677(7)(B) and 1677(7)(C)). Information on the alleged margin of dumping was presented earlier in this

report and information on the volume and pricing of imports of the subject merchandise is presented in

Parts IV and V. Information on the other factors specified is presented in this section and/or Part VI and

(except as noted) is based on the questionnaire responses of two firms that accounted for 100 percent of

U.S. production of HEDP during 2005-07.

U.S. PRODUCERS OF HEDP

There are currently eight U.S. producers of phosphonates. The U.S. producers of phosphonates

are either selling into the merchant market or are captive producers selling directly to formulators, most of

whose products are destined for the oilfield market. The two leading U.S. manufacturers of phosphonates

are Compass and Rhodia, which markets the Briquest line of phosphonates.1

 The smaller companies,

selling to captive markets are ***. The combined annual organophosphonate production capacity of these

five companies is estimated to be ***. In addition, *** has the ability to manufacture phosphonates ***.2

The Commission sent producers’ questionnaires to firms believed to have been current or former

producers, including specifically Compass and Rhodia (identified in the petition as U.S. producers of

HEDP).3

 Both firms submitted responses. The Commission also attempted to contact former producer

Lynx Chemical Group LLC (“Lynx”); however, the company no longer exists. Instead, partial data for

the former Lynx operation were provide by Compass and Rhodia.4

Table III-1 presents the list of reporting U.S. producers with each company’s U.S. production

location, share of U.S. HEDP production in 2007, and position on the petition.
 5

 Conference transcript, p. 22 (Failon). Compass also reported that it did not produce HEDP when Compass first

acquired the U.S. facility, but continued to import HEDP from China in the second half of 2006, and only started

producing HEDP after a period of evaluation. Conference transcript, p. 62 (McCaul).

 6

 Producers’ questionnaire, section II-2.

 7

 Conference transcript, pp. 11-12 (Failon). Compass reported that it has invested “in excess of $2 million of

capital” at the Smyrna facility. Conference transcript, pp. 21-22 (Failon).

 8

 Compass argues that it purchased the Smyrna facility as ***. Petitioner’s postconference brief, Exh. 4.

 9

 Conference transcript, p. 10 (Failon).

III-2

Table III-1

HEDP: U.S. producers, positions on petition, plant locations, and shares of U.S. production in

2007

Firm name

Position on

petition Plant location Parent company

Share of

reported 2007

U.S. production

(percent)

Compass Chemical

International LLC1

Support

(petitioner)

Smyrna, GA 100% Cathay

Industries (USA)

***

Rhodia, North

America / Lynx2

*** Charleston, SC3 100% Rhodia Group

(France)

(

3

)

1

 Compass reported a ***. Compass reported that ***, an affiliated company that *** during the period for which

data were collected, was integrated into Cathay Pigments (China), Ltd. *** was the broker Compass used for its

HEDP imports from China. Compass also reported that ***, which operated independently, purchased HEDP

predominately from Chinese producer ***. Petition, supplemental information, March 26, 2008, pp. 1-2. 2

 Rhodia reported that ***.

3

 ***. 

Source: Compiled from data submitted in response to Commission questionnaires, www.na.rhodia.com, and

www.compasschemical.com.

U.S. CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION 

U.S. producers' capacity, production, and capacity utilization data for HEDP are presented in

table III-2. These data show that production capacity remained stable during 2005 to 2007, with average

capacity utilization fluctuating based on production levels over the same period. In 2005 capacity

utilization was *** percent, then fell in 2006 to *** percent, before returning to *** percent in 2007. The

decline in 2006 was due to substantially lower production level in the second half of 2006, as Compass

acquired the Smyrna, GA, production facility in July and only gradually ramped up its production.5

Table III-2

HEDP: U.S. producers’ capacity, production, and capacity utilization, 2005-07, July-December

2006, and July-December 2007

* * * * * * *

The Commission asked domestic producers to describe any plant openings, relocations,

expansions, acquisitions, consolidations, closures, and prolonged shutdowns.6

 Compass reported that it

acquired a phosphonate plant in Smyrna, GA, and blending facility in Huntsville, TX, from Lynx in July

2006.7 8

 Prior to this, Compass was, since its establishment in August 1999, an import-based, hybrid

supplier of specialty chemicals, including HEDP.9

 It used third party blending and warehousing service
 10 Conference transcript, p. 11 (Failon).

 11 Compass Chemical International LLC, “About us,” found at

http://www.compasschemical.com/about/index.htm, retrieved April 1, 2008.

 12 Under the agreement, ***. Email from ***, April 17, 2008.

 13 Rhodia’s response to the producer’s questionnaire, addendum.

 14 Producers’ questionnaire responses, section II-4.

 15 Compass reported that in 2007 it changed its raw material input from phosphorus trichloride (PCL3) to

phosphorus acid. Compass stated that it made this change in part due to the availability of PCL3, its higher cost, and

its hazardous nature. Lynx had obtained the PCL3 it used in the production of HEDP from Rhodia, and so Compass

claimed that it had to obtain PCL3 from another source. Conference transcript, pp. 64-66 (McCaul).

 16 Conference transcript, p. 22 (Failon).

 17 ***.

 18 Conference transcript, pp. 18-19 (Failon), and Producer’s questionnaire response, section II. Internal

consumption for Lynx ranged from *** percent to *** percent of its total shipments, and *** percent to *** percent

of total shipments for Compass. 

 19 Compass reported that this product can also be used in other applications where HEDP is used, particularly

where the alkaline pH is preferred so as to avoid an exothermal or heat buildup during blending. Competing

products include Thermphos’ Dequest 2016 and Rhodia’s Briquest ADPA 21SH. Conference transcript, p. 19

(Failon). Similarly, Indian producer Aquapharm reported that it produced and internally consumed tetrasodium salt,

(continued...)

III-3

providers.10 In January 2007, Compass merged with Cathay Pigments USA, Inc. to form Cathay

Industries (USA). Cathay Industries (USA) is a wholly owned subsidiary of Cathay Industries

International Ltd., which in turn is a wholly owned subsidiary of Cathay Pigments (Holdings) Ltd.11

Prior to its acquisition by Compass, the phosphonate plant in Smyrna, GA, was owned and

operated by Lynx from 2004 through June 2006. During this period Lynx ***.12 In turn, ***.13

The Commission asked domestic producers to describe the constraints that limit production

capacity.14 Compass responded that the *** limited its production capacity of HEDP.15

Compass, accounting for all the U.S. production of HEDP in 2007, reported that it *** produce

other products on the same machinery and equipment, but *** produce other products, namely ***, with

the workers used in the production of HEDP. *** reportedly accounted for *** of its total production in

2007.

U.S. PRODUCERS’ SHIPMENTS

Table III-3 presents information on U.S. producers’ shipments of HEDP. U.S. producers’ U.S.

shipments, in terms of quantity, rose from 2005 to 2007 by *** percent, largely due to Compass ramping

up its production.16 On a value basis, U.S. producers’ U.S. shipments increased by only *** percent from

2005 to 2007, which resulted in a decline in the average unit value of *** percent. The average unit value

of U.S. shipments declined over the period, from $*** in 2005 to $*** in 2007. U.S. producers’ total

shipments increased by *** percent during 2005-07, largely due to an increase in U.S. shipments in 2007. 

As a share of total shipments, U.S. shipments increased between 2005 and 2007, while export shipments

declined.

*** U.S. producers reported transfers to related firms, while *** had export shipments.17

Rhodia/Lynx and Compass reported *** internal consumption, of which Compass reported that

tetrasodium etidronate, a tetrasodium salt of HEDP, represented *** percent of its internal consumption.18

*** percent of tetrasodium etidronate, in the form of ***, was processed into a downstream product, and

was reported to account for *** percent of the downstream product’s production cost. Tetrasodium

etidronate is used almost exclusively in bar soap manufacture as a preservative, as well as functioning as a

water softener in soaps to prevent soap scum and bathtub rings by again sequestering or locking up the

calcium and magnesium in the water.19
 19 (...continued)

but that it did not sell this salt in the United States. Conference transcript, pp. 138-139 (Mangwani).

 20 ***.

III-4

Table III-3

HEDP: U.S. producers’ shipments, by type and by company, 2005-07, July-December 2006, and

July-December 2007

* * * * * * *

U.S. PRODUCERS’ INVENTORIES

Data on U.S. producers’ end-of-period inventories of HEDP for the period for which data were

collected are presented in table III-4. Inventories declined between 2005 and 2006, as Compass acquired

the U.S. production facility in July 2006, but rose again in 2007, though ending the period *** percent

below 2005 levels. Likewise, inventories as a ratio to production, to U.S. shipments, and to total

shipments also declined in 2006, the partially recovered in 2007. 

Table III-4

HEDP: U.S. producers’ end-of-period inventories, by company, 2005-07, July-December 2006, and

July-December 2007

* * * * * * *

U.S. PRODUCERS’ IMPORTS AND PURCHASES

During the period 2005-07, both Compass and Rhodia reported imports of HEDP, and ***

reported purchases from other sources of HEDP.20 *** reported that the purchases of U.S. imports from

other sources were ***. Table III-5 presents company-specific information on U.S. producers’ imports

and purchases of HEDP and ratios to U.S. production of HEDP. 

Table III-5

HEDP: U.S. producers’ U.S. production, imports, purchases, and ratio to production, 2005-07,

July-December 2006, and July-December 2007

* * * * * * *

U.S. EMPLOYMENT, WAGES, AND PRODUCTIVITY

Data provided by U.S. producers on the number of production and related workers (“PRWs”)

engaged in the production of HEDP, the total hours worked by such workers, and wages paid to such

PRWs during the period for which data were collected are presented in table III-6. PRWs producing

HEDP declined by *** percent from 2005 to 2006, and rose in 2007 by *** percent, as Compass acquired

the production facility from Lynx and ramped up its production. Hours worked per PRW declined ***

percent between 2005 and 2007, while productivity increased *** percent and hourly wages increased by

*** percent.

Table III-6

HEDP: U.S. producers’ employment-related indicators, 2005-07, July-December 2006, and JulyDecember 2007

* * * * * * *
 1

 The Commission sent questionnaires to those firms identified in the petition, along with firms that, based on a

review of data provided by the U.S. Customs and Border Protection (“Customs”), may have imported HEDP since

2005.

 2

 ***, ***, and *** provided responses to the importers’ questionnaire, but reported that they were not the

importers of record, and as such are not included in the import data contained in this report. *** also reported that it

was not the importer of record, but is included in the import data as its reported importer of record, a related

company, ***, did not provide a response to the importers’ questionnaire. 

 3

 *** reported that ***.

 4

 Both Petitioners and Respondents reported that the United Kingdom was the only other major source of imports

of HEDP into the United States. Conference transcript, p. 31 (Failon) and pp. 98-99 (Mangwani).

 5

 ***.

IV-1

PART IV: U.S. IMPORTS, APPARENT U.S. CONSUMPTION, AND

MARKET SHARES

U.S. IMPORTERS

The Commission sent importer questionnaires to 60 firms believed to be U.S. importers of HEDP,

as well as to all U.S. producers.1

 Questionnaire responses containing usable data were received from 18

firms, which represent almost three-quarters of total imports from China under HTS subheading

2931.00.9043, a multi-product statistical reporting number,2

 almost all imports from India, and the vast

majority of imports from all other sources, essentially the United Kingdom, in the period for which data

were collected. Compass accounted for *** percent of reported imports of HEDP from China in 2007,

and Aquapharm accounted for *** percent of reported imports of HEDP from India in 2007. Solutia

accounted for *** percent of imports in 2007 from the United Kingdom, the largest nonsubject source.3

During the period for which data were collected, U.S. producers Compass and Rhodia imported HEDP

from China and the United Kingdom, respectively. From 2005 to June 2006, Compass was solely an

importer of HEDP from China. In July 2006, Compass acquired a HEDP plant in Smyrna, GA, and

commenced U.S. shipments from this facility. From 2005 to 2007, Compass accounted for *** percent,

*** percent, and *** percent of the quantity of reported HEDP imports from China, respectively. During

the same period, Rhodia accounted for *** percent, *** percent, and *** percent of imports of HEDP

from nonsubject sources. From 2005 to June 2006, Rhodia had an exclusive agreement with U.S.

producer Lynx, which ***. This agreement is described in more detail in Part III of this report. 

Table IV-1 lists all responding U.S. importers of HEDP, their U.S. locations, and their quantities

of imports, by source, in 2007.

Table IV-1

HEDP: Reported U.S. imports, by importers and by sources of imports, 2007

* * * * * * *

U.S. IMPORTS

Table IV-2 presents data for U.S. imports of HEDP from China, India, and nonsubject sources,

essentially the United Kingdom.4

 Data on U.S. imports from China and nonsubject sources are based on

responses to the Commission's U.S. importers’ questionnaires, as official statistics are from a statistical

reporting number that is broader than the subject product. Data for imports from India are based

primarily on responses to the Commission's U.S. importers' and foreign producers’ questionnaires from

***.5

The quantity of U.S. imports from China fluctuated over the period, increasing *** percent from

2005 to 2006, then declining *** percent in 2007. In terms of value, imports from China followed a
 6

 Conference transcript, p. 22 (Failon).

 7

 Petitioner's postconference brief, p. 14 fn. 39.

IV-2

similar pattern, rising between 2005 and 2006 by *** percent, then falling in 2007 by *** percent. The

fluctuation in imports of HEDP from China ***. Compass noted that in 2006 after it bought the U.S.

HEDP production facility, it had an increase in business and temporarily increased its imports of HEDP

from China while it ramped up its U.S. production.6

 Compass argues that the decline in HEDP imports

from China between 2006 and 2007 was due in large measure to a decline in imports from China by

Compass itself, in order to ramp up domestic production.7

Table IV-2

HEDP: U.S. imports, by sources, 2005-07, July-December 2006, and July-December 2007

Source

Calendar year July-December

2005 2006 2007 2006 2007

Quantity (1,000 pounds)

China *** *** *** *** ***

India *** *** *** *** ***

 Subtotal 5,407 8,770 8,528 5,583 5,056

All other sources1

 *** *** *** *** ***

 Total *** *** *** *** ***

Value ($1,000)

2

China *** *** *** *** ***

India *** *** *** *** ***

 Subtotal 2,915 4,559 4,599 2,877 2,768

All other sources1

 *** *** *** *** ***

 Total *** *** *** *** ***

Unit value (per pound)

2

China $*** $*** $*** $*** $***

India *** *** *** *** ***

 Average 0.54 0.52 0.54 0.52 0.55

All other sources1

 *** *** *** *** ***

 Average *** *** *** *** ***

Table continued on next page.
 8

 ***.

 9

 ***.

IV-3

Table IV-2--Continued

HEDP: U.S. imports, by sources, 2005-07, July-December 2006, and July-December 2007

Source

Calendar year July-December

2005 2006 2007 2006 2007

Share of quantity (percent)

China *** *** *** *** ***

India *** *** *** *** ***

 Subtotal *** *** *** *** ***

All other sources1 *** *** *** *** ***

 Total 100.0 100.0 100.0 100.0 100.0

Share of value (percent)

China *** *** *** *** ***

India *** *** *** *** ***

 Subtotal *** *** *** *** ***

All other sources1 *** *** *** *** ***

 Total 100.0 100.0 100.0 100.0 100.0

 1 All such imports are from the United Kingdom.

 2

 Landed, duty-paid.

Note.–2005 and 2006 data for imports of HEDP from India were compiled from ***. 

Note.-- ***.

Source: Compiled from data submitted in response to Commission questionnaires.

Offsetting *** in imports from China in 2007, other U.S. importers, which collectively

represented approximately *** of total imports from China in 2007, reported increases in imports of

HEDP from China. *** started importing in 2007, and importers *** increased their imports from China

by ***.

Over the period for which data were collected imports of HEDP from India, in terms of quantity

and value, increased by *** percent and *** percent, respectively. The quantity of imports of HEDP

from the United Kingdom, the only substantial nonsubject source, rose by *** percent between 2005 and

2006, then fell *** percent in 2007. The increase in imports from 2005 to 2006 can be largely attributed

to ***. In 2007 *** imports from the United Kingdom declined *** percent from its 2006 levels.8

 The

decline in UK imports can also be attributed to ***.9

 The share of quantity and value of imports from

China and India increased from 2005 to 2007, while that of the United Kingdom declined.

The Commission asked importers if they imported HEDP under HTS statistical reporting

numbers other than 2931.00.9043. Four importers, *** reported importing HEDP under HTS numbers

2931.00.9041 or 2931.00.9050. This represented *** percent of total imports of HEDP from China over

the period for which data were collected, *** percent of total imports of HEDP from India, and ***

percent of total imports of HEDP from the United Kingdom.
 10 Petition, p. 28, and petitioner’s postconference brief, pp. 8-9.

IV-4

Table IV-3 presents data for U.S. imports of HEDP from China by source. Imports of HEDP

from China by Compass increased by *** percent between 2005 and 2006, but declined by *** percent in

2007, while imports from China by all other importers increased by *** percent and *** percent over the

same periods. Over the period for which data were collected, unit values of imports by all other importers

of HEDP from China were lower than those of Compass in each period.

Table IV-3

HEDP: U.S. imports from China, by sources, 2005-07, July-December 2006, and July-December

2007

* * * * * * *

THE QUESTION OF NEGLIGIBLE IMPORTS

The statute (section 771(24)(A)(i) of the Act) provides that imports from a subject country

corresponding to the domestic like product are negligible if such imports account for less than 3 percent

of the volume of all such merchandise imported into the United States in the most recent 12-month period

for which data are available that precedes the filing of the petition - in this case January 2007 through

December 2007. Based on questionnaire responses of importers of HEDP from China, India, and

nonsubject sources for that 12-month period, imports of HEDP from China and India accounted for ***

percent and *** percent of total U.S. imports, respectively, ***.

CUMULATION CONSIDERATIONS

In assessing whether imports compete with each other and with the domestic like product, the

Commission has generally considered four factors: (1) fungibility, (2) presence of sales or offers to sell

in the same geographical market, (3) common or similar channels of distribution, and (4) simultaneous

presence in the market. Issues concerning fungibility and channels of distribution are addressed in 

Parts I and II of this report. With regard to geographic markets and presence in the market, the petitioner

argued that imported HEDP from all subject countries competes without regard to geographic location in

the United States and that these imports have been simultaneously present in the U.S. market during the

period for which data were collected.10 Respondents did not address geographic markets and presence in

the market.

Table IV-4 presents data for the geographic markets of U.S. imports of HEDP from China and

India. Eleven importers, representing *** of imports from China and *** of imports from India, reported

estimated shares of their U.S. shipments into each of seven U.S. geographic regions in 2007. 

Table IV-4

HEDP: U.S. shipments of subject U.S. imports, by geographic area, by sources, 2007

* * * * * * *

HEDP produced in China and India was present in the United States in all period and subperiods

for which data were collected.

APPARENT U.S. CONSUMPTION AND MARKET SHARES

Data on apparent U.S. consumption of HEDP are presented in table IV-5. From 2005 to 2006,

apparent U.S. consumption of HEDP increased by *** percent in terms of quantity, and by *** percent in
 11 *** reported that ***.

IV-5

terms of value. From 2006 to 2007, the quantity of apparent U.S. consumption decreased by *** percent

and the value decreased by *** percent. 

Data on U.S. market shares for HEDP are presented in table IV-6. From 2005 to 2006, U.S.

producers lost *** percentage points of market share based on quantity and *** percentage points based

on value. Between 2006 and 2007, U.S. producers gained *** percentage points of U.S. market share

based on volume and *** percentage points based on value. U.S. imports from China gained ***

percentage points of U.S. market share during 2005-06 based on quantity and *** percentage points

based on value. Between 2006 and 2007, U.S. imports from China gained *** percentage point and ***

percentage points, based on quantity and value, respectively. U.S. imports from India declined by ***

and *** percentage points between 2005 and 2006 based on quantity and value, respectively, but gained

*** and *** percentage points of U.S. market share during 2006-07, respectively. The market share of

U.S. imports from nonsubject countries declined *** percentage points based on quantity but gained ***

percentage point based on value over the period for which data were collected.11

Table IV-5

HEDP: U.S. shipments of domestic product, U.S. shipments of imports by sources, and apparent

U.S. consumption, 2005-07, July-December 2006, and July-December 2007

Item

Calendar year July-December

2005 2006 2007 2006 2007

Quantity (1,000 pounds)

U.S. producers' U.S. shipments: *** *** *** *** ***

U.S. shipments of imports from--

 China *** *** *** *** ***

 India *** *** *** *** ***

 Subtotal 5,881 8,351 8,089 4,762 4,267

 All other countries1 *** *** *** *** ***

 Total imports *** *** *** *** ***

Apparent U.S. consumption *** *** *** *** ***

Value ($1,000)

U.S. producers' U.S. shipments: *** *** *** *** ***

U.S. shipments of imports from--

 China *** *** *** *** ***

 India *** *** *** *** ***

 Subtotal 3,709 5,047 4,978 2,828 2,716

 All other countries1 *** *** *** *** ***

 Total imports *** *** *** *** ***

Apparent U.S. consumption *** *** *** *** ***

1

 ***.

Source: Compiled from data submitted in response to Commission questionnaires. 
IV-6

Table IV-6

HEDP: Apparent U.S. consumption and market shares, 2005-07, July-December 2006, and JulyDecember 2007

* * * * * * *

RATIO OF IMPORTS TO U.S. PRODUCTION

Data on the ratio of imports to U.S. production of HEDP are presented in table IV-7.

Table IV-7

HEDP: U.S. production, U.S. imports, and ratios of imports to production, 2005-07, July-December

2006, and July-December 2007

Item

Calendar year July-December

2005 2006 2007 2006 2007

Quantity (1,000 pounds)

U.S. production *** *** *** *** ***

U.S. imports from--

China *** *** *** *** ***

India *** *** *** *** ***

Subtotal, subject 5,407 8,770 8,528 5,583 5,056

All other sources1 *** *** *** *** ***

Total imports *** *** *** *** ***

Ratio of imports to U.S. production (percent)

U.S. imports from--

China *** *** *** *** ***

India *** *** *** *** ***

Subtotal, subject *** *** *** *** ***

All other sources! *** *** *** *** ***

Total imports *** *** *** *** ***

Source: Compiled from data submitted in response to Commission questionnaires. 
 1

 Petition, p. 4.

 2

 Petition, pp. 29-39 and Exhibit AD-15.

 3

 The importer that reported 25 percent was ***. The second-highest reported transportation cost by importers

was 10 percent.

V-1

PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

The principal raw materials used for producing HEDP in the United States are acetic anhydride

and phosphorus acid.1

 Raw materials as a share of cost of goods sold for the domestic producer of HEDP

increased between the second half of 2006 and 2007, increasing from *** percent of the cost of goods

sold in the second half of 2006 to *** percent in 2007. Petitioner indicates that annual average raw

material costs for its Mayoquest 1500 product increased by *** percent from *** cents per pound in 2005

to *** cents per pound in 2006 to *** cents per pound in 2007.2

Transportation Costs to the U.S. Market

Transportation costs for HEDP from China and India to the United States (excluding U.S. inland

costs) are estimated to be approximately 6.1 percent and 0.9 percent, respectively, of the total cost for

HEDP. These estimates are derived from official import data and represent the transportation and other

charges on imports valued on a c.i.f. basis, as compared with customs value.

U.S. Inland Transportation Costs

Transportation costs on U.S. inland shipments of HEDP generally account for a small-tomoderate share of the delivered price of these products. The one U.S. producer, Compass, reported costs

of *** percent of the delivered price for HEDP. For importers, the costs ranged from 1 to 25 percent of

the delivered price for HEDP.3

Exchange Rates

Quarterly data reported by the International Monetary Fund indicate that the nominal value of the

Chinese currency appreciated 11.4 percent relative to the U.S. dollar from 2005 to 2007 and the real value

appreciated 38.4 percent (figure V-1). The nominal value of the Indian currency appreciated 10.8

percent relative to the U.S. dollar from 2005 to 2007 and the real value appreciated 8.2 percent. 

PRICING PRACTICES

Pricing Methods

When the U.S. producer and importers were asked how they determined the prices that they

charge for HEDP, responses were varied. Transaction-by-transaction negotiations, set price lists, and

contracts were all cited by the U.S. producer and importers. U.S. producer Compass reported that it

quotes prices of HEDP on *** basis, and importers reported quoting on an f.o.b. basis, a delivered basis,

or both.
V-2

The U.S. producer Compass reported that *** percent of its sales of HEDP were from inventory. 

Seven of 12 responding importers reported that all of their sales are made from inventory and the three

remaining importers (***) reported making at least 75 percent of their sales from inventory. Two of the

12 responding importers (***) reported making all of their sales to order.

The U.S. producer Compass reported lead times from inventory of *** days and lead times for

sales to order of *** days. Lead times for delivery of HEDP for all but one responding U.S. importer

ranged from to one day to seven days on sales from inventory and ranged from 3 to 8 weeks on sales

produced to order. 

Figure V-1

Exchange rates: Indices of the nominal and real exchange rates between the currencies of China

and India and the U.S. dollar, by quarters, 2005-2007

Source: International Monetary Fund, International Financial Statistics online, www.imfstatistics.org/imf/ retrieved

April 2, 2008.
 4

 Although importer *** did not indicate what share of its sales were for contract or spot sales, it is assumed that

all of its sales were on a contract basis since it reported that its short term contracts were one year in duration.

 5

 Another two responding importers indicated that these contracts sometimes contain meet or release provisions. 

Another two responding importers indicated that sometimes price and quantity are fixed.

V-3

Sales Terms and Discounts

 U.S. producer Compass reported that *** percent of its sales are on a short-term contract basis

and *** percent were on a spot sales basis. Five of 12 responding importers reported that they sell

exclusively on a spot sales basis and one importer reported making 90 percent of its sales on a spot basis. 

Five importers reported making at least 45 percent of their sales on a contract basis (***) and one

reported making half of their sales on short-term contract basis and other half on a spot basis (***).4

U.S. producer Compass indicated that its contracts are *** in duration, sometimes price ***, and

that its contracts have ***, and sometimes ***. U.S. importers indicated that contracts are typically for

periods of one month to up to one year. Four of eight responding importers reported that price can be

renegotiated for their contracts during the contract period. Four of eight responding importers indicated

that contracts contain meet-or-release provisions and four of six responding importers indicated that both

price and quantity are fixed.5

The *** and five of eleven responding importers indicated that they do not have discount policies

for their sales of HEDP. Two responding importers (***) reported the use of volume discounts and one

additional importer (***) reported providing discounts for full container loads.

PRICE DATA

The Commission requested U.S. producers and importers of HEDP to provide quarterly data for

the total quantity and f.o.b. value of the following HEDP products shipped to unrelated customers in the

U.S. market during 2005-07:

Product 1.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in truckload drums to distributors (resellers).

Product 2.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in bulk tanktruck to compounders (formulators).

Product 3.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in truckload drums to compounders

(formulators).

Product 4.-- 60 percent nominal aqueous solution HEDP, including, but not limited to, Dequest®

2010 (Thermphos/Solutia), Briquest® ADPA-60A (Rhodia), Mayoquest® 1500 (Compass),

Aquacid 105 EX (Aquapharm), XF-334 (Wujin Fine Chemical Factory), KW-100 (Kewei), and

ZF111SG (Wujin Water Stabilizer Factory), sold in LTL drums to compounders (formulators).
 6

 Price data from the ***.

 7

 Price data on U.S. imports from the United Kingdom are presented in Appendix D.

 8

 Conference transcript p. 35 (Failon), pp. 102-103 (Collias). 

 9

 Conference transcript, p. 77 (Failon).

V-4

Two U.S. producers (***),6

 nine importers from China (***), and two importers from India (***)

provided usable pricing data for sales of the requested products, although not all firms reported pricing for

all products for all quarters. Pricing data reported by these firms accounted for approximately ***

percent of U.S. producers’ commercial shipments of HEDP, about *** percent of U.S. commercial

shipments of subject imports from China, about *** percent of U.S. commercial shipments of subject

imports from India, and about *** percent of U.S. commercial shipments of subject imports from

nonsubject sources in 2007.7

Price Trends

Weighted-average prices of HEDP are presented in tables V-1 through V-4 and figure V-2. 

According to both petitioner and respondents, the HEDP market exhibits seasonality, increasing during

the second and third quarters due to increased air conditioning use and somewhat due to increased

demand for industrial cooling.8

 Compass indicated that it makes no distinction between pricing of

imported material versus domestically produced material.9 Weighted-average sales prices for most U.S.-

produced products decreased between periods with available data by amounts up to *** percent (see table

V-5). The weighted-average sales price for product 2 increased by *** between the first quarter of 2005

and the fourth quarter of 2007.

Price Comparisons

Overall, there were 52 instances where prices for domestic HEDP and subject imports of HEDP

could be compared. Of these 52 comparisons, there were 35 instances (67 percent) where the subject

imported product was priced below the domestic product (table V-6). Margins of underselling averaged

21.5 percent, ranging from 0.9 percent to 60.0 percent. In 17 instances, the subject imported product was

priced above the comparable domestic product. Margins of overselling averaged 18.2 percent, ranging

from 0.3 percent to 84.2 percent. 

Table V-1

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 1, and

margins of (overselling)/underselling by quarters, 2005-07

* * * * * * *

Table V-2

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 2, and

margins of (overselling)/underselling by quarters, 2005-07

* * * * * * *

Table V-3

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 3, and

margins of (overselling)/underselling by quarters, 2005-07

* * * * * * *
V-5

Table V-4

HEDP: Weighted-average f.o.b. prices and quantities of domestic and imported product 4, and

margins of (overselling)/underselling by quarters, 2005-07

* * * * * * *

Figure V-2

HEDP: Weighted-average f.o.b. prices of products 1-4, 2005-07

* * * * * * *

Table V-5

HEDP: Summary of weighted-average f.o.b. prices for products 1-4, by country, 2005-07

* * * * * * *

Table V-6

HEDP: Instances of underselling/overselling and the range and average of margins for products 

1-4, 2005-07

Country

Underselling Overselling

Number of

instances

Range

(percent)

Average

margin

(percent)

Number of

instances

Range

(percent)

Average

margin

(percent)

 China *** *** *** *** *** ***

 India *** *** *** *** *** ***

 Total1 35 0.9 to 60.0 21.5 17 0.3 to 84.2 18.2

 1 Total number of instances for all cited products, range of margins for all cited products, and average margin for

all cited products. 

Source: Compiled from data submitted in response to Commission questionnaires.

LOST SALES AND LOST REVENUES

The Commission requested U.S. producers of HEDP to report any instances of lost sales or

revenues they experienced due to competition from imports of HEDP from China and India since 2005. 

In their petition, Compass reported *** lost sales allegations totaling $*** and involving *** pounds of

HEDP and *** totaling $*** and involving *** pounds of HEDP. Staff contacted the *** purchasers

cited in the allegations; *** responded. The results are summarized in tables V-7 and V-8 and are

discussed below. 

***.

Table V-7

HEDP: U.S. producers’ lost sales allegations

* * * * * * *

Table V-8

HEDP: U.S. producers’ lost revenue allegations

* * * * * * *

***.

 1

 Addendum to Rhodia’s U.S. producer questionnaire.

 2

 Conference transcript, pp. 60-61 (McCaul).

 3

 ***. 

 4

 Conference transcript, p. 57 (McCaul). 

 5

 ***. Because the HEDP cost information reported by Rhodia and Compass are not directly comparable, table

VI-1 and table VI-2 are modified from the traditional Commission format in order to separately present the JanuaryJuly 2006 information for Rhodia and the July-December 2006 information for Compass. The full-year 2006

information reflects the HEDP financial results of Compass and Rhodia combined. As presented in appendix C,

HEDP financial results reflect full-year 2006 (without separate first half and second half 2006 breakouts), as well as

second half 2006 and second half 2007.

VI-1

PART VI: FINANCIAL EXPERIENCE OF THE U.S. PRODUCER

BACKGROUND

During the period examined U.S. production of HEDP took place at a single facility in Smyrna,

GA, which was operated by Lynx and subsequently by Compass. Financial results were reported on the

basis of U.S. generally accepted accounting principles (“GAAP”). 

As described in a previous section of this report, the character of U.S. HEDP operations changed

during the period. ***.1

 Subsequent to the acquisition of the Smyrna, GA plant in mid 2006, Compass

assumed responsibility for both manufacturing and marketing U.S.-produced HEDP.2

 With respect to the

part of the period covered by the Lynx-Rhodia agreement (2005, first half 2006), the Commission ideally

would present a consolidation of the HEDP financial results of both Lynx and Rhodia. For the reasons

described in footnote 3, however, staff concluded that HEDP financial results for the first part of the

period (2005, first half 2006) should be limited to the financial results reported by Rhodia.3

 In the second

half of the period (second half 2006, 2007), U.S.-produced HEDP financial results reflect the operations

of Compass. 

As noted in a previous section of the report, in early 2007 Compass became a subsidiary of

Cathay Industries USA with its ultimate parent company being Cathay Pigments (Holdings) Ltd. 

According to a Compass official, there was no substantive change in the company’s operations

subsequent to becoming part of the Cathay group.4

 

OPERATIONS ON HEDP

Income-and-loss data for operations on HEDP are presented in table VI-1 and on an average unit

basis in table VI-2. A variance analysis is not presented due to the comparability issues described below.5

Table VI-1

HEDP: Results of operations, 2005-07

* * * * * * *

Table VI-2

HEDP: Results of operations (per pound), 2005-07

* * * * * * *

As shown in table VI-1, overall HEDP operations generated *** throughout the period with a ***

in 2007. The trend in average sales value indicates that on an overall basis average HEDP sales value
 6

 Petition, pp. 4-5.

 7

 Conference transcript, pp. 62-64 (McCaul). 

 8

 Conference transcript, p. 62 (McCaul). With regard to the switch from phosphorus trichloride to phosphorus

acid crystal in 2007, it was also noted at the staff conference that Compass could no longer rely on Rhodia as a

source of phosphorus trichloride because Rhodia in effect became a competitor after the termination of the LynxRhodia contract manufacturing agreement. Conference transcript, p. 64 (McCaul). Additionally, the switch to

phosphorus acid crystal from phosphorus trichloride, formerly the single most hazardous material at the Smyrna, GA

plant, also reduced the overall hazardous material responsibilities of Compass. Conference transcript, p. 66 (Failon).

 9

 ***. E-mail with attachments from ***, April 8, 2008. Conference transcript, pp. 64 (McCaul). ***. Auditor

preliminary phase notes. 

 10 E-mail from ***, April 22, 2008.

 11 Compass petition, pp. 4-5. 

 12 Conference transcript, pp. 59-60 (McCaul). 

 13 E-mail with attachments from ***, April 8, 2008. Conference transcript, pp. 59-60 (McCaul). 

VI-2

declined in 2006 compared to 2005 and then subsequently increased in 2007. Despite the increase in

2007, average HEDP sales value at the end of the period was still lower compared to 2005. 

A direct period-to-period comparison of the average costs presented in table VI-2 is limited by

the change in reporting entities and corresponding format of HEDP financial results. With respect to

average raw material cost, comparability is further limited by changes in the form of phosphorus acid 

used. As described in a previous section of this report, HEDP can be produced using two processes both 

of which use acetic anhydride but which differ in terms of phosphorus acid source: phosphorus

trichloride or phosphorus acid crystal.6

 During 2005 and 2006, phosphorus trichloride was the primary

phosphorus acid source used in the production of HEDP. According to a company official, the

subsequent switch to phosphorus acid crystal in 2007 by Compass was the only significant operational

change after the company’s acquisition of the Smyrna, GA plant.7

 With respect to the cost of raw

materials after acquisition, it was also noted generally that “. . . Compass was, because of its situation,

able to provide some raw materials at better costs than Lynx was able to, so there would have been some

improvement in that regard.”8

 According to Compass’ U.S. producer questionnaire, ***.9 

***. ***.10 ***.11 

Since full-year 2006 data are a combination of reporting by Compass and Rhodia, period-toperiod changes in direct labor and other factory costs are comparable, as presented in table VI-1 and table

VI-2, only with respect to the second half of 2006 and 2007. As shown in table VI-2, average direct labor

cost and other factory cost were somewhat lower in full-year 2007 compared to second half 2006. This

pattern, at least in part, is related to the substantial decline in capacity utilization in the second half of

2006 and the subsequent increase in full-year 2007. According to Compass, while the Smyrna, GA

facility continued to operate throughout the transition in ownership between Lynx and Compass, there

was a slowdown in second half 2006 production in part to work off some of Compass’ imported

inventory. The decline in second half 2006 HEDP volume also reflected the previous termination of the

Lynx-Rhodia contract manufacturing agreement.12 

While the company reported that there were no significant non-recurring expenses due to the

transition in ownership, there was a general corporate restructuring of Compass to reflect its expansion

into manufacturing operations, as well as capital expenditures at the Smyrna, GA plant to get it “. . . into

an acceptable condition over the first twelve months of ownership.”13 As described by a Compass

company official, “{t}here was equipment that had to be replaced; there were upgrades that had to be

made. That was done by Compass, and that was a significant difference in the operation. The plant,

currently, is in much better shape than it's ever been and it's running very smoothly now.” According to
 14 Conference transcript, p. 61 (McCaul). For the eighteen months subsequent to the Compass acquisition the

overall investment at the Smyrna, GA plant was estimated to be around $2.5 million. Ibid.

 15 In response to staff requests, Compass provided financial results for Compass’ overall establishment operations

(2005, 2006, 2007), as well as plant-specific (Smyrna, GA) financial results (2006, 2007). Compass also provided

Lynx’s financial results broken out by plant (including Smyrna, GA) (2005, 2006).

 16 ***. 

 17 The internal consumption reported in table VI-1 and table VI-2 represents HEDP used to produce tetrasodium

etidronate. 

 18 Conference transcript, pp. 62, 67 (McCaul). 

 19 Conference transcript, p. 68 (McCaul). 

 20 ***. Petitioner’s postconference brief, exhibit 4. 

VI-3

this company official, these investments were not made previously due to financial difficulties

experienced by Lynx.14 

As shown in table VI-1 and table VI-2 and when considering the entire period, SG&A expenses

as a percent of sales and on an average per pound basis were somewhat lower at the end of the period.

When considering Compass’ second-half 2006 HEDP financial results and the *** in 2007, the primary

factors were lower average raw material cost in conjunction with a modestly higher average sales value. 

Additional factors were the declines in average direct labor and other factory costs which were partially

offset by higher average SG&A expenses. The lower average direct labor and other factory costs in 2007

are generally consistent with higher capacity utilization and the plant improvements noted previously. 

In 2007, U.S.-produced HEDP represented *** percent of the Smyrna, GA plant’s total revenue

and *** percent of Compass’ overall establishment revenue.15 The corresponding 2007 *** for the

Smyrna, GA plant and Compass’ overall establishment operations were ***, respectively. For second

half 2006 the Smyrna, GA plant reported a ***, while for full-year 2006 Compass’ overall establishment

operations generated a ***.16 

While HEDP is the largest volume phosphonate produced at the Smyrna, GA plant, tetrasodium

etidronate is the only downstream product which is directly dependent on HEDP production.17 According

to a company official, with the minor exception of tetrasodium etidronate, the Smyrna, GA plant could

operate without HEDP production. However and from the company’s perspective, the inability to

produce and sell the largest volume product, HEDP, profitably calls into question the plant’s overall

viability.18 The Compass company official also noted that large volume HEDP production enhances the

company’s supply relationships and infrastructure and that in this regard the elimination of HEDP

production would likely affect the plant’s other products.19 

Notwithstanding the importance of HEDP production to the overall efficiency of the Smyrna, GA

plant operations, a company official indicated that it was not clear whether HEDP production would be

continued after Compass’ acquisition: “. . . our first decision was that we weren't going to make any

HEDP. We continued importing product in the second half of 2006; and then we kept looking at it,

though, and thinking we ought to be able to try to compete here on making HEDP in the U.S. So we

changed our position on that and we started focusing on manufacturing HEDP.”20 
 21 As a purchaser of Lynx’s manufacturing output, Rhodia did not report assets, capital expenditures, or R&D

expenses associated with U.S.-produced HEDP.

 22 E-mail with attachments from ***, April 8, 2008. 

VI-4

CAPITAL EXPENDITURES, RESEARCH AND DEVELOPMENT EXPENSES, 

ASSETS, AND RETURN ON INVESTMENT

Data on capital expenditures, research and development (“R&D”) expenses, assets, and return on

investment are presented in table VI-3. 

The capital expenditures for the period, including 2005, were reported by Compass.21 As noted

previously, the increases in capital expenditures during the period represented equipment upgrades that

had been delayed/postponed by the predecessor company, Lynx. R&D expenses, which were also

reported for the entire period by Compass, declined steadily. As described by Compass, ***.22 

Table VI-3

HEDP: Capital expenditures, R&D expenses, assets, and return on investment related to HEDP

operations, 2005-07

* * * * * * *

CAPITAL AND INVESTMENT

The Commission requested the U.S. producer to describe any actual or anticipated negative

effects of imports of HEDP from China and/or India on its firms’ growth, investment, ability to raise

capital, existing development and production efforts (including efforts to develop a derivative or more

advanced version of the product), or the scale of capital investments. 

Actual Negative Effects

Compass: ***. 

Rhodia: ***.

Anticipated Negative Effects

Compass: ***.

Rhodia: ***.
 1

 Section 771(7)(F)(ii) of the Act (19 U.S.C. § 1677(7)(F)(ii)) provides that “The Commission shall consider *** .

. . as a whole in making a determination of 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

under this title. The presence or absence of any factor which the Commission is required to consider . . . shall not

necessarily give decisive guidance with respect to the determination. Such a determination may not be made on the

basis of mere conjecture or supposition.”

VII-1

PART VII: THREAT CONSIDERATIONS AND BRATSK INFORMATION

Section 771(7)(F)(i) of the Act (19 U.S.C. § 1677(7)(F)(i)) provides that--

In determining whether an industry in the United States is threatened

with material injury by reason of imports (or sales for importation) of the

subject merchandise, the Commission shall consider, among other

relevant economic factors1

--

(I) if a countervailable subsidy is involved, such information as may be

presented to it by the administering authority as to the nature of the

subsidy (particularly as to whether the countervailable subsidy is a

subsidy described in Article 3 or 6.1 of the Subsidies Agreement), and

whether imports of the subject merchandise are likely to increase,

(II) any existing unused production capacity or imminent, substantial

increase in production capacity in the exporting country indicating the

likelihood of substantially increased imports of the subject merchandise

into the United States, taking into account the availability of other export

markets to absorb any additional exports,

(III) a significant rate of increase of the volume or market penetration of

imports of the subject merchandise indicating the likelihood of

substantially increased imports,

(IV) whether imports of the subject merchandise are entering at prices

that are likely to have a significant depressing or suppressing effect on

domestic prices, and are likely to increase demand for further imports,

(V) inventories of the subject merchandise,

(VI) the potential for product-shifting if production facilities in the

foreign country, which can be used to produce the subject merchandise,

are currently being used to produce other products,

(VII) in any investigation under this title which involves imports of both

a raw agricultural product (within the meaning of paragraph (4)(E)(iv))

and any product processed from such raw agricultural product, the

likelihood that there will be increased imports, by reason of product

shifting, if there is an affirmative determination by the Commission

under section 705(b)(1) or 735(b)(1) with respect to either the raw

agricultural product or the processed agricultural product (but not both),
 2

 Section 771(7)(F)(iii) of the Act (19 U.S.C. § 1677(7)(F)(iii)) further provides that, in antidumping

investigations, “. . . the Commission shall consider whether dumping in the markets of foreign countries (as

evidenced by dumping findings or antidumping remedies in other WTO member markets against the same class or

kind of merchandise manufactured or exported by the same party as under investigation) suggests a threat of material

injury to the domestic industry.”

 3

 Petition, exh. AD-3.

VII-2

(VIII) the actual and potential negative effects on the existing

development and production efforts of the domestic industry, including

efforts to develop a derivative or more advanced version of the domestic

like product, and

(IX) any other demonstrable adverse trends that indicate the probability

that there is likely to be material injury by reason of imports (or sale for

importation) of the subject merchandise (whether or not it is actually

being imported at the time).2

Information on the volume and pricing of imports of the subject merchandise is presented in

Parts IV and V of this report; and information on the effects of imports of the subject merchandise on U.S.

producers’ existing development and production efforts is presented in Part VI. Information on

inventories of the subject merchandise; foreign producers’ operations, including the potential for

“product-shifting;” any other threat indicators, if applicable; and any dumping in third-country markets,

follows. Also presented in this section of the report is information obtained for consideration by the

Commission in relation to Bratsk rulings.

THE INDUSTRY IN CHINA

The Commission requested data from 27 firms which were listed in the petition and believed to

produce HEDP in China during the period for which data were collected.3

 The Commission received

responses from four firms, which claimed to account for approximately *** percent of Chinese

production of HEDP and *** percent of exports to the United States. The names of the foreign firms

along with shares of production and exports to the United States (by quantity) are presented in table

VII-1. 
 4

 AWTCP postconference brief, p. Q-2.

VII-3

Table VII-1

HEDP: Manufacturers/exporters in China, and quantities and shares of reported production and

exports to the United States, 2007

Foreign producer/exporter

Reported production

(2007)

Reported exports to the

United States (2007)

Quantity

(1,000

lbs.)

Share

(Percent)

Quantity

(1,000

lbs.)

Share

(Percent)

Changzhou Kewei Fine Chemical Co., Ltd. *** *** *** ***

Jiangsu Jianghai Chemical Group Co., Ltd. *** *** *** ***

Nanjing University of Chemical Technology

Changzhou Wujin Water Quality Stabilizer

Factory *** *** *** ***

Wujin Fine Chemical Factory1 *** *** *** ***

Total 43,355 100.0 *** 100.0

1 Wujin Fine Chemical Factory reported that ***.

Source: Compiled from data submitted in response to Commission questionnaires.

The Commission asked responding foreign producers to estimate the shares of their firm’s total

sales that were represented by sales of HEDP in 2007; firms reported a simple average of *** percent,

with sales of HEDP ranging from *** percent to *** percent of total sales. *** Chinese producers

reported plans to change production capacity or production of HEDP in China. Chinese producers of

HEDP reported that none of the HEDP exported by them was subject to antidumping findings or remedies

in any WTO-member countries.

Respondent, Ad Hoc Water Treatment Chemical Producers Committee (“AWTCP”), which

consists of the four responding Chinese producers, contends that the demand for HEDP in China is at

least 20,000 metric tons or 44.1 million pounds. AWTCP also contends that “***.”4

 

Table VII-2 presents data for reported production and shipments of HEDP for China. Chinese

capacity increased by 37.6 percent over the period 2005-07, with a commensurate increase in production

of 36.0 percent. From 2005 to 2007, capacity utilization for producers in China remained relatively

steady, declining by 0.7 percentage point from 65.0 percent to 64.3 percent. Individual Chinese

producers’ average capacity utilization over the period 2005-07 ranged from *** percent to *** percent,

with all but one producer above *** percent. Exports to the United States rose by *** percent from 2005

to 2007, compared with an increase of *** percent to all other markets. As a ratio of total shipments,

exports to the United States rose from *** percent to *** percent between 2005 and 2006, then fell to ***

percent in 2007. Exports to all other markets as a ratio of total shipments declined from *** percent in

2005 to *** percent in 2006, then increased to *** percent in 2007. Ratios of inventories to production

and to total shipments remained relatively steady, but both were projected to increase in 2008 and 2009.

Chinese producer, *** listed ***, as one of its five largest U.S. importers.
VII-4

Table VII-2

HEDP: China’s reported production capacity, production, shipments, and inventories, 2005-07,

July-December 2006, July-December 2007, and projections for 2008 and 2009

Item

Actual experience Projections

2005 2006 2007

July-December

2006 2007 2008 2009

Quantity (1,000 pounds)

Capacity 49,018 60,055 67,455 32,328 33,828 68,455 68,955

Production 31,885 36,582 43,355 18,198 20,979 42,344 44,467

End-of-period inventories *** *** *** *** *** *** ***

Shipments:

 Internal consumption *** *** *** *** *** *** ***

 Home market *** *** *** *** *** *** ***

 Exports to--

 The United States *** *** *** *** *** *** ***

 All other markets *** *** *** *** *** *** ***

 Total exports *** *** *** *** *** *** ***

Total shipments *** *** *** *** *** *** ***

Ratios and shares (percent)

Capacity utilization 65.0 60.9 64.3 56.3 62.0 61.9 64.5

Inventories to production *** *** *** *** *** *** ***

Inventories to total shipments *** *** *** *** *** *** ***

Shares of total quantity of

shipments:

 Internal consumption *** *** *** *** *** *** ***

 Home market *** *** *** *** *** *** ***

 Exports to--

 The United States *** *** *** *** *** *** ***

 All other markets *** *** *** *** *** *** ***

 Total exports *** *** *** *** *** *** ***

Source: Compiled from data submitted in response to Commission questionnaires.
 5

 Petition, exh. AD-3. 

 6

 Excel Industries provided a response to the foreign producers’ questionnaire, but did not provide usable trade

data. Excel Industries reported that ***.

 7

 E-mail from ***, April 5, 2008, and conference transcript, p. 100 (Mangwani). The petitioners also report that

these two producers are the largest producers and exporters to the United States of HEDP from India. Petition, p. 9

and Exh. AD-3. 

 8

 There are two other producers of HEDP in India, Rencal Chemicals (India) Ltd. and United Phosphorus, Ltd.,

but they are reported to be relatively small. Conference transcript, p. 100 (Mangwani).

 9

 Conference transcript, pp. 85-87 (Mangwani), and email from ***, April 14, 2008.

 10 Conference transcript, p. 110 (Mangwani).

VII-5

THE INDUSTRY IN INDIA

The Commission requested data from six firms which were listed in the petition and believed to

have produced HEDP in India during the period for which data were collected.5

 The Commission

received responses from two firms, although only one firm, Aquapharm Chemicals Pvt. Ltd.

(“Aquapharm”), provided useable data.6

 The *** producer of HEDP in India, Aquapharm, claimed to

account for approximately *** percent of Indian production of HEDP and together with Indian producer,

Excel Industries, accounted for the vast majority of exports to the United States during the period 2005-

07.7 8

Aquapharm reported that *** percent of its total sales in the most recent fiscal year were sales of

HEDP. As shown in table VII-3, in 2007, *** percent of Aquapharm’s total shipments of HEDP were

exported to the United States, *** percent of its shipments were to its home market, *** percent were

internal shipments, and *** percent were to export other markets such as ***. 

Table VII-3

HEDP: India’s reported production capacity, production, shipments, and inventories, 2005-07,

July-December 2006, July-December 2007, and projections for 2008 and 2009

* * * * * * *

Aquapharm reported that it only sells to two customers in the United States, 80 percent to

formulator/compounder/distributor Buckman and 20 percent to distributor Zibex. Aquapharm reported

that it has a warehouse in Alabama, as well as an independent agent, to provide service to Buckman.9

Aquapharm stated that it had increased its HEDP production capacity in order to meet demand from the

European Union.10 It also reported that it ***. Aquapharm reported that it anticipated growth in its sales

in ***.

Table VII-3 presents data for reported production and shipments of HEDP for India. Production

increased over the period 2005-07 and was projected to continue to increase in 2008 and 2009. Capacity

utilization fluctuated from ***. Home market sales remained relatively stable over the period, declining

by *** percent between 2005 and 2007. In contrast, exports rose by *** percent over the same period,

with a *** percent increase in exports to the United States and a *** percent increase in exports to all

other markets. As a share of total shipments, exports increased from *** percent in 2005 to *** percent in

2006 and *** percent in 2007. This increase was largely attributable to exports to non-U.S. markets,

which increased from *** percent of total shipments in 2005 to *** percent in 2006 and *** percent in

2008. Exports to the United States as a share of total shipments remained relatively flat, fluctuating from

*** percent in 2005 to *** percent in 2006 and *** percent in 2007.

Aquapharm reported that *** as shown in table VII-4, ***.
 11 Conference transcript, pp. 100-101 (Mangwani).

 12 Conference transcript, p. 22 (Failon). In addition, *** reported that they did not import HEDP from China in

2005, and therefore had no inventories prior to 2006.

 13 *** did not report inventories of HEDP from India for 2005.

 14 Email from ***, April 17, 2008.

VII-6

Aquapharm estimated that the demand for HEDP in India was approximately 7,000 to 8,000

metric tons (15.4 million to 17.6 million pounds), and was growing at a rate of about 14 to 15 percent per

year due to growth in infrastructure and increased use in water treatment.11

Both Indian producers of HEDP reported that none of the HEDP that they exported was subject to

antidumping findings or remedies in any WTO-member countries.

U.S. IMPORTS SUBSEQUENT TO DECEMBER 31, 2007

The Commission requested U.S. importers to indicate whether they imported or arranged for the

importation of HEDP after December 31, 2007. Nine of the 15 reporting U.S. importers stated that they

had imported or arranged for importation since December 31, 2007, seven from China and two from

India. Table VII-4 presents U.S. imports from China and India subsequent to December 31, 2007.

Table VII-4

HEDP: U.S. importers’ orders of subject imports from China and India subsequent to December

31, 2007, by period

Period

Quantity (pounds)

China India

January-March 2008 932,414 ***

April-June 2008 572,134 ***

July-September 2008 70,000 ***

October-December 2008 80,000 ***

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. IMPORTERS’ INVENTORIES

Data collected in these investigations on U.S. importers’ end-of-period inventories of HEDP are

presented in table VII-5. U.S. importers’ reported inventories of HEDP from China increased by

*** percent from 2005 to 2006, and by *** percent from 2006 to 2007. These inventories from China, as

a share of imports from China, also increased from *** percent in 2005, to *** percent in 2006, rising

again in 2007 to *** percent. In 2006, Compass reported that it had an increase in business, and

temporarily increased its imports of HEDP from China after it bought the U.S. HEDP production

facility.12

Inventories from India increased by *** percent, an increase of *** percentage points as a ratio to

imports, between 2006 and 2007.13 Inventories from all other sources fell by *** percent from 2006 to

2007. The decline was largely due to a *** percent decline in inventories of imports from the United

Kingdom reported by ***, which reported that ***.14
VII-7

Table VII-5

HEDP: U.S. importers’ end-of-period inventories of imports, by source, 2005-07, July-December

2006, and July-December 2007

Source

Calendar year July-December

2005 2006 2007 2006 2007

Imports from China:

Inventories (1,000 pounds) *** *** *** *** ***

Ratio of inventories to imports (percent) *** *** *** *** ***

Ratio of U.S. shipments of imports (percent) *** *** *** *** ***

Imports from India:

Inventories (1,000 pounds) *** *** *** *** ***

Ratio of inventories to imports (percent) *** *** *** *** ***

Ratio of U.S. shipments of imports (percent) *** *** *** *** ***

Imports from all subject sources:

Inventories (1,000 pounds) 548 1,790 2,007 1,689 1,897

Ratio of inventories to imports (percent) 10.1 20.4 23.5 15.1 18.8

Ratio of U.S. shipments of imports (percent) 9.3 21.4 24.8 17.7 22.2

Imports from all other sources:

Inventories (1,000 pounds) *** *** *** *** ***

Ratio of inventories to imports (percent) *** *** *** *** ***

Ratio of U.S. shipments of imports (percent) *** *** *** *** ***

Imports from all sources:

Inventories (1,000 pounds) *** *** *** *** ***

Ratio of inventories to imports (percent) *** *** *** *** ***

Ratio of U.S. shipments of imports (percent) *** *** *** *** ***

Note.–Ratios are based on annualized import and shipments data.

Source: Compiled from data submitted in response to Commission questionnaires.

ANTIDUMPING DUTY ORDERS IN THIRD-COUNTRY MARKETS

There are no known antidumping duty orders in effect covering HEDP from China or India in any

other countries.
 15 Silicon Metal from Russia, Inv. No. 731-TA-991 (Second Remand), USITC Publication 3910, March 2007, p. 2;

citing Bratsk Aluminum Smelter v. United States, 444 F.3d at 1375.

 16 In the silicon metal remand, Chairman Pearson noted “consistent with his views in Lined Paper School

Supplies From China, India, and Indonesia, Inv. Nos. 701-TA-442-443 and 731-TA-1095-1097 (Final), USITC Pub.

3884 (Sept. 2006) at 51, that while he agrees with the Commission that the Federal Circuit’s opinion suggests a

replacement/benefit test, he also finds that the Federal Circuit’s opinion could be read, not as requiring a new test,

but rather as a reminder that the Commission, before it makes an affirmative determination, must satisfy itself that it

has not attributed material injury to factors other than subject imports.” Silicon Metal from Russia, Inv. No. 731-TA991 (Second Remand), USITC Publication 3910, March 2007, p. 2, fn. 17. Commissioner Okun joined in those

separate and dissenting views in Lined Paper.

 17 Petitioner’s postconference brief, pp. 24-25, fn. 67. The petitioner also contends that the relationship between

Rhodia in the United Kingdom and its importing company in the United States substantially mitigates the

significance of nonsubject imports in the U.S. market. Ibid.

 18 The Indian respondent, Aquapharm did not address the applicability of Bratsk.

 19 Respondent, AWTCP’s post conference brief, pp. 10-11.

 20 ***.

VII-8

INFORMATION ON NONSUBJECT SOURCES

“Bratsk” Considerations

As a result of the Court of Appeals for the Federal Circuit (“CAFC”) decision in Bratsk

Aluminum Smelter v. United States (“Bratsk”), the Commission is directed to:15 16

undertake an “additional causation inquiry” whenever certain triggering factors

are met: “whenever the antidumping investigation is centered on a commodity

product, and price competitive non-subject imports are a significant factor in the

market.” The additional inquiry required by the Court, which we refer to as the

Bratsk replacement / benefit test, is “whether non-subject imports would have

replaced the subject imports without any beneficial effect on domestic

producers.”

 The petitioner argued that Bratsk is inapplicable to these investigations because the only nonsubject imports of HEDP, which are from the United Kingdom, are not price competitive with subject

imports.17

The Chinese respondents argued that it would be appropriate to consider whether Bratsk is

applicable in these investigations.18 They contend that a “substantial” volume of HEDP is imported from

the United Kingdom, and that if, as a result of an antidumping order on HEDP, imports of HEDP from

India and China declined, “it would likely only be to the benefit of the U.K. production of HEDP.”19

Nonsubject Source Information

In terms of percentage of world consumption of HEDP, the three largest regions are Western

Europe (with somewhat greater than 50 percent), the United States (with somewhat less than 50 percent),

and Japan (less than 5 percent).20 Within the class of phosphonates, there is product substitution over

time as end-use formulations change, environmental regulations change, consumers change their

preferences, and price. Estimated total capacity in 2006 for Western Europe was about 35 thousand

metric tons (77.1 million pounds). The two largest producers are Solutia and Rhodia. Each has an

estimated 30 percent market share. The two commodity phosphonates are HEDP and ATMP; however,
 21 ***. HEDP production was estimated to be between 10,000 and 50,000 metric tons per year during 1990-93. 

HERA substance team, Human & Environmental Risk Assessment on Ingredients in European Household Cleaning

Products, June 9, 2004, p. 13.

VII-9

most other phosphonates are manufactured in Western Europe. Production data for individual

phosphonates are difficult to obtain, but the following table lists the major Western European producers

of phosphonates:21

* * * * * * *

Information on prices of imports of HEDP from the United Kingdom are presented in

Appendix D.

A-1

APPENDIX A

FEDERAL REGISTER NOTICES

16058 Federal Register / Vol. 73, No. 59 / Wednesday, March 26, 2008 / Notices 

1 HEDP is identified by CAS registry number 

2809–21–4. 

DEPARTMENT OF THE INTERIOR 

National Park Service 

Notice of Extension of the Concession 

Contract for Bighorn Canyon National 

Recreation Area, MT 

AGENCY: National Park Service, Interior. 

ACTION: Notice of proposal to extend the 

concession contract for the operation of 

the Ok-A-Beh Marina within Bighorn 

Canyon National Recreation Area, MT. 

DATES: Effective Date: May 1, 2008. 

FOR FURTHER INFORMATION CONTACT: Jo 

A. Pendry, Concession Program 

Manager, National Park Service, 

Washington, DC 20240, Telephone 202/ 

513–7156. 

SUMMARY: Pursuant to 36 CFR 51.23, 

public notice is hereby given that the 

National Park Service proposes to 

extend the expiring concession contract 

for the operation of the Ok-A-Beh 

Marina within Bighorn Canyon National 

Recreation Area, Montana for a period 

of up to 1 year, or until such time as a 

new contract is executed, whichever 

occurs sooner. This action is necessary 

to avoid interruption of visitor services. 

SUPPLEMENTARY INFORMATION: 

Concession Contract CC–BICA007–05 

expired by its term on December 31, 

2007. The concessioner is LuCon 

Corporation operating within Bighorn 

Canyon National Recreation Area. The 

National Park Service has determined 

that the proposed short-term extension 

is necessary in order to avoid 

interruption of visitor services and has 

taken all reasonable and appropriate 

steps to consider alternatives to avoid 

such interruption. 

This is not a request for proposals. 

Dated: March 5, 2008. 

Daniel N. Wenk, 

Deputy Director, Operations, National Park 

Service. 

[FR Doc. E8–5958 Filed 3–25–08; 8:45 am] 

BILLING CODE 4312–53–M 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation Nos. 731–TA–1146–1147 

(Preliminary)] 

1-Hydroxyethylidene-1,1-Diphosphonic 

Acid (Hedp) From China and India 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of antidumping duty 

investigations and scheduling of 

preliminary phase investigations. 

SUMMARY: The Commission hereby gives 

notice of the institution of investigations 

and commencement of preliminary 

phase antidumping investigation Nos. 

731–TA–1146–1147 (Preliminary) under 

section 733(a) of the Tariff Act of 1930 

(19 U.S.C. 1673b(a)) (the Act) to 

determine whether there is a reasonable 

indication that an industry in the 

United States is materially injured or 

threatened with material injury, or the 

establishment of an industry in the 

United States is materially retarded, by 

reason of imports from China and India 

of 1-Hydroxyethylidene-1,1- 

diphosphonic acid (HEDP),1 provided 

for in subheading 2931.00.90 of the 

Harmonized Tariff Schedule of the 

United States, that are alleged to be sold 

in the United States at less than fair 

value. Unless the Department of 

Commerce extends the time for 

initiation pursuant to section 

732(c)(1)(B) of the Act (19 U.S.C. 

1673a(c)(1)(B)), the Commission must 

reach a preliminary determination in 

antidumping investigations in 45 days, 

or in this case by May 5, 2008. The 

Commission’s views are due at 

Commerce within five business days 

thereafter, or by May 12, 2008. 

For further information concerning 

the conduct of these investigations and 

rules of general application, consult the 

Commission’s Rules of Practice and 

Procedure, part 201, subparts A through 

E (19 CFR part 201), and part 207, 

subparts A and B (19 CFR part 207). 

DATES: Effective Date: March 19, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Nathanael Comly (202–205–3174), 

Office of Investigations, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436. 

Hearing-impaired persons can obtain 

information on this matter by contacting 

the Commission’s TDD terminal on 202–

205–1810. Persons with mobility 

impairments who will need special 

assistance in gaining access to the 

Commission should contact the Office 

of the Secretary at 202–205–2000. 

General information concerning the 

Commission may also be obtained by 

accessing its internet server (http:// 

www.usitc.gov). The public record for 

these investigations may be viewed on 

the Commission’s electronic docket 

(EDIS) at http://edis.usitc.gov. 

SUPPLEMENTARY INFORMATION:

Background. These investigations are 

being instituted in response to a petition 

filed on March 19, 2008, by Compass 

Chemical International LLC, Huntsville, 

TX. 

Participation in the investigations and 

public service list. Persons (other than 

petitioners) wishing to participate in the 

investigations as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

sections 201.11 and 207.10 of the 

Commission’s rules, not later than seven 

days after publication of this notice in 

the Federal Register. 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 

investigations. The Secretary will 

prepare a public service list containing 

the names and addresses of all persons, 

or their representatives, who are parties 

to these investigations upon the 

expiration of the period for filing entries 

of appearance. 

Limited disclosure of business 

proprietary information (BPI) under an 

administrative protective order (APO) 

and BPI service list.—Pursuant to 

section 207.7(a) of the Commission’s 

rules, the Secretary will make BPI 

gathered in these investigations 

available to authorized applicants 

representing interested parties (as 

defined in 19 U.S.C. 1677(9)) who are 

parties to the investigations under the 

APO issued in the investigations, 

provided that the application is made 

not later than seven days after the 

publication of this notice in the Federal 

Register. A separate service list will be 

maintained by the Secretary for those 

parties authorized to receive BPI under 

the APO. 

Conference. The Commission’s 

Director of Operations has scheduled a 

conference in connection with these 

investigations for 9:30 a.m. on April 9, 

2008, at the U.S. International Trade 

Commission Building, 500 E Street, 

SW., Washington, DC. Parties wishing to 

participate in the conference should 

contact Nathanael Comly (202–205–

3174) not later than April 7, 2008, to 

arrange for their appearance. Parties in 

support of the imposition of 

antidumping duties in these 

investigations and parties in opposition 

to the imposition of such duties will 

each be collectively allocated one hour 

within which to make an oral 

presentation at the conference. A 

nonparty who has testimony that may 

aid the Commission’s deliberations may 

request permission to present a short 

statement at the conference. 

Written submissions. As provided in 

sections 201.8 and 207.15 of the 

Commission’s rules, any person may 

submit to the Commission on or before 

April 14, 2008, a written brief 

containing information and arguments 

pertinent to the subject matter of the 

investigations. Parties may file written 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 73, No. 59 / Wednesday, March 26, 2008 / Notices 16059 

testimony in connection with their 

presentation at the conference no later 

than three days before the conference. If 

briefs or written testimony contain BPI, 

they must conform with the 

requirements of sections 201.6, 207.3, 

and 207.7 of the Commission’s rules. 

The Commission’s rules do not 

authorize filing of submissions with the 

Secretary by facsimile or electronic 

means, except to the extent permitted by 

section 201.8 of the Commission’s rules, 

as amended, 67 FR 68036 (November 8, 

2002). Even where electronic filing of a 

document is permitted, certain 

documents must also be filed in paper 

form, as specified in II (C) of the 

Commission’s Handbook on Electronic 

Filing Procedures, 67 FR. 68168, 68173 

(November 8, 2002). 

In accordance with sections 201.16(c) 

and 207.3 of the rules, each document 

filed by a party to the investigations 

must be served on all other parties to 

the investigations (as identified by 

either the public or BPI service list), and 

a certificate of service must be timely 

filed. The Secretary will not accept a 

document for filing without a certificate 

of service. 

Authority: These investigations are being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.12 of the 

Commission’s rules. 

Issued: March 20, 2008. 

By order of the Commission. 

William R. Bishop, 

Acting Secretary to the Commission. 

[FR Doc. E8–6091 Filed 3–25–08; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 731–TA–1148 

(Preliminary)] 

Frontseating Service Valves from 

China 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of antidumping 

investigation and scheduling of a 

preliminary phase investigation. 
Federal Register / Vol. 73, No. 72 / Monday, April 14, 2008 / Notices 20023 

1C2H8O7P2 or C(CH3)(OH)(PO3H2)2

Interested parties may submit 

comments for consideration in the 

Department’s final results not later than 

30 days after publication of this notice. 

See 19 CFR 351.309(c). Responses to 

those comments may be submitted not 

later than five days following 

submission of the comments. See 19 

CFR 351.309(d). All written comments 

must be submitted in accordance with 

19 CFR 351.303, and must be served on 

interested parties on the Department’s 

service list in accordance with 19 CFR 

351.303(f)(3). The Department will issue 

the final results of this administrative 

review, which will include the results of 

its analysis of issues raised in any such 

comments, within 120 days of 

publication of the preliminary results, 

and will publish these results in the 

Federal Register. 

This notice is in accordance with 

sections 751 and 777(i)(1) of the Tariff 

Act of 1930, as amended, and 19 CFR 

351.213(d)(4). 

Dated: April 7, 2008. 

Stephen J. Claeys, 

Deputy Assistant Secretary for Import 

Administration. 

[FR Doc. E8–7892 Filed 4–11–08; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

(A–533–847, A–570–934) 

1–Hydroxyethylidene–1, 1–

Diphosphonic Acid from the Republic 

of India and the People’s Republic of 

China: Initiation of Antidumping Duty 

Investigations 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

EFFECTIVE DATE: April 14, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Brian Smith (India) or Maisha Cryor 

(People’s Republic of China), AD/CVD 

Operations, Offices 2 and 4, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230; 

telephone: (202) 482–1766 or (202) 482–

5831, respectively. 

SUPPLEMENTARY INFORMATION: 

The Petitions 

On March 19, 2008, the Department of 

Commerce (the Department) received 

petitions concerning imports of 1–

hydroxyethylidene–1, 1–diphosphonic 

acid (HEDP) from the Republic of India 

(India) (India petition) and the People’s 

Republic of China (PRC) (PRC petition) 

filed in proper form by Compass 

Chemical International LLC (petitioner). 

See the Petitions on HEDP from India 

and the PRC submitted on March 19, 

2008. On March 24 and 25, and April 

1, 2008, the Department issued requests 

for additional information and 

clarification of certain areas of the 

petitions. Based on the Department’s 

requests, the petitioner filed additional 

information on March 27, April 1 and 3, 

2008 (two distinct submissions on 

general material and one distinct 

submission on PRC–only material). On 

March 28, 2008, Rhodia Inc., a producer 

of non–HEDP phosphonates and an 

importer of HEDP, submitted 

information indicating that the 

petitioner is the only U.S. producer of 

HEDP. 

In accordance with section 732(b) of 

the Tariff Act of 1930, as amended (the 

Act), the petitioner alleges that imports 

of HEDP from India and the PRC are 

being, or are likely to be, sold in the 

United States at less than fair value, 

within the meaning of section 731 of the 

Act, and that such imports are 

materially injuring, or threatening 

material injury to, an industry in the 

United States. 

The Department finds that the 

petitioner filed these petitions on behalf 

of the domestic industry because the 

petitioner is an interested party as 

defined in section 771(9)(C) of the Act, 

and has demonstrated sufficient 

industry support with respect to the 

antidumping duty investigations that 

the petitioner is requesting that the 

Department initiate (see ‘‘Determination 

of Industry Support for the Petitions’’

section below). 

Period of Investigations 

The period of investigation (POI) for 

India is January 1, 2007, through 

December 31, 2007. The POI for the PRC 

is July 1, 2007, through December 31, 

2007. See 19 CFR 351.204(b)(1). 

Scope of Investigations 

The merchandise covered by each of 

these investigations includes all grades 

of aqueous, acidic (non–neutralized) 

concentrations of 1–hydroxyethylidene–

1, 1–diphosphonic acid1, also referred 

to as hydroxethlylidenendiphosphonic 

acid, hydroxyethanediphosphonic acid, 

acetodiphosphonic acid, and etidronic 

acid. The CAS (Chemical Abstract 

Service) registry number for HEDP is 

2809–21–4. The merchandise subject to 

these investigations is currently 

classified in the Harmonized Tariff 

Schedule of the United States (HTSUS) 

at subheading 2931.00.9043. It may also 

enter under HTSUS subheading 

2811.19.6090. While HTSUS 

subheadings are provided for 

convenience and customs purposes 

only, the written description of the 

scope of these investigations is 

dispositive. 

Comments on Scope of Investigations 

During our review of the petitions, we 

discussed the scope with the petitioner 

to ensure that it is an accurate reflection 

of the products for which the domestic 

industry is seeking relief. Moreover, as 

discussed in the preamble to the 

regulations (Antidumping Duties; 

Countervailing Duties; Final Rule, 62 FR 

27296, 27323 (May 19, 1997)), we are 

setting aside a period for interested 

parties to raise issues regarding product 

coverage. The Department encourages 

all interested parties to submit such 

comments by April 28, 2008, which is 

20 calendar days from the date of 

signature of this notice. Comments 

should be addressed to Import 

Administration’s APO/Dockets Unit, 

Room 1870, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230. 

The period of scope consultations is 

intended to provide the Department 

with ample opportunity to consider all 

comments and to consult with parties 

prior to the issuance of the preliminary 

determinations. 

Comments on Product Characteristics 

for Antidumping Duty Questionnaires 

We are requesting comments from 

interested parties regarding the 

appropriate physical characteristics of 

HEDP to be reported in response to the 

Department’s antidumping 

questionnaires. This information will be 

used to identify the key physical 

characteristics of the subject 

merchandise in order to more accurately 

report the relevant factors and costs of 

production, as well as to develop 

appropriate product comparison 

criteria. 

Interested parties may provide any 

information or comments that they feel 

are relevant to the development of an 

accurate listing of physical 

characteristics. Specifically, they may 

provide comments as to which 

characteristics are appropriate to use as 

1) general product characteristics and 2) 

the product comparison criteria. We 

note that it is not always appropriate to 

use all product characteristics as 

product comparison criteria. We base 

product comparison criteria on 

meaningful commercial differences 

among products. In other words, while 

there may be some physical product 

characteristics utilized by 


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manufacturers to describe HEDP, it may 

be that only a select few product 

characteristics take into account 

commercially meaningful physical 

characteristics. In addition, interested 

parties may comment on the order in 

which the physical characteristics 

should be used in product matching. 

Generally, the Department attempts to 

list the most important physical 

characteristics first and the least 

important characteristics last. 

In order to consider the suggestions of 

interested parties in developing and 

issuing the antidumping duty 

questionnaires, we must receive 

comments at the above–referenced 

address by April 28, 2008. Additionally, 

rebuttal comments must be received by 

May 5, 2008. 

Determination of Industry Support for 

the Petitions 

Section 732(b)(1) of the Act requires 

that a petition be filed on behalf of the 

domestic industry. Section 732(c)(4)(A) 

of the Act provides that a petition meets 

this requirement if the domestic 

producers or workers who support the 

petition account for: (i) at least 25 

percent of the total production of the 

domestic like product; and (ii) more 

than 50 percent of the production of the 

domestic like product produced by that 

portion of the industry expressing 

support for, or opposition to, the 

petition. Moreover, section 732(c)(4)(D) 

of the Act provides that, if the petition 

does not establish support of domestic 

producers or workers accounting for 

more than 50 percent of the total 

production of the domestic like product, 

the Department shall: (i) poll the 

industry or rely on other information in 

order to determine if there is support for 

the petition, as required by 

subparagraph (A), or (ii) determine 

industry support using a statistically 

valid sampling method. 

Section 771(4)(A) of the Act defines 

the ‘‘industry’’ as the producers as a 

whole of a domestic like product. Thus, 

to determine whether a petition has the 

requisite industry support, the statute 

directs the Department to look to 

producers and workers who produce the 

domestic like product. The International 

Trade Commission (ITC), which is 

responsible for determining whether 

‘‘the domestic industry’’ has been 

injured, must also determine what 

constitutes a domestic like product in 

order to define the industry. While both 

the Department and the ITC must apply 

the same statutory definition regarding 

the domestic like product (section 

771(10) of the Act), they do so for 

different purposes and pursuant to a 

separate and distinct authority. In 

addition, the Department’s 

determination is subject to limitations of 

time and information. Although this 

may result in different definitions of the 

like product, such differences do not 

render the decision of either agency 

contrary to law. See USEC, Inc. v. 

United States, 132 F. Supp. 2d 1, 8 (CIT 

2001), citing Algoma Steel Corp. Ltd. v. 

United States, 688 F. Supp. 639, 644 

(CIT 1988), aff’d 865 F.2d 240 (Fed. Cir. 

1989), cert. denied 492 U.S. 919 (1989). 

Section 771(10) of the Act defines the 

domestic like product as ‘‘a product 

which is like, or in the absence of like, 

most similar in characteristics and uses 

with, the article subject to an 

investigation under this subtitle.’’ Thus, 

the reference point from which the 

domestic like product analysis begins is 

‘‘the article subject to an investigation,’’

(i.e., the class or kind of merchandise to 

be investigated, which normally will be 

the scope as defined in the petition). 

With regard to the domestic like 

product, the petitioner does not offer a 

definition of domestic like product 

distinct from the scope of the 

investigation. Based on our analysis of 

the information submitted on the 

record, we have determined that HEDP 

constitutes a single domestic like 

product and we have analyzed industry 

support in terms of that domestic like 

product. For a discussion of the 

domestic like product analysis in this 

case, see Antidumping Duty 

Investigation Initiation Checklist: HEDP 

from India, Industry Support at 

Attachment II (India Initiation 

Checklist), and Antidumping Duty 

Investigation Initiation Checklist: HEDP 

from the People’s Republic of China 

(PRC), Industry Support at Attachment 

II (PRC Initiation Checklist) on file in 

the Central Records Unit (CRU), Room 

1117 of the main Department of 

Commerce building. 

Our review of the data provided in the 

petitions, supplemental submissions, 

and other information readily available 

to the Department indicates that the 

petitioner has established industry 

support. To establish industry support, 

the petitioner demonstrated that it was 

the sole producer of the domestic like 

product in 2007. Therefore, the petitions 

established support from domestic 

producers (or workers) accounting for 

more than 50 percent of the total 

production of the domestic like product 

and, as such, the Department is not 

required to take further action to 

evaluate industry support (e.g., polling). 

See Section 732(c)(4)(D) of the Act. In 

addition, the domestic producers have 

met the statutory criteria for industry 

support under 732(c)(4)(A)(i) because 

the domestic producers (or workers) 

who support the petition account for at 

least 25 percent of the total production 

of the domestic like product. Finally, 

the domestic producers have met the 

statutory criteria for industry support 

under 732(c)(4)(A)(ii) because the 

domestic producers (or workers) who 

support the petition account for more 

than 50 percent of the production of the 

domestic like product produced by that 

portion of the industry expressing 

support for, or opposition to, the 

petition. Accordingly, the Department 

determines that the petition was filed on 

behalf of the domestic industry within 

the meaning of section 732(b)(1) of the 

Act. See India Initiation Checklist and 

PRC Initiation Checklist at Attachment 

II (Industry Support). 

The Department finds that the 

petitioner filed the petitions on behalf of 

the domestic industry because it is an 

interested party as defined in section 

771(9)(C) of the Act and it has 

demonstrated sufficient industry 

support with respect to the antidumping 

investigations that it is requesting the 

Department initiate. See India Initiation 

Checklist and PRC Initiation Checklist at 

Attachment II (Industry Support). 

Allegations and Evidence of Material 

Injury and Causation 

The petitioner alleges that the U.S. 

industry producing the domestic like 

product is being materially injured, or is 

threatened with material injury, by 

reason of the imports of the subject 

merchandise sold at less than normal 

value (NV). The petitioner contends that 

the industry’s injured condition is 

illustrated by reduced market share, 

reduced production and capacity 

utilization, reduced shipments, 

underselling and price depressing and 

suppressing effects, lost sales, a decline 

in financial performance, and an 

increase in import penetration. We have 

assessed the allegations and supporting 

evidence regarding material injury, 

threat of material injury, and causation, 

and we have determined that these 

allegations are properly supported by 

adequate evidence and meet the 

statutory requirements for initiation. See 

India Initiation Checklist and PRC 

Initiation Checklist at Attachment III. 

Allegations of Sales at Less Than Fair 

Value 

The following is a description of the 

allegations of sales at less than fair value 

upon which the Department based its 

decision to initiate these investigations 

of imports of HEDP from India and the 

PRC. The sources of data for the 

deductions and adjustments relating to 

the U.S. price, constructed value (CV) 

(for India), and the factors of production 


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(for the PRC) are also discussed in the 

country–specific initiation checklists. 

See India Initiation Checklist and PRC 

Initiation Checklist. Should the need 

arise to use any of this information as 

facts available under section 776 of the 

Act in our preliminary or final 

determinations, we will reexamine the 

information and revise the margin 

calculations, if appropriate. 

India 

Export Price (EP) 

The petitioner calculated one EP 

based on a price quote for Indian–

produced HEDP during the POI 

obtained from one of its U.S. customers. 

The petitioner made adjustments to the 

starting price for U.S. inland freight, 

ocean freight, and marine insurance 

charges. The petitioner calculated U.S. 

inland freight, ocean freight, and marine 

insurance charges based on price quotes 

obtained from a freight service provider. 

See India Initiation Checklist for further 

discussion. 

NV Based on CV 

With respect to NV, the petitioner 

states that neither home–market prices 

nor third–country prices of Indian–

produced HEDP were reasonably 

available. According to the petitioner, it 

was unsuccessful in obtaining such 

pricing information, despite its best 

efforts. See India petition at pages 17–

18. Therefore, the petitioner based NV 

on CV. 

Pursuant to section 773(e) of the Act, 

CV consists of the cost of manufacture 

(COM); selling, general and 

administrative (SG&A) expenses; 

packing expenses; and profit. In 

calculating COM (exclusive of factory 

overhead) and packing, the petitioner 

based the quantity of each of the inputs 

used to manufacture and pack HEDP in 

India on its own production experience 

during the POI. The petitioner then 

multiplied the usage quantities by the 

value of the inputs used to manufacture 

and pack HEDP in India based on 

publicly available data. In calculating 

factory overhead expenses, SG&A 

expenses and profit, the petitioner used 

the financial statements of Excel 

Industries Limited (Excel), an Indian 

manufacturer of HEDP. The petitioner 

used a calculation methodology for 

purposes of deriving CV in the India 

petition that is consistent with the 

calculation methodology used in the 

PRC petition. We made minor 

modifications to the petitioner’s CV 

calculation to adjust the values of 

certain inputs included in COM ((i.e., 

water, hydrochloric acid and 

phosphorus trichloride), consistent with 

Department practice. See the India 

petition at pages 12–18, India Initiation 

Checklist, and ‘‘NV’’ section below for 

further discussion. 

PRC 

EP 

The petitioner calculated one EP 

based on a sale for PRC–produced HEDP 

during the POI. The petitioner made 

adjustments to the starting price for 

ocean freight and marine insurance 

charges. The petitioner calculated ocean 

freight and marine insurance charges 

based on an actual price paid for these 

expenses. The petitioner also made a 

deduction to the starting price for 

commission expenses. The petitioner 

calculated commission expenses based 

on its own industry knowledge and 

experience. See PRC Initiation Checklist 

and ‘‘Fair Value Comparisons’’ section 

below for further discussion. 

NV 

The petitioner notes that the PRC is a 

non–market economy country (NME) 

and that no determination to the 

contrary has yet been made by the 

Department. See PRC petition, at page 

12. The Department has previously 

examined the PRC’s market status and 

determined that NME status should 

continue for the PRC. See Memorandum 

from the Office of Policy to David M. 

Spooner, Assistant Secretary for Import 

Administration, regarding The People’s 

Republic of China Status as a Non–

Market Economy, dated May 15, 2006 

(available online at http://ia.ita.doc.gov/ 

download /prc–nme-status/prc–nmestatus–memo.pdf). In addition, in recent 

investigations, the Department has 

continued to determine that the PRC is 

an NME country. See Final 

Determination of Sales at Less Than 

Fair Value and Partial Affirmative 

Determination of Critical 

Circumstances: Certain Polyester Staple 

Fiber from the People’s Republic of 

China, 72 FR 19690 (April 19, 2007); 

Final Determination of Sales at Less 

Than Fair Value: Certain Activated 

Carbon from the People’s Republic of 

China, 72 FR 9508 (March 2, 2007). 

In accordance with section 

771(18)(C)(i) of the Act, the 

presumption of NME status remains in 

effect until revoked by the Department. 

The presumption of NME status for the 

PRC has not been revoked by the 

Department and, therefore, remains in 

effect for purposes of the initiation of 

this investigation. Accordingly, the NV 

of the product is appropriately based on 

factors of production valued in a 

surrogate market economy country, in 

accordance with section 773(c) of the 

Act. In the course of this investigation, 

all parties will have the opportunity to 

provide relevant information related to 

the issues of the PRC’s NME status and 

the granting of separate rates to 

individual exporters. 

The petitioner argues that India is the 

appropriate surrogate country for the 

PRC because it is at a comparable level 

of economic development and it is a 

significant producer of HEDP. See PRC 

Petition at page 12. The petitioner 

asserts that other potential surrogate 

countries are not known manufacturers 

of HEDP. See petition at page 12; PRC 

Initiation Checklist. Based on the 

information provided by the petitioner, 

the Department believes that the use of 

India as a surrogate country is 

appropriate for purposes of initiation. 

However, after initiation of the 

investigation, interested parties will 

have the opportunity to submit 

comments regarding surrogate country 

selection and, pursuant to 19 CFR 

351.301(c)(3)(i), will be provided an 

opportunity to submit publicly available 

information to value factors of 

production within 40 days after the date 

of publication of the preliminary 

determination. 

The petitioner calculated NV and a 

dumping margin for the U.S. price, 

discussed above, using the Department’s 

NME methodology as required by 19 

CFR 351.202(b)(7)(i)(C) and 19 CFR 

351.408. The petitioner calculated NV 

based on its own consumption rates for 

producing HEDP in 2007. See PRC 

Initiation Checklist and India Initiation 

Checklist. The petitioner states that its 

production experience is representative 

of the production process used in the 

PRC and India because all of the 

material inputs and processing are 

unlikely to be materially different for a 

Chinese or Indian producer of HEDP. 

See petitions at Exhibit AD–1, Affidavit 

3. 

The petitioner valued the factors of 

production based on reasonably 

available, public surrogate country data, 

including India statistics from the 

Export Import Data Bank, Key World 

Energy Statistics 2003, published by the 

International Energy Agency, the Gas 

Authority of India, and the Maharastra 

Industrial Development Corporation. 

See PRC Initiation Checklist and India 

Initiation Checklist. Where the 

petitioner was unable to find input 

prices contemporaneous with the POI, 

the petitioner adjusted for inflation 

using the wholesale price index for 

India, as published by the Office of the 

Economic Advisor to India. See 

petitions at page 16 and Exhibit AD–11. 

In addition, the petitioner made 

currency conversions, where necessary, 


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2The petitioner did calculate a labor cost for 

India based on rates obtained from the Department’s 

website. 

based on the POI–average rupee/U.S. 

dollar exchange rate, as reported on the 

Department’s website. See petitions at 

page 12. The petitioner did not calculate 

a labor cost for the PRC because it states 

that the cost is ‘‘negligible.’’ Id. at page 

13.2 For purposes of initiation, the 

Department determines that the 

surrogate values used by the petitioner 

are reasonably available and, thus, 

acceptable for purposes of initiation. 

However, the Department has made 

minor modifications, as appropriate, to 

the surrogate values as calculated by the 

petitioner (i.e., water, hydrochloric acid 

and phosphorus trichloride). See PRC 

Initiation Checklist. 

The petitioner based factory overhead 

expenses, SG&A expenses, and profit, 

on data from Excel for the fiscal year 

ending March 31, 2007. See petitions at 

pages 15–16 and Exhibit AD–10. For 

purposes of initiation, the Department 

finds the petitioner’s use of Excel’s 

financial ratios appropriate. 

Fair Value Comparisons 

Based on the data provided by the 

petitioner, there is reason to believe that 

imports of HEDP from India and the 

PRC are being, or are likely to be, sold 

in the United States at less than fair 

value. Based on a comparison of EP and 

CV, calculated in accordance with 

section 773(a)(4) of the Act, the revised 

estimated dumping margin for HEDP 

from India is 42.74 percent. See India 

Initiation Checklist at Attachment VIII. 

Based on comparisons of EP to NV, 

calculated in accordance with section 

773(c) of the Act, the revised estimated 

dumping margin for HEDP from the PRC 

is 72.42 percent. See PRC Initiation 

Checklist at Attachment V. 

Initiation of Antidumping 

Investigations 

Based upon the examination of the 

petitions on HEDP from India and the 

PRC, the Department finds that the 

petitions meet the requirements of 

section 732 of the Act. Therefore, we are 

initiating antidumping duty 

investigations to determine whether 

imports of HEDP from India and the 

PRC are being, or are likely to be, sold 

in the United States at less than fair 

value. In accordance with section 

733(b)(1)(A) of the Act, unless 

postponed, we will make our 

preliminary determinations no later 

than 140 days after the date of this 

initiation. 

Respondent Selection for India 

For the India investigation, the 

Department intends to select 

respondents based on U.S. Customs and 

Border Protection (CBP) data for U.S. 

imports during the POI. We intend to 

release the CBP data under 

Administrative Protective Order (APO) 

to all parties having an APO within five 

days of publication of this Federal 

Register notice, and make our decision 

regarding respondent selection within 

20 days of publication of this notice. 

The Department invites comments 

regarding the CBP data and respondent 

selection within 10 days of publication 

of this Federal Register notice. 

Interested parties must submit 

applications for disclosure under APO 

in accordance with 19 CFR 351.305. 

Instructions for filing such applications 

may be found on the Department’s 

website at http://ia.ita.doc.gov/apo. 

Respondent Selection for the PRC 

In the PRC investigation, the 

Department will request quantity and 

value information from all known 

exporters and producers identified in 

the petition. The quantity and value 

data received from NME exporters/ 

producers will be used as the basis to 

select the mandatory respondents. The 

Department requires that the 

respondents submit a response to both 

the quantity and value questionnaire 

and the separate–rate application by the 

respective deadlines in order to receive 

consideration for separate–rate status. 

See Circular Welded Austenitic 

Stainless Pressure Pipe from the 

People’s Republic of China: Initiation of 

Antidumping Duty Investigation, 73 FR 

10221, 10225 (February 26, 2008); and 

Initiation of Antidumping Duty 

Investigation: Certain Artist Canvas 

From the People’s Republic of China, 70 

FR 21996, 21999 (April 28, 2005). 

Appendix I of this notice contains the 

quantity and value questionnaire that 

must be submitted by all NME 

exporters/producers no later than April 

29, 2008. In addition, the Department 

will post the quantity and value 

questionnaire along with the filing 

instructions on the Import 

Administration website, at http:// 

ia.ita.doc.gov/ia–highlights-and–

news.html. The Department will send 

the quantity and value questionnaire to 

those PRC companies identified in the 

PRC petition at page 9 and Exhibit AD–

3. 

Separate Rates 

In order to obtain separate–rate status 

in NME investigations, exporters and 

producers must submit a separate–rate 

status application. See Policy Bulletin 

05.1: Separate–Rates Practice and 

Application of Combination Rates in 

Antidumping Investigations involving 

Non–Market Economy Countries (April 

5, 2005) (Separate Rates/Combination 

Rates Bulletin), available on the 

Department’s website at http:// 

ia.ita.doc.gov/policy/bull05–1.pdf. The 

specific requirements for submitting the 

separate–rate application in this 

investigation are outlined in detail in 

the application itself, available on the 

Department’s website at http:// 

ia.ita.doc.gov/ia–highlights-and–

news.html on the date of publication of 

this initiation notice in the Federal 

Register. The separate–rate application 

will be due by June 9, 2008. 

Use of Combination Rates in an NME 

Investigation 

The Department will calculate 

combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. The 

Separate Rates/Combination Rates 

Bulletin states: 

{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 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 Separate Rates/Combination Rates 

Bulletin, at 6. 

Distribution of Copies of the Petitions 

In accordance with section 

732(b)(3)(A) of the Act and 19 CFR 

351.202(f), copies of the public versions 

of the petitions have been provided to 

the representatives of the Governments 

of India and the PRC. We will attempt 


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to provide a copy of the public version 

of the petitions to the foreign producers/ 

exporters, consistent with 19 CFR 

351.203(c)(2). 

International Trade Commission 

Notification 

We have notified the ITC of our 

initiations, as required by section 732(d) 

of the Act. 

Preliminary Determinations by the 

International Trade Commission 

The ITC will preliminarily determine, 

no later than May 5, 2008, whether there 

is a reasonable indication that imports 

of HEDP from India and the PRC are 

materially injuring, or threatening 

material injury to, a U.S. industry. A 

negative ITC determination with respect 

to either of the investigations will result 

in that investigation being terminated; 

otherwise, these investigations will 

proceed according to statutory and 

regulatory time limits. 

This notice is issued and published 

pursuant to section 777(i) of the Act. 

Dated: April 8, 2008. 

David M. Spooner, 

Assistant Secretary for Import 

Administration. 

Appendix I 

Where it is not practicable to examine 

all known producers/exporters of 

subject merchandise, section 777A(c)(2) 

of the Tariff Act of 1930 (as amended) 

permits us to investigate (1) a sample of 

exporters, producers, or types of 

products that is statistically valid based 

on the information available at the time 

of selection, or (2) exporters and 

producers accounting for the largest 

volume and value of the subject 

merchandise that can reasonably be 

examined. 

In the chart below, please provide the 

total quantity and total value of all your 

sales of merchandise covered by the 

scope of this investigation (see scope 

section of this notice), produced in the 

PRC, and exported/shipped to the 

United States during the period July 1, 

2007, through December 31, 2007. 

Market Total Quantity Terms of Sale Total Value 

United States ................................................. .................................................. .................................................. ..................................................

1. Export Price Sales ..................................... .................................................. .................................................. ..................................................

2. .................................................................... .................................................. .................................................. ..................................................

a. Exporter name ........................................... .................................................. .................................................. ..................................................

b. Address ...................................................... .................................................. .................................................. ..................................................

c. Contact ....................................................... .................................................. .................................................. ..................................................

d. Phone No. .................................................. .................................................. .................................................. ..................................................

e. Fax No. ...................................................... .................................................. .................................................. ..................................................

3. Constructed Export Price Sales ................ .................................................. .................................................. ..................................................

4. Further Manufactured Sales ...................... .................................................. .................................................. ..................................................

Total Sales .................................................... .................................................. .................................................. ..................................................

Please provide the following 

information for your company. If you 

believe that you should be treated as a 

single entity along with other named 

exporters, please provide the 

information requested below both in the 

aggregate for all named entities in your 

group and separately for each named 

entity. Please label each chart 

accordingly. 

(1) Production 

Market: Total Quantity: ( In MT) 

Your total production of all merchandise meeting the description of HEDP identified in the ‘‘Scope of 

Investigations’’ section of this notice, produced during the period of investigation (‘‘POI’’) (regardless 

of the ultimate market destination). ......................................................................................................... ................................................................

(2)U.S. Sales 

Merchandise Total Quantity: (In MT) Total Value ($U.S.1 ) 

Merchandise under investigation your company produced and shipped/exported to the 

United States during the POI. .............................................................................................. ........................................ ........................................

Merchandise under investigation exported/shipped to the United States by your company 

during the POI which was sourced from an unaffiliated supplier or suppliers (i.e., not 

produced by your company). ............................................................................................... ........................................ ........................................

Merchandise under investigation produced by your company but exported/shipped through 

another PRC company to the United States during the POI. ............................................. ........................................ ........................................

1Values should be expressed in U.S. dollars. Indicate any exchange rates used and their respective dates and sources. 

Total Quantity: 

• Please report quantity on a metric 

ton basis. If any conversions were 

used, please provide the conversion 

formula and source. 

Terms of Sales: 

• Please report all sales on the same 

terms, such as ‘‘free on board’’ at 

port of export. 

Total Value: 

• All sales values should be reported 

in U.S. dollars. Please provide any 

exchange rates used and their 

respective dates and sources. 

Export Price Sales: 

• Generally, a U.S. sale is classified as 

an export price sale when the first 

sale to an unaffiliated customer 

occurs before importation into the 

United States. 

• Please include any sales exported by 

your company directly to the 

United States. 

• Please include any sales exported by 

your company to a third–country 

market economy reseller where you 

had knowledge that the 

merchandise was destined to be 


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resold to the United States. 

• If you are a producer of subject 

merchandise, please include any 

sales manufactured by your 

company that were subsequently 

exported by an affiliated exporter to 

the United States. 

• Please do not include any sales of 

merchandise manufactured in Hong 

Kong in your figures. 

Constructed Export Price Sales: 

• Generally, a U.S. sale is classified as 

a constructed export price sale 

when the first sale to an unaffiliated 

customer occurs after importation. 

However, if the first sale to the 

unaffiliated customer is made by a 

person in the United States 

affiliated with the foreign exporter, 

constructed export price applies 

even if the sale occurs prior to 

importation. 

• Please include any sales exported by 

your company directly to the 

United States. 

• Please include any sales exported by 

your company to a third–country 

market economy reseller where you 

had knowledge that the 

merchandise was destined to be 

resold to the United States. 

• If you are a producer of subject 

merchandise, please include any 

sales manufactured by your 

company that were subsequently 

exported by an affiliated exporter to 

the United States. 

• Please do not include any sales of 

merchandise manufactured in Hong 

Kong in your figures. 

Further Manufactured Sales: 

• Further manufacture or assembly 

(including re–packing) sales 

(‘‘further manufactured sales’’) 

refers to merchandise that 

undergoes further manufacture or 

assembly in the United States 

before being sold to the first 

unaffiliated customer. 

• Further manufacture or assembly 

costs include amounts incurred for 

direct materials, labor and 

overhead, plus amounts for general 

and administrative expense, interest 

expense, and additional packing 

expense incurred in the country of 

further manufacture, as well as all 

costs involved in moving the 

product from the U.S. port of entry 

to the further manufacturer. 

[FR Doc. E8–7894 Filed 4–11–08; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

Federal Consistency Appeal by AES 

Sparrows Point LNG, LLC and MidAtlantic Express, L.L.C. 

AGENCY: National Oceanic and 

Atmospheric Administration (NOAA), 

Department of Commerce (Commerce). 

ACTION: Notice of closure—

administrative appeal decision record. 

SUMMARY: This announcement provides 

notice that the decision record has been 

closed for an administrative appeal filed 

with the Department of Commerce by 

AES Sparrows Point LNG, LLC and MidAtlantic Express, L.L.C. (collectively, 

AES). 

DATES: The decision record for AES’

administrative appeal was closed on 

April 14, 2008. 

ADDRESSES: Materials from the appeal 

record are available at the Internet site 

http://www.ogc.doc.gov/czma.htm and 

at the Office of the General Counsel for 

Ocean Services, National Oceanic and 

Atmospheric Administration, U.S. 

Department of Commerce, 1305 EastWest Highway, Silver Spring, MD 

20910. 

FOR FURTHER INFORMATION CONTACT: 

Odin Smith, Attorney-Advisor, Office of 

the Assistant General Counsel for 

Legislation and Regulation, Department 

of Commerce, via e-mail at 

osmith@doc.gov, or at (202) 482–4144. 

SUPPLEMENTARY INFORMATION: On August 

8, 2007, AES filed a notice of appeal 

with the Secretary of Commerce 

(Secretary) pursuant to section 

307(c)(3)(A) of the Coastal Zone 

Management Act of 1972 (CZMA), as 

amended, 16 U.S.C. 1451 et seq., and 

the Department of Commerce’s 

implementing regulations, 15 CFR part 

930, subpart H. The appeal was taken 

from an objection by the Maryland 

Department of the Environment (State) 

to AES’ consistency certification for 

U.S. Army Corps of Engineers and 

Federal Energy Regulatory Commission 

permits to construct and operate a 

liquefied natural gas (LNG) terminal and 

associated 88-mile natural gas pipeline. 

The certification indicates that the 

project is consistent with Maryland’s 

coastal management program. The 

project would affect the natural 

resources or land and water uses of 

Maryland’s coastal zone. 

AES requested the Secretary to 

override the State’s consistency 

objection on grounds the proposed 

project allegedly is consistent with the 

objectives of the CZMA, and necessary 

in the interest of national security. 

Decisions for CZMA administrative 

appeals are based on information 

contained in a decision record. Under 

the CZMA, the decision record must 

close no later than 220 days after notice 

of the appeal was first published in the 

Federal Register. 16 U.S.C. 1465. 

Consistent with this deadline, the AES 

appeal decision record was closed on 

April 14, 2008. No further information, 

briefs or comments will be considered 

in deciding this appeal. 

The CZMA requires that a notice be 

published in the Federal Register 

indicating the date on which the 

decision record has been closed. 16 

U.S.C. 1465(b)(2). A final decision of the 

AES appeal must be issued no later than 

60 days after the date of the publication 

of this notice. 16 U.S.C. 1465(c)(1). The 

deadline may be extended by publishing 

(within the 60-day period) a subsequent 

notice explaining why a decision cannot 

be issued within that time frame. 16 

U.S.C. 1465(c)(1). In this event, a final 

decision must be issued no later than 15 

days after the date of publication of the 

subsequent notice. 16 U.S.C. 1465(c)(2). 

Additional information about the AES 

appeal and the CZMA appeals process 

is available from the Department of 

Commerce CZMA appeals Web site 

http://www.ogc.doc.gov/czma.htm. 

(Federal Domestic Assistance Catalog No. 

11.419 Coastal Zone Management Program 

Assistance.) 

Dated: April 9, 2008. 

Joel La Bissonniere, 

Assistant General Counsel for Ocean Services. 

[FR Doc. E8–7904 Filed 4–11–08; 8:45 am] 

BILLING CODE 3510–08–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

RIN 0648–XG98 

International Whaling Commission; 

60th Annual Meeting; Announcement 

of Public Meeting 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Notice of meeting. 

SUMMARY: This notice announces the 

date, time, and location of the public 

meeting being held prior to the 60th 

annual International Whaling 

Commission (IWC) meeting. 

DATES: The public meeting will be held 

May 7, 2008, at 1 p.m. 


jlentini on PROD1PC65 with NOTICES
B-1

APPENDIX B

LIST OF CONFERENCE WITNESSES

B-3

CALENDAR OF PUBLIC CONFERENCE

Those listed below appeared as witnesses at the United States International Trade

Commission’s conference:

Subject: HEDP from China and India

Inv. No.: 731-TA-1146-1147 (Preliminary)

Date and Time: April 9, 2008 - 9:30 a.m.

The conference in connection with these investigations was held in the Court Room B,

500 E Street, SW, Washington, D.C.

OPENING REMARKS:

Petitioners (Jeffrey S. Levin, Saul Ewing LLP)

Respondents (Lizbeth Levinson, Garvey Schubert Barer)

In Support of the Imposition of 

Antidumping Duties:

Saul Ewing LLP

Washington, D.C.

on behalf of

Compass Chemical International LLC 

Daniel McCaul, President, 

Compass Chemical International LLC 

Brian K. Failon, Vice President, Business Development & Technology, 

Compass Chemical International LLC 

Jeffrey S. Levin, Esq. ) – OF COUNSEL
B-4

In Opposition to the Imposition of 

Antidumping Duties:

Garvey Schubert Barer

Washington, DC

on behalf of

Aquapharm Chemicals Pvt. Ltd.

Vimal Mangwani, Director,

Aquapharm Ltd.

Mohan Karve, President,

Karve and Associates

John Zibrida, President, 

Zibex Inc.

Lizbeth Levinson, Esq. ) – OF COUNSEL

Riggle and Craven LLP

Chicago, IL

on behalf of

Jiangsu Jianghai Chemical Group Co., Ltd.

Changzhou Kewei Fine Chemical Co., Ltd.

Wujin Fine Chemical Factory Co., Ltd.

Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer 

Factory

George Collias, Sales Manager, 

Uniphos, Inc.

David Craven, Esq. ) – OF COUNSEL

REBUTTAL/CLOSING REMARKS:

Petitioners (Jeffrey S. Levin, Saul Ewing LLP)

Respondents (Lizbeth Levinson, Garvey Schubert Barer)
C-1

APPENDIX C

SUMMARY DATA

Table C-1

HEDP: Summary data concerning the U.S. market, 2005-07, July-December 2006, and July-December 2007

(Quantity=1,000 pounds, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per pound; period changes=percent, except where noted)

Reported data Period changes

July-December July-Dec.

Item 2005 2006 2007 2006 2007 2005-07 2005-06 2006-07 2006-07

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 India . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Subtotal . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Other sources . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 India . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Subtotal . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Other sources . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. shipments of imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 India:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 Subtotal:

 Quantity . . . . . . . . . . . . . . . . . . 5,881 8,351 8,089 4,762 4,267 37.5 42.0 -3.1 -10.4

 Value . . . . . . . . . . . . . . . . . . . . 3,709 5,047 4,978 2,828 2,716 34.2 36.1 -1.4 -4.0

 Unit value . . . . . . . . . . . . . . . . . $0.63 $0.60 $0.62 $0.59 $0.64 -2.4 -4.2 1.8 7.2

 Ending inventory quantity . . . . 548 1,790 2,007 1,689 1,897 266.3 226.6 12.1 12.3

 All other sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

Table continued on next page.

C-3
Table C-1--Continued

HEDP: Summary data concerning the U.S. market, 2005-07, July-December 2006, and July-December 2007

(Quantity=1,000 pounds, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per pound; period changes=percent, except where noted)

Reported data Period changes

July-December July-Dec.

Item 2005 2006 2007 2006 2007 2005-07 2005-06 2006-07 2006-07

U.S. producers':

 Average capacity quantity . . . . . *** *** *** *** *** *** *** *** ***

 Production quantity . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Capacity utilization (1) . . . . . . . . *** *** *** *** *** *** *** *** ***

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . *** *** *** *** *** *** *** *** ***

 Inventories/total shipments (1) . . *** *** *** *** *** *** *** *** ***

 Production workers . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hours worked (1,000s) . . . . . . . *** *** *** *** *** *** *** *** ***

 Wages paid ($1,000s) . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hourly wages . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Productivity (pounds per hour) . *** *** *** *** *** *** *** *** ***

 Unit labor costs . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Cost of goods sold (COGS) . . . . *** *** *** *** *** *** *** *** ***

 Gross profit or (loss) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 SG&A expenses . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss) . . . . *** *** *** *** *** *** *** *** ***

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit SG&A expenses . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit operating income or (loss) . *** *** *** *** *** *** *** *** ***

 COGS/sales (1) . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 (1) "Reported data" are in percent and "period changes" are in percentage points.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-4
D-1

APPENDIX D

PRICE DATA FOR NONSUBJECT COUNTRIES

D-3

Table D-1

HEDP: Weighted-average f.o.b. prices and quantities of products 1-4 imported from the UK, by

quarters, 2005-07

* * * * * * *