U.S. International Trade Commission

Publication 4073 April 2009

Washington, DC 20436

Frontseating Service Valves from China

Investigation No. 731-TA-1148 (Final)
U.S. International Trade Commission

COMMISSIONERS 

 

Shara L. Aranoff, Chairman 

Daniel R. Pearson, Vice Chairman 

Deanna Tanner Okun 

Charlotte R. Lane 

Irving A. Williamson 

Dean A. Pinkert

Staff assigned

Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

Robert A. Rogowsky

Director of Operations

Edward Petronzio, Investigator 

Ruben Mata, Industry Analyst 

Mihir Torsekar, Industry Analyst 

Nancy Bryan, Economist 

Charles Yost, Accountant 

Rhonda Hughes, Attorney 

Lemuel Shields, Statistician 

George Deyman, Supervisory Investigator 
U.S. International Trade Commission

Washington, DC 20436 

www.usitc.gov

Publication 4073 April 2009

Frontseating Service Valves from China

Investigation No. 731-TA-1148 (Final)

i

CONTENTS

 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 the 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 sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

The subject merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Commerce’s scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

The product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Descriptions and applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Manufacturing processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Domestic like product issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

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

U.S. market segments/channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Supply and demand considerations ................................................ II-3

U.S. supply ............................................................... II-3

U.S. demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5

Substitutability issues .......................................................... II-8

Factors affecting purchasing decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-8

Comparisons of domestic product and subject imports .............................. II-10

Other country comparisons ................................................... II-14

Elasticity estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14

U.S. supply elasticity ........................................................ II-14

U.S. demand elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14

Substitution elasticity ....................................................... II-14

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

U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

U.S. capacity, production, and capacity utilization ................................... III-1

U.S. producer’s shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2

U.S. producer’s inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3

U.S. producer’s imports and purchases ............................................. III-3

U.S. employment, wages, and productivity ......................................... III-3
ii

CONTENTS

Page

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

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

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2

Negligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2

Apparent U.S. consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2

U.S. market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3

Ratio of imports to U.S. production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3

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-2

U.S. inland transportation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Pricing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Sales terms and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7

Lost sales and lost revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7

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

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

Operations on FSVs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Capital expenditures and research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3

Assets and return on investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3

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

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

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

Part VII: Threat considerations and information on nonsubject countries ............... VII-1

The industry in China .......................................................... VII-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1

FSV operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2

U.S. imports subsequent to September 30, 2008 ..................................... VII-4

U.S. importers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4

Dumping in third-country markets ................................................ VII-5

Information on nonsubject countries .............................................. VII-5

Nonsubject source information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-5

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-6
CONTENTS

Page

 Appendixes

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

B. List of hearing witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

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

D. Purchasers’ reported purchases by source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

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

and has been replaced with asterisks in this report. 

iii
 
 1

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

1

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation No. 731-TA-1148 (Final)

FRONTSEATING SERVICE VALVES FROM CHINA 

DETERMINATION

On the basis of the record1

 developed in the subject investigation, the United States International

Trade Commission (Commission) determines, pursuant to section 735(b) of the Tariff Act of 1930 (19

U.S.C. § 1673d(b)) (the Act), that an industry in the United States is materially injured by reason of

imports from China of frontseating service valves, provided for principally in subheading 8481.80.10 of

the Harmonized Tariff Schedule of the United States, that have been found by the Department of

Commerce (Commerce) to be sold in the United States at less than fair value (LTFV).

BACKGROUND

The Commission instituted this investigation effective March 19, 2008 (73 F.R. 16059) following

receipt of a petition filed with the Commission and Commerce by Parker-Hannifin Corp. of Cleveland,

OH. The final phase of the investigation was scheduled by the Commission following notification of a

preliminary determination by Commerce that imports of frontseating service valves from China were

being sold at LTFV within the meaning of section 733(b) of the Act (19 U.S.C. § 1673b(b)). Notice of

the scheduling of the final phase of the Commission’s investigation and of a public hearing 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 November 21, 2008 (73 F.R. 70672). The hearing was held in Washington, DC, on March 10, 2009,

and all persons who requested the opportunity were permitted to appear in person or by counsel.
 
 1

 19 U.S.C. § 1677(4)(A).

 2 19 U.S.C. § 1677(4)(A).

 3 19 U.S.C. § 1677(10).

 4 See, e.g., Cleo, Inc. v. United States, 501 F.3d 1291, 1299 (Fed. Cir. 2007); 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 the following: (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).

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

-3-

VIEWS OF THE COMMISSION

Based on the record in the final phase of this investigation, we find that an industry in the United

States is materially injured by reason of imports of frontseating service valves (“FSVs”) from the

People’s Republic of China (“China”) that have been found by the U.S. Department of Commerce

(“Commerce”) to be sold in the United States at less than fair value.

I. BACKGROUND

The petition in this investigation was filed on March 19, 2008, by Parker-Hannifin Corp.

(“Parker”), the sole current domestic producer of FSVs. Parker filed questionnaire responses, appeared at

the staff conference and hearing, and filed briefs. Two Chinese producers/exporters of the subject

merchandise, Zhejiang DunAn Hetian Metal Co., Ltd. (“DunAn”) and Zhejiang Sanhua Co., Ltd.

(“Sanhua”) also filed questionnaire responses, appeared at the staff conference and hearing, and submitted

briefs.

II. DOMESTIC LIKE PRODUCT

A. In General

In determining whether an industry in the United States is materially injured or threatened with

material injury by reason of imports of the subject merchandise, the Commission first defines the

“domestic like product” and the “industry.”1

 Section 771(4)(A) of the Tariff Act of 1930, as amended

(“the Tariff Act”), defines the relevant domestic industry as the “producers as a whole 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.”2

 In turn, the Tariff 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.”3

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.4

 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.5

 The
 6

 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.”).

 7 See, e.g., USEC, Inc. v. United States, 34 Fed. Appx. 725, 730 (Fed. Cir. 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).

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

single like product corresponding to several different classes or kinds defined by Commerce); Cleo, 501 F.3d at 1298

n.1 (“Commerce’s [scope] finding does not control the Commission’s [like product] determination.”); Torrington,

747 F. Supp. at 748-52 (affirming the Commission’s determination defining six like products in investigations in

which Commerce found five classes or kinds).

 9 The frontseating service valve differs from a backseating service valve in that a backseating service valve has

two sealing surfaces on the valve stem. This difference typically incorporates a valve stem on a backseating service

valve to be machined of steel, where a frontseating service valve has a brass stem. The backseating service valve

dual stem seal (on the back side of the stem), creates a metal to metal seal when the valve is in the open position,

thus sealing the stem from the atmosphere.

-4-

Commission looks for clear dividing lines among possible like products and disregards minor variations.6

Although the Commission must accept Commerce’s determination as to the scope of the imported

merchandise that is subsidized or sold at less than fair value,7

 the Commission determines what domestic

product is like the imported articles Commerce has identified.8

B. Product Description

 Commerce defined the imported merchandise within the scope of this investigation as follows:

[F]rontseating service valves, assembled or unassembled, complete or incomplete, and certain

parts thereof. Frontseating service valves contain a sealing surface on the front side of the valve

stem that allows the indoor unit or outdoor unit to be isolated from the refrigerant stream when

the air conditioning or refrigeration unit is being serviced. Frontseating service valves rely on an

elastomer seal when the stem cap is removed for servicing and the stem cap metal to metal seat to

create this seal to the atmosphere during normal operation.9

For purposes of the scope, the term “unassembled” frontseating service valve means a

brazed subassembly requiring any one or more of the following processes: the insertion of a valve

core pin, the insertion of a valve stem and/or O ring, the application or installation of a stem cap,

charge port cap or tube dust cap. The term “complete” frontseating service valve means a product

sold ready for installation into an air conditioning or refrigeration unit. The term “incomplete”

frontseating service valve means a product that when sold is in multiple pieces, sections,

subassemblies or components and is incapable of being installed into an air conditioning or

refrigeration unit as a single, unified valve without further assembly.

The major parts or components of frontseating service valves intended to be covered by

the scope under the term “certain parts thereof” are any brazed subassembly consisting of any two

or more of the following components: a valve body, field connection tube, factory connection

tube or valve charge port. The valve body is a rectangular block, or brass forging, machined to be

hollow in the interior, with a generally square shaped seat (bottom of body). The field connection

tube and factory connection tube consist of copper or other metallic tubing, cut to length, shaped

and brazed to the valve body in order to create two ports, the factory connection tube and the

field connection tube, each on opposite sides of the valve assembly body. The valve charge port
 10 74 Fed. Reg. 10,886, 10,887-88 (Mar. 13, 2009).

 11 Split air conditioning systems have separate heating and cooling components inside and outside a house. FSVs

can be found outside a residence on the pipes that connect the air conditioner or heat pump compressor and fan to the

unit equipment inside the home. This two-part air conditioning system typically consists of a condenser, condenser

coil, fan, electric motor, and compressor located outside the house. The indoor unit comprises an evaporator coil

mounted on a furnace with a blower and filter. CR at I-8, PR at I-6.

 12 Confidential Report (“CR”) at I-6 - I-7. Public Report (“PR”) at I-6. The CR includes amended Table D-1 as

contained in Memorandum OINV-GG-029 (Apr. 1, 2009).

 13 CR/PR at II-1.

 14 CR at I-7 - I-8, PR at I-6.

-5-

is a service port via which a hose connection can be used 

to charge or evacuate the refrigerant medium or to monitor the system pressure for diagnostic

purposes. 

The scope includes frontseating service valves of any size, configuration, material

composition or connection type. Frontseating service valves are classified under subheading

8481.80.1095, and also have been classified under subheading 8415.90.80.85, of the Harmonized

Tariff Schedule of the United States (“HTSUS”). It is possible for frontseating service valves to

be manufactured out of primary materials other than copper and brass, in which case they would

be classified under HTSUS subheadings 8481.80.3040, 8481.80.3090, or 8481.80.5090. In

addition, if unassembled or incomplete frontseating service valves are imported, the various parts

or components would be classified under HTSUS subheadings 8481.90.1000, 8481.90.3000, or

8481.90.5000. The HTSUS subheadings are provided for convenience and customs purposes, but

the written description of the scope of this proceeding is dispositive.10

FSVs are designed to be used in residential air conditioning and heating systems such as split air

conditioning equipment and heat pumps.11 The production of FSVs is capital intensive and FSVs are

exclusively produced for the North American market primarily for the purpose of meeting environmental

regulations. FSVs are used to isolate sections of an air conditioning system during diagnostic servicing,

installation, repair, and to permit technicians to provide refrigerant charging and evacuating capabilities. 

FSVs contain one sealing surface on the front side of the valve stem. Every split air conditioning and

heat pump unit makes use of two FSVs. One FSV is a larger diameter valve used for outgoing refrigerant

gas and the other is a smaller diameter suction valve used for incoming compressed liquid.12 FSVs are

produced to order for original equipment manufacturers (“OEMs”) of residential split air conditioning

units, and typically range in size from 3/4-inch to 7/8-inch in diameter.13

FSVs perform essentially three primary functions in split air conditioning units and heat pumps: 

(1) contain the refrigerant in the condensing unit prior to the installation; (2) provide shut-off capability

that enables the unit to be serviced once installed; and (3) provide a service port by which a hose

connection can be used to evacuate the refrigerant medium or monitor the system pressure for diagnostic

purposes.14

C. Analysis

In the preliminary phase of the investigation, the Commission found that there was a single

domestic like product that is coextensive with the scope of the investigation and consisting of FSVs,
 15 Frontseating Service Valves from China, Inv. No. 731-TA-1148 (Preliminary), USITC Pub. 3999 (May 2008),

at 8.

 16 USITC Pub. 3999 at 7.

 17 USITC Pub. 3999 at 8.

 18 19 U.S.C. § 1677(4)(A).

 19 The domestic industry consisted of Parker, the sole remaining producer, as well as Chatleff Controls, Inc.

(“Chatleff”), a domestic producer during the early part of the period of investigation, as discussed further below. 

Chatleff submitted a partial questionnaire response that only included capacity and production data; consequently, its

data are not included in certain computations. See CR/PR at III-1 & n.2.

 20 Negligibility is not an issue in this investigation under 19 U.S.C. § 1677(24). The petition was filed on March

19, 2008. Subject imports from China accounted for all known U.S. imports of FSVs for the most recent 12-month

period for which data were available that preceded the filing of the petition (March 2007 through February 2008). 

CR at IV-5, PR at IV-2.

 21 19 U.S.C. §§ 1671d(b), 1673d(b).

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regardless of size, but not including backseating valves (“BSVs”) or ball valves.15 The Commission

based its decision not to include BSVs and ball valves in the domestic like product on differences among

FSVs, BSVs and ball valves in terms of physical characteristics and end uses, manufacturing facilities,

customers’ and producers’ perceptions, and price, in addition to limited practical interchangeability

among the products.16 The Commission based its finding with respect to the different sizes of FSVs on

the similarity in physical characteristics and general uses among the various sizes; the fact that all are sold

in the same channel of distribution, i.e. to OEMs; the fact that all are made on the same machinery and

equipment using the same manufacturing process; and the fact that customers and producers view the

different sizes of FSVs as similar. In addition, respondents presented no argument to the contrary.17

There is no evidence in the record of this final phase of the investigation calling into question the

domestic like product as defined in the preliminary determination and no party has challenged this

definition. We again find a single domestic like product coextensive with the scope of the investigation

and consisting of FSVs, regardless of size, but not including BSVs or ball valves.

III. DOMESTIC INDUSTRY

The domestic industry is defined as the domestic “producers as a whole 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.”18 In defining the domestic industry, the

Commission’s general practice has been to include in the industry producers of all domestic production of

the like product, whether toll-produced, captively consumed, or sold in the domestic merchant market.

Consistent with our definition of the domestic like product, we define the domestic industry as

consisting of all domestic producers of FSVs,19 regardless of size, but not including producers of BSVs or

ball valves.

IV. MATERIAL INJURY BY REASON OF SUBJECT IMPORTS FROM CHINA20

A. Legal Standards

In the final phase of antidumping or countervailing duty investigations, the Commission

determines whether an industry in the United States is materially injured or threatened with material

injury by reason of the imports under investigation.21 In making this determination, the Commission must

consider the volume of subject imports, their effect on prices for the domestic like product, and their
 22 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).

 23 19 U.S.C. § 1677(7)(A).

 24 19 U.S.C. § 1677(7)(C)(iii).

 25 19 U.S.C. § 1677(7)(C)(iii).

 26 19 U.S.C. §§ 1671d(a), 1673d(a).

 27 Angus Chemical Co. v. United States, 140 F.3d 1478, 1484-85 (Fed. Cir. 1998) (“[T]he statute does not

‘compel the commissioners’ to employ [a particular methodology].”), aff’g 944 F. Supp. 943, 951 (Ct. Int’l Trade

1996).

 28 The Federal Circuit, in addressing the causation standard of the statute, observed that “[a]s long as its effects

are not merely incidental, tangential, or trivial, the foreign product sold at less than fair value meets the causation

requirement.” Nippon Steel Corp. v. USITC, 345 F.3d 1379, 1384 (Fed. Cir. 2003). This was further ratified in

Mittal Steel Point Lisas Ltd. v. United States, 542 F.3d 867, 873 (Fed. Cir. 2008), where the Federal Circuit, quoting

Gerald Metals, Inc. v. United States, 132 F.3d 716, 722 (Fed. Cir. 1997), stated that “this court requires evidence in

the record ‘to show that the harm occurred “by reason of” the LTFV imports, not by reason of a minimal or

tangential contribution to material harm caused by LTFV goods.’ ” See also Nippon Steel Corp. v. United States,

458 F.3d 1345, 1357 (Fed. Cir. 2006); Taiwan Semiconductor Industry Ass’n v. USITC, 266 F.3d 1339, 1345 (Fed.

Cir. 2001).

 29 Statement of Administrative Action (“SAA”) on Uruguay Round Agreements Act (“URAA”), H.R. Rep. 103-

316, Vol. I at 851-52 (1994) (“[T]he Commission must examine other factors to ensure that it is not attributing injury

from other sources to the subject imports.”); S. Rep. 96-249 at 75 (1979) (the Commission “will consider

information which indicates that harm is caused by factors other than less-than-fair-value imports.”); H.R. Rep. 96-

317 at 47 (1979) (“in examining the overall injury being experienced by a domestic industry, the ITC will take into

account evidence presented to it which demonstrates that the harm attributed by the petitioner to the subsidized or

(continued...)

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impact on domestic producers of the domestic like product, but only in the context of U.S. production

operations.22 The statute defines “material injury” as “harm which is not inconsequential, immaterial, or

unimportant.”23 In assessing whether 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.24 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.”25

Although the statute requires the Commission to determine whether the domestic industry is

“materially injured by reason of” unfairly traded imports,26 it does not define the phrase “by reason of,”

indicating that this aspect of the injury analysis is left to the Commission’s reasonable exercise of its

discretion.27 In identifying a causal link, if any, between subject imports and material injury to the

domestic industry, the Commission examines the facts of record that relate to the significance of the

volume and price effects of the subject imports and any impact of those imports on the condition of the

domestic industry. This evaluation under the “by reason of” standard must ensure that subject imports are

more than a minimal or tangential cause of injury and that there is a sufficient causal, not merely a

temporal, nexus between subject imports and material injury.28

In many investigations, there are other economic factors at work, some or all of which may also

be having adverse effects on the domestic industry. Such economic factors might include non-subject

imports; changes in technology, demand, or consumer tastes; competition among domestic producers; or

management decisions by domestic producers. The legislative history explains that the Commission must

examine factors other than subject imports to ensure that it is not attributing injury from other factors to

the subject imports, thereby inflating an otherwise tangential cause of injury into one that satisfies the

statutory material injury threshold.29 In performing its examination, however, the Commission need not
 29 (...continued)

dumped imports is attributable to such other factors;” those factors include “the volume and prices of nonsubsidized

imports or imports sold at fair value, contraction in demand or changes in patterns of consumption, trade restrictive

practices of and competition between the foreign and domestic producers, developments in technology and the

export performance and productivity of the domestic industry”); accord Mittal Steel, 542 F.3d at 877.

 30 SAA at 851-52 (“[T]he Commission need not isolate the injury caused by other factors from injury caused by

unfair imports.”); Taiwan Semiconductor Industry Ass’n v. USITC, 266 F.3d 1339, 1345 (Fed. Cir. 2001) (“[T]he

Commission need not isolate the injury caused by other factors from injury caused by unfair imports. . . . Rather, the

Commission must examine other factors to ensure that it is not attributing injury from other sources to the subject

imports.” (emphasis in original)); Asociacion de Productores de Salmon y Trucha de Chile AG v. United States, 180

F. Supp. 2d 1360, 1375 (Ct. Int’l Trade 2002) (“[t]he Commission is not required to isolate the effects of subject

imports from other factors contributing to injury” or make “bright-line distinctions” between the effects of subject

imports and other causes.); see also Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 731-TA-928

(Remand), USITC Pub. 3658 at 100-01 (Dec. 2003) (Commission recognized that “[i]f an alleged other factor is

found not to have or threaten to have injurious effects to the domestic industry, i.e., it is not an ‘other causal factor,’

then there is nothing to further examine regarding attribution to injury”), citing Gerald Metals, Inc. v. United States,

132 F.3d 716, 722 (Fed. Cir. 1997) (the statute “does not suggest that an importer of LTFV goods can escape

countervailing duties by finding some tangential or minor cause unrelated to the LTFV goods that contributed to the

harmful effects on domestic market prices.”). 

 31 S. Rep. 96-249 at 74-75; H.R. Rep. 96-317 at 47.

 32 See Nippon Steel Corp., 345 F.3d at 1381 (“an affirmative material-injury determination under the statute

requires no more than a substantial-factor showing. That is, the ‘dumping’ need not be the sole or principal cause of

injury.”).

 33 Mittal Steel, 542 F.3d at 877-78; see also id. at 873 (“While the Commission may not enter an affirmative

determination unless it finds that a domestic industry is materially injured ‘by reason of’ subject imports, the

Commission is not required to follow a single methodology for making that determination . . . [and has] broad

discretion with respect to its choice of methodology.”) citing United States Steel Group v. United States, 96 F.3d

1352, 1362 (Fed. Cir. 1996) and S. Rep. 96-249 at 75.

 34 Commissioner Pinkert does not join this paragraph or the following four paragraphs. He points out that the

Federal Circuit, in Bratsk, 444 F.3d 1369, and Mittal, held that the Commission is required, in certain circumstances,

to undertake a particular kind of analysis of non-subject imports. Mittal explains as follows:

What Bratsk held is that “where commodity products are at issue and fairly traded, price-competitive, nonsubject imports are in the market,” the Commission would not fulfill its obligation to consider an important

aspect of the problem if it failed to consider whether non-subject or non-LTFV imports would have

replaced LTFV subject imports during the period of investigation without a continuing benefit to the

domestic industry. 444 F.3d at 1369. Under those circumstances, Bratsk requires the Commission to

consider whether replacement of the LTFV subject imports might have occurred during the period of

investigation, and it requires the Commission to provide an explanation of its conclusion with respect to

that factor.

542 F.3d at 878.

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isolate the injury caused by other factors from injury caused by unfairly traded imports.30 Nor does the

“by reason of” standard require that unfairly traded imports be the “principal” cause of injury or

contemplate that injury from unfairly traded imports be weighed against other factors, such as non-subject

imports, which may be contributing to overall injury to an industry.31 It is clear that the existence of

injury caused by other factors does not compel a negative determination.32

Assessment of whether material injury to the domestic industry is “by reason of” subject imports

“does not require the Commission to address the causation issue in any particular way” as long as “the

injury to the domestic industry can reasonably be attributed to the subject imports” and the Commission

“ensure[s] that it is not attributing injury from other sources to the subject imports.”33 34 Indeed, the

Federal Circuit has examined and affirmed various Commission methodologies and has disavowed “rigid
 35 Nucor Corp. v. United States, 414 F.3d 1331, 1336, 1341 (Fed. Cir. 2005); see also Mittal Steel, 542 F.3d at

879 (“Bratsk did not read into the antidumping statute a Procrustean formula for determining whether a domestic

injury was ‘by reason’ of subject imports.”).

 36 Mittal Steel, 542 F.3d at 875-79.

 37 Mittal Steel, 542 F.3d at 873 (quoting from Gerald Metals, 132 F.3d at 722), 875-79 & n.2 (recognizing the

Commission’s alternative interpretation of Bratsk as a reminder to conduct a non-attribution analysis).

 38 Commissioner Lane also refers to her dissenting views in Polyethylene Terephthalate Film, Sheet, and Strip

from Brazil, China, Thailand, and the United Arab Emirates, Inv. Nos. 731-TA-1131-1134 (Final), USITC Pub.

4040 (Oct. 2008), for further discussion of Mittal Steel.

 39 To that end, after the Federal Circuit issued its decision in Bratsk, the Commission began to present published

information or send out information requests in final phase investigations to producers in non-subject countries that

accounted for substantial shares of U.S. imports of subject merchandise (if, in fact, there were large non-subject

import suppliers). In order to provide a more complete record for the Commission’s causation analysis, these

requests typically seek information on capacity, production, and shipments of the product under investigation in the

major source countries that export to the United States. The Commission plans to continue utilizing published or

requested information in final phase investigations in which there are substantial levels of non-subject imports.

 40 We provide in the discussion of impact in section IV.E. below a full analysis of other factors alleged to have

caused any material injury experienced by the domestic industry. 

 41 Mittal Steel, 542 F.3d at 873; Nippon Steel Corp., 458 F.3d at 1350, citing U.S. Steel Group, 96 F.3d at 1357;

S. Rep. 96-249 at 75 (“The determination of the ITC with respect to causation is . . . complex and difficult, and is a

matter for the judgment of the ITC.”).

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adherence to a specific formula.”35

The Federal Circuit’s decisions in Gerald Metals, Bratsk, and Mittal Steel all involved cases

where the relevant “other factor” was the presence in the market of significant volumes of pricecompetitive non-subject imports. The Commission interpreted the Federal Circuit’s guidance in Bratsk as

requiring it to apply a particular additional methodology following its finding of material injury in cases

involving commodity products and a significant market presence of price-competitive non-subject

imports.36 The additional “replacement/benefit” test looked at whether non-subject imports might have

replaced subject imports without any benefit to the U.S. industry. The Commission applied that specific

additional test in subsequent cases, including the Carbon and Certain Alloy Steel Wire Rod from Trinidad

and Tobago determination that underlies the Mittal Steel litigation.

Mittal Steel clarifies that the Commission’s interpretation of Bratsk was too rigid and makes clear

that the Federal Circuit does not require the Commission to apply an additional test nor any one specific

methodology; instead, the court requires the Commission to have “evidence in the record to show that the

harm occurred ‘by reason of’ the LTFV imports,’” and requires that the Commission not attribute injury

from non-subject imports or other factors to subject imports.37 Accordingly, we do not consider ourselves

required to apply the replacement/benefit test that was included in Commission opinions subsequent to

Bratsk.

The progression of Gerald Metals, Bratsk, and Mittal Steel clarifies that, in cases involving

commodity products where price-competitive non-subject imports are a significant factor in the U.S.

market, the Court will require the Commission to give full consideration, with adequate explanation, to

non-attribution issues when it performs its causation analysis.38 39

The question of whether the material injury threshold for subject imports is satisfied

notwithstanding any injury from other factors is factual, subject to review under the substantial evidence

standard.40 Congress has delegated this factual finding to the Commission because of the agency’s

institutional expertise in resolving injury issues.41
 42 Tr. at 47 (Mr. Nelson), 85 (Mr. Nelson), 112 (Mr. Hudgens), 116 (Mr. Hudgens), 206 (Mr. Dinan).

 43 CR at II-9 - II-10, PR at II-5; Tr. at 92 (Mr. Miller) (decreased demand in housing market reported for

September/October 2008).

 44 CR at II-9 - II-10, PR at II-5. The Commission’s normal practice is to consider data for the three most recent

calendar years, plus interim periods when applicable. This achieves a balance between the burden on questionnaire

recipients and the Commission’s need for sufficient information for making its determinations. See Silicon Metal

from Russia, Inv. No. 731-TA-991 (Final), USITC Pub. 3584 (March 2003) at 11, n. 68, citing, inter alia, Kenda

Rubber Industrial Co. v. United States, 630 F. Supp. 354, 359 (Ct. Int’l Trade 1986), aff’d on this point, Bratsk 

Smelter v. United States, Slip Op. 04-75 (Ct. Int’l Trade June 22, 2004). However, we have expanded the period of

investigation when we found it was appropriate to do so under the unique facts of a particular industry or

investigation. See e.g., Sodium Hexametaphosphate from China, Inv. No. 731-TA-1110 (Final), USITC Pub. 3984

(March 2008) at 8-9; Certain Orange Juice from Brazil, Inv. No. 731-TA-1089 (Final), USITC Pub. 3838 (March

2006) at 18, n. 133; Purified Carboxymethylcellulose from Finland, Mexico, Netherlands, and Sweden, Inv. Nos.

731-TA-1084-1087 (Final), USITC Pub. 3787 (June 2005) at 14; Certain Aluminum Plate from South Africa, Inv.

No. 731-TA-1056 (Final), USITC Pub. 3734 (November 2004) at 19 n. 156. Here, given new environmental

regulations that took effect in January 2006, affecting the entire customer base for FSVs, we have gathered data for

four years rather than three so as to analyze the industry and market before and after these new regulations were

implemented. We also note that respondents requested that we gather full-year 2008 data and petitioner did not

object. See Letter from Ned H. Marshak to Marilyn R. Abbott (Nov. 13, 2008).

 45 CR at II-10, PR at II-5.

 46 See CR/PR at Table IV-4; see also CR at II-11, Tr. at 92 & 105 (Mr. Miller) (because of economic downturn

homeowners repair air conditioning units, which does not necessitate replacing existing FSVs).

 47 Apparent U.S. consumption decreased from *** units in 2005 to *** units in 2006, to *** units in 2007, and

further to *** units in 2008. CR/PR at Table IV-3.

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B. Conditions of Competition and the Business Cycle

The following conditions of competition inform our analysis of whether there is material injury or

threat of material injury by reason of subject imports from China.

1. Demand Conditions

As explained above, FSVs are primarily used in residential air conditioning units. The FSVs

subject to this investigation are used only in the North American market.42 The demand for FSVs is

determined by the demand for new and replacement residential split air conditioning units, with

replacement units reportedly accounting for approximately 70 percent of the total U.S. market.43 Demand

for new residential split air conditioning units is largely dependent on demand for single-family housing

construction, which is subject to changes in interest rates, housing prices and population growth, among

other factors. According to the U.S. Census Bureau, new privately owned housing units completed in the

United States decreased by 42.2 percent from 2005 to 2008, with all of the decrease occurring in 2007

and 2008.44 U.S. demand for replacements of air conditioning systems is partly driven by the number of

older houses and weather events that damage property, such as floods and hurricanes.45 Demand for

replacements decreased during the period of investigation.46

The questionnaire data show that demand for FSVs decreased in each year from 2005 to 2008. 

Apparent U.S. consumption steadily decreased over the period of investigation from *** units in 2005 to

*** units in 2008.47

The record indicates that there was a spike in demand in 2005 due to a buildup of inventory of

residential split air conditioning units in anticipation of the change in the U.S. Department of Energy’s

mandated seasonal energy efficiency ratio (“SEER”) requirements that took effect in January 2006. 
 48 CR at II-11, PR at II-6.

 49 CR at II-12, PR at II-7.

 50 CR/PR at IV-1.

 51 CR/PR at III-1 & n.3.

 52 CR/PR at Table III-2.

 53 CR/PR at Table IV-4.

 54 The domestic industry’s capacity utilization decreased steadily over the period, from *** percent in 2005 to

*** percent in 2008. CR/PR at Table III-2. The subject Chinese producers’ capacity utilization decreased from ***

percent in 2005 to *** percent in 2008. CR/PR at Table VII-1.

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Parker reported that the growth rate of consumption of residential split air conditioning units averaged

roughly *** to *** percent per year prior to 2004 and rose to *** percent in 2005, due mostly to the

demand spike caused by the new SEER requirements, before returning to more normal levels of growth in

2006 and 2007. Long-term demand is expected to be relatively flat, due to a strong replacement market

and the fact that air conditioning systems are now virtually standard equipment in residential units.48

Seasonality exists in the market, with reportedly 60 percent of annual sales occurring between January

and May. Parker reported, however, that this seasonality does not have an effect on prices, as they are

negotiated mostly on a long-term contract basis.49

2. Supply Conditions

There are two sources of supply in the U.S. market: imports of the subject merchandise and

domestic production. There were no nonsubject imports of FSVs during the period of investigation.

The petition identified two importers of FSVs, DunAn Precision Inc. (“DunAn Precision”) and

Sanhua International, Inc. (“Sanhua International”). Both importers submitted complete questionnaire

responses. The questionnaire coverage is believed to be 100 percent because ***. Prior to 2006, ***,

which also submitted a complete U.S. importer questionnaire. The combined questionnaire responses of

*** are believed to account for all U.S. imports of FSVs from China, by quantity, in the period examined. 

The responding importers reported *** from other sources during the period examined.50

The petition identified the current U.S. producer of FSVs, Parker, as the sole domestic producer,

but subsequent to the filing of the petition, Chatleff was also identified as a producer. Chatleff produced

*** FSVs from *** until *** when it ceased production for reasons unrelated to competition with

domestic or international suppliers. The Commission received a completed questionnaire response from

Parker and a partial response from Chatleff.51

The domestic industry’s FSV production capacity decreased from *** to ***, then was steady for

the remainder of the period of investigation.52 As measured by quantity, however, its market share

decreased steadily throughout the period from *** percent in 2005 to *** percent in 2008.53 Both the

domestic industry and the Chinese producers have *** excess capacity.54

3. Raw Material Costs

Brass and copper are the principal raw materials used in producing FSVs, with brass reportedly

accounting for *** percent of total raw material costs and copper accounting for *** percent. Parker

reported that prices for brass and copper have increased by *** percent since 2005. Monthly brass prices

increased by 164.3 percent from January 2005 to September 2008, after which they decreased by 63.8

percent to November 2008, the last month for which data are available. London Metal Exchange monthly

copper prices increased by 165.4 percent from January 2005 to July 2008, after which they decreased by
 55 CR/PR at V-1.

 56 Parker reported that the U.S. and Chinese products are *** interchangeable; two importers reported that the

products are frequently interchangeable and one reported that they are never interchangeable; and four purchasers

reported that the products are always interchangeable while two reported that they are frequently interchangeable. 

CR/PR at Table II-3.

 57 CR/PR at Table II-1.

 58 CR/PR at Table II-2.

 59 CR at II-12 - II-13, PR at II-7-8.

 60 CR at I-9, I-10, PR at I-7. Production of FSVs starts by ***. CR at I-9, PR at I-7. ***. CR at I-9, PR at I-7.

 61 See CR/PR at II-1; see also Tr. at 149-50 (Mr. Craven) (Sanhua sells bar stock valves in the U.S. market, while

DunAn sells forged).

 62 There are seven OEMs in the market, six of which responded to the Commission’s questionnaires. CR at II-3,

PR at II-1.

 63 CR at II-15 - II-16, PR at II-10.

 64 See CR/PR at Table II-2.

 65 CR/PR at Table II-2.

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63.1 percent to December 2008.55

4. Substitutability

The record indicates that there is a high degree of interchangeability between FSVs produced in

the United States and subject imports from China. The domestic producer, along with most importers and

purchasers, reported that the products are “always” or “frequently” interchangeable.56 Price was always

identified as one of the top three factors in making purchasing decisions, although it was not identified as

the most important factor.57 Additionally, all six responding purchasers reported that price is a “very

important” factor.58

In terms of substitute products, BSVs, ball valves and aluminum service valves may technically

be used in place of FSVs, but are more expensive and are not functional economic substitutes.59 In the

United States, *** FSVs are produced by the bar stock method, while in China some FSVs are produced

using the forged body method.60 FSVs produced using the forged body method may be substituted for

those produced using the bar stock method.61

5. Other Factors

We note that qualification of a manufacturer is important in obtaining contracts. All six

responding purchasers62 reported that they require suppliers to become certified. Qualification times may

last from three months to three years. Once a producer is qualified, field performance of the FSVs is

monitored, but there is no further testing. When asked if any suppliers failed in attempting to become

certified, one purchaser cited *** and another cited ***.63

Record evidence also shows that service is important in obtaining and maintaining contracts. 

Service includes matters such as quick and consistent delivery, inventory management and customer

service.64 Thus, most purchasers rated non-price factors such as availability, product consistency, quality,

and reliability of supply as “very important.”65
 66 19 U.S.C. § 1677(7)(C)(i).

 67 CR/PR at Table IV-3.

 68 Subject imports rose from *** units in 2005 to *** units in 2006, then to *** units in 2007, and fell to ***

units in 2008. CR/PR at Table IV-2. U.S. shipments of subject imports increased from *** units in 2005 to ***

units in 2006, to *** units in 2007, then decreased to *** units in 2008. CR/PR at Table IV-3.

 69 As measured by quantity, subject import market share climbed from *** percent in 2005 to *** percent in

2006, to *** percent in 2007, then to *** percent in 2008. CR/PR at Table IV-4.

 70 CR/PR at Table III-3.

 71 The domestic industry’s U.S. shipments decreased from *** units in 2005 to *** units in 2006, to *** units in

2007, then to *** units in 2008. CR/PR at Table III-3.

 72 As measured by quantity, the domestic industry’s market share fell from *** percent in 2005 to *** percent in

2006, to *** percent in 2007, then to *** percent in 2008. CR/PR at Table IV-4.

 73 CR/PR at Table IV-4.

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C. Volume of the Subject Imports

In evaluating the volume of subject imports, section 771(7)(C)(i) of the Tariff 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.”66

Apparent U.S. consumption decreased significantly over the period of investigation, from ***

units in 2005 to *** units in 2008.67 Notwithstanding this decrease, subject imports increased steadily

from 2005 to 2007, before decreasing in 2008.68 As measured by quantity, subject import market share

rose steadily throughout the period as well and, in terms of percentage points, it more than *** between

2005 and 2008.69 The ratio of subject imports to U.S. production increased *** over the period of

investigation from *** percent in 2005 to *** percent in 2008.70

Because there is no other source of FSVs, all subject import gains in volume and market share

occurred directly at the expense of the domestic industry. The domestic industry’s quantity of U.S.

shipments decreased steadily over the period commensurate with the increase in subject imports, falling

by *** percent between 2005 and 2008.71 This decline in the domestic industry’s shipments translated to

a loss of *** percentage points of its market share over the period.72 In contrast, the market share of

subject imports rose by *** percentage points over the same period.73

In view of the foregoing, we find that the volume of subject imports and the increase in that

volume are significant, both in absolute terms and relative to consumption and production in the United

States.

D. Price Effects of Subject Imports

In evaluating the price effects of the subject imports, section 771(7)(C)(ii) of the Tariff Act

provides that 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
 74 19 U.S.C. § 1677(7)(C)(ii).

 75 These products are as follows: frontseating service valves that have brass bodies with copper tube extensions,

double 90-degree flow pattern, metal-to-metal seating, with Schrader Bridgeport access valves and captivated stem

with OD solder connection of (1) 3/8 inch – SAE – 6 size; (2) 3/4 inch – SAE – 12 size; and (3) 7/8 inch – SAE – 14

size. CR at V-6 - V-7, PR at V-4-5.

 76 CR at V-7, PR at V-5.

 77 CR at V-14, PR at V-7.

 78 Confirmed lost sales are valued at $***. CR at V-16, PR at V-7. Although ***. CR at V-16 n.19, PR at V-7

n.19.

 79 See CR/PR at Tables V-1 - V-3.

 80 CR/PR at Table VI-1.

 81 CR/PR at Table VI-1. The domestic industry was able to increase its average unit sales value from $*** in

2007 to $*** in 2008, while its average unit COGS decreased from $*** in 2007 to $*** in 2008. In 2006 and

2007, the domestic industry was not able to increase its average unit sales values sufficiently to cover the large

increases in average unit COGS in those years. The increase in average unit sales values relative to COGS in 2008,

however, did not offset the cost-price squeeze experienced in 2006 and 2007. As a result, there was a cost-price

squeeze over the period of investigation, as average unit COGS increased by $*** more than the increase in average

unit sales values over the period of investigation.

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degree.74

As indicated above, there is a high degree of substitutability between the domestic like product

and the subject imports; price is an important factor in purchasing decisions, although certain non-price

factors are important in purchasing decisions as well.

The Commission sought quarterly pricing data for three products.75 The pricing data obtained

accounted for approximately *** percent of Parker’s U.S. commercial shipments during the period of

investigation and for *** percent of subject imports from China during the period.76 The data show

underselling in all 48 quarterly comparisons, ranging from 11.0 percent to 45.9 percent.77 Pervasive

underselling of the domestic like product by highly substitutable subject imports from China in a market

in which price is a very important factor in purchasing decisions resulted in subject imports taking

substantial market share from the domestic industry. This conclusion is buttressed by extensive evidence

of lost sales,78 demonstrating that OEM purchasers shifted their contracts from Parker to subject producers

in order to take advantage of lower prices. Accordingly, given the clear relationship between the

pervasive underselling and sales lost by the domestic industry, we find the underselling to be significant.

Consistent with the global rise in costs of brass and copper, prices generally increased for both

the domestic product and subject merchandise during the period, although there were some fluctuations

for each of the three pricing products, most notably declines for certain products in 2006 and in the fourth

quarter of 2008.79 Given the general increases in the domestic industry’s prices over the entire period of

investigation, we do not find that subject imports from China significantly depressed prices of the

domestic like product in the U.S. market.

We have also considered whether subject imports from China suppressed prices of the domestic

like product to a significant degree. As explained above, the cost of raw materials increased substantially

over the period. While prices also increased, they were not sufficient to cover the increase in these costs. 

The domestic industry’s average unit cost of goods sold (“COGS”) increased, from $*** per unit in 2005

to $*** per unit in 2008, an increase of $*** per unit.80 The domestic industry’s average unit sales value

increased from $*** per unit in 2005 to $*** per unit in 2008, an increase of $*** per unit.81

Consequently, the industry experienced a cost-price squeeze through 2008 as is also shown by trends in

the ratio of COGS to net sales, which increased overall from *** percent in 2005 to *** percent in 2007,
 82 CR/PR at Table VI-1. Production declined from *** units in 2005 to *** units in 2008. CR/PR at Table III-2. 

Thus, the increase in costs was spread over substantially fewer units over the course of the period.

 83 Commissioners Lane, Williamson and Pinkert find that decreased demand typically causes intensified

competition among suppliers that may lower prices as they attempt to maintain their level of sales and market share

in a shrinking market. In this investigation, there is a single source of U.S.-produced FSVs and there are no

nonsubject imports. As such, the effect of declining demand was to intensify price competition between the sole

domestic producer and subject imports (rather than other sources of supply).

 84 The cost of the FSVs approximates between *** and *** percent of the cost of the air conditioning unit. CR at

II-13, PR at II-8.

 85 CR at II-22 - II-23, PR at II-15.

 86 In its final determination, Commerce found dumping margins of 28.44 for Sanhua, 12.95 percent for DunAn

and 55.62 percent for the country-wide margin. 74 Fed. Reg. at 10,890.

 87 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.”).

 88 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701-

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

 89 Production decreased from *** units in 2005, to *** units in 2006, to *** units in 2007 and 2008. CR/PR at

Table III-2.

 90 U.S. shipments fell from *** units in 2005 to *** units in 2006, to *** units in 2007, and then to *** units in

2008. CR/PR at Table III-3.

 91 Capacity utilization declined from *** percent in 2005 to *** percent in 2006, to *** percent in 2007, then to

*** percent in 2008. CR/PR at Table III-2.

-15-

and declined *** to *** percent in 2008.82 Although demand for the product is decreasing,83 there are no

economically viable substitutes for FSVs. FSVs are essential components of a finished air conditioning

unit and account for a small share of the total price.84 Demand for FSVs, therefore, has a relatively low

sensitivity to changes in price.85 Based on evidence of the market conditions in this industry, Parker

should have been able to pass on cost increases to purchasers by way of higher prices. Accordingly, we

find that the large volume of lower-priced subject imports prevented price increases for domestic FSVs,

sufficient to cover costs, which otherwise would have occurred, to a significant degree.

In light of the foregoing, we find that subject imports have had significant adverse effects on

domestic prices.

E. Impact of the Subject Imports on the Domestic Industry86

In examining the impact of subject imports, section 771(7)(C)(iii) of the Tariff Act provides that

the Commission “shall evaluate all relevant economic factors which have a bearing on the state of the

industry.”87 These factors include output, sales, inventories, 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.”88

We have examined the performance indicators in the trade and financial data for the domestic

industry producing FSVs, all of which indicate *** declines during the period of investigation. 

Production declined by *** percent during that time frame89 and the domestic producers’ U.S. shipments

shrank by *** percent,90 causing capacity utilization to decline by *** percentage points.91 While, as

explained above, Parker makes *** its product to order, we note that inventories fell by *** percent over
 92 End-of-period inventories increased from *** units in 2005 to *** units in 2006, and then decreased to ***

units in 2007 and to *** units in 2008. CR/PR at Table III-4.

 93 The ratio of end-of-period inventories to total shipments rose from *** percent in 2005 to *** percent in 2006,

then fell to *** percent in 2007 and to *** percent in 2008. CR/PR at Table III-4.

 94 The number of production and related workers decreased from *** in 2005 to *** in 2006, to *** in 2007, and

then to *** in 2008. CR/PR at Table III-5.

 95 Hours worked declined from *** hours in 2005 to *** hours in 2006, to *** hours in 2007, then to *** hours

in 2008. CR/PR at Table III-5.

 96 Wages paid fell from $*** in 2005 to $*** in 2006, to $*** in 2007, then to $*** in 2008. CR/PR at Table

III-5.

 97 Productivity fell from *** units per hour in 2005 to *** units per hour in 2006, to *** units per hour in 2007,

then rose to *** units per hour in 2008. CR/PR at Table III-5.

 98 As measured by quantity, total net sales fell from *** units in 2005 to *** units in 2006, to *** units in 2007,

then to *** units in 2008. CR/PR at Table VI-1.

 99 As measured by value, total net sales fell from $*** in 2005 to $*** in 2006, to $*** in 2007, then to $*** in

2008. CR/PR at Table VI-1.

 100 Operating income declined from $*** in 2005 to $*** in 2006, to *** in 2007, and *** in 2008. CR/PR at

Table VI-1.

 101 The ratio of operating income to net sales fell from *** percent in 2005 to *** percent in 2006, then to ***

percent in 2007, and *** percent in 2008. CR/PR at Table VI-1.

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the period as Parker lost customers.92 Thus, the ratio of inventories to total shipments declined ***

between 2005 and 2008.93

The employment indicators also exhibited substantial downward trends. The number of

production and related workers declined steadily ***,94 as did hours worked95 and wages paid.96 In 2008,

productivity was *** above its 2005 level, after steady declines between 2005 and 2007.97

Total net sales, as measured by quantity, decreased by *** percent over the entire period of

investigation98 and fell by *** percent over the period, as measured by value.99 Operating income

declined *** in 2007, and *** in 2008.100 The operating income margins exhibited the same trends.101

We conclude that subject imports had a material adverse impact on the condition of the domestic

industry during the period of investigation. In particular, we find that both the absolute and relative

volumes of subject imports were significant. In addition, subject imports gained market share at the

expense of the domestic industry, undersold the domestic product to a significant degree, and suppressed

domestic prices to a significant degree. As the domestic industry’s costs increased and significant

volumes of lower-priced subject imports entered the U.S. market, the domestic industry was caught in a

cost-price squeeze. The increase in subject imports and their adverse effects on U.S. prices caused

declines in the domestic industry’s trade, employment, and financial performance over the period of

investigation.

We find that there is a causal nexus between the subject imports and the trade, employment and

financial difficulties Parker experienced during the period of investigation. As explained above, although

demand decreased during the period of investigation, the market share of subject imports increased *** at

the expense of the domestic industry. The significant and increasing volumes of subject imports were

priced significantly lower then the domestic like product and undersold it in every quarterly comparison. 

The record supports a finding that the lower prices caused purchasers to reduce, or in some cases cease

altogether, their purchases of the domestic like product in favor of the subject imports. Whereas all six of

the reporting purchasers obtained their product from the domestic industry at the beginning of the period

of investigation, by the end of the period four of the six purchasers were obtaining their product
 102 See CR/PR at VI-1 n.3, Table D-1 (amended). In fact, five of the seven OEMs (***) purchased exclusively

from Chinese producers at the end of the period of investigation. ***.

 103 In 2005, the six purchasers bought a total of *** units from China; this number rose to *** in 2007. It was

*** in January-September 2007 and *** in Jan.-Sept. 2008. CR/PR at Table D-1 (amended).

 104 In 2005, subject import shipments totaled *** units; they totaled *** units in 2007. CR/PR at Table IV-3.

 105 For this reason, Commissioner Pinkert finds that the second Bratsk triggering factor – regarding the presence

of price-competitive nonsubject imports in the U.S. market – is not satisfied in this case.

 106 Sanhua’s Prehearing Brief at 7. As discussed infra, we do not agree with Sanhua’s assertion that Parker was

ever a monopolist during the period of investigation or that our own analysis should be different even if it were.

 107 See Sanhua’s Prehearing Brief at 18-21; Petitioner’s Posthearing Brief at 5 & Exh. 3; Tr. at 21 (Mr. Nelson). 

Four of the six responding purchasers indicated that Parker and the Chinese producers were equal in meeting quality

requirements. One of the remaining two was a verified lost sale, showing that the switch to the Chinese product was

made on the basis of price, not quality. See *** Response to Lost Sales Allegation; CR at V-20. We note that while

purchaser ***. CR at V-19, PR at V-8. We note that ***. CR at V-19 nn.23-24, PR at V-8 nn.23-24.

 108 *** purchased *** units from the domestic industry in 2005, *** units in 2006 and *** units in 2007. It

purchased *** units in January-September 2007 and *** units in January-September 2008. CR/PR at Table D-1

(amended).

 109 CR/PR at Table II-3.

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exclusively from Chinese producers.102 Between 2005 and 2007, the number of units purchased from

Chinese producers effectively ***.103 The number of shipments of subject merchandise from Chinese

producers *** as well during this period.104

We have considered whether there are other factors that have an impact on the domestic industry. 

As there were no imports of FSVs from any country other than China during the period of investigation,

the injury we have found cannot be attributed to nonsubject imports.105

We recognize that apparent U.S. consumption has decreased steadily over the period under

examination, and that long-term demand is expected to be relatively flat. In this investigation, in which

there is a single source of U.S.-produced merchandise and there are no nonsubject imports, declining

demand resulted in intensified competition between low-priced subject imports and U.S.-produced

merchandise. As the low-priced subject imports increased (both in terms of absolute volume and market

share), the domestic industry’s share of the shrinking U.S. market declined ***.

Respondent Sanhua argues that the loss of customers by the domestic industry has been due to

issues related to the quality of the domestic industry’s product as well as the service it provides, rather

than to price considerations. Sanhua argues that the domestic industry cannot compete on quality and

service with subject imports because it cannot “shed the years of sloth built up” during the period when

Parker had “nearly unlimited market power.”106 Ample evidence in the record, however, indicates that

this is not the case. While Sanhua argues that the defect rate of Parker’s FSVs (i.e. defective parts per

million (“DPPM”)) was high, exceeding the rate for the Chinese producers, there is evidence in the record

that indicates that Parker’s defect rate was far below the industry standard for each OEM.107 Further, ***,

continues to purchase *** quantities of FSVs from Parker and has done so in every year of the period of

investigation.108

Although the record is mixed as to whether purchasers had significant concerns with the quality

of the domestic industry’s product, there is sufficient evidence on the record showing that purchasers

switched to subject imports on the basis of price. As noted above, four of the six responding purchasers

indicated that the subject FSVs and the domestic like product are always interchangeable and the

remaining two reported that they are frequently interchangeable. None reported that they are only

sometimes or never interchangeable.109 Moreover, there is evidence in the record indicating that at the

time they ceased purchasing FSVs from Parker and began obtaining them from subject Chinese
 110 In 2006, the average unit value (“AUV”) of ***. See Purchaser Questionnaire Responses of ***. We note

that because this information is based in part on AUVs, we are mindful of product mix issues in this regard. See

also Purchaser Questionnaire Response of *** (stating that ***); Purchaser Questionnaire Response of *** (stating

that ***).

 111 See Sanhua’s Prehearing Brief at 20-21.

 112 See Sanhua’s Prehearing Brief at 21.

 113 CR at II-5, PR at II-5.

 114 Petitioner’s Posthearing Brief at 6 & Exh. 4. Although respondents refer to the issue of providing consigned

inventory as a service issue, see, e.g., Tr. at 175 (Mr. Jin), we find it relates to price and volume effects inasmuch as

it is ***. See CR at II-6 n.15, PR at II-3 n.15; see also Tr. at 176 (Mr. Jin) (price customer pays includes price for

consignment warehouse). Providing “consigned inventories” involves maintaining inventories for one or several

weeks in a customer’s, or third party’s, warehouse, from which the purchaser draws upon them when needed. See

CR at II-5, PR at II-2. *** maintain inventories for *** in their customers’ warehouses or designated third-party

warehouses. CR at II-5, PR at II-2. The ratio of U.S. importers’ end-of-period inventories to U.S. shipments of

imports was *** percent in 2005, *** percent in 2006, *** percent in 2007, and *** percent in 2008. CR/PR at

Table VII-4. Three of six purchasers reported purchasing FSVs on a consigned inventory basis. CR at II-5, PR at II2. Further, Parker indicates that it does not offer consigned inventory because it is too expensive to offer at no cost. 

CR at II-6, PR at II-3. Sanhua counters that when it sells products on consignment, the price the customer pays is

the price that is in effect at the time the goods are taken from the warehouse and that Parker could receive the same

consideration. Sanhua’s Posthearing Brief at 12. Parker maintains that it has not been able to recover the holding,

handling and warehousing costs associated with the service given the high pricing pressure on the FSV market. Tr.

at 22 (Mr. Nelson). While providing consigned inventory is important to some purchasers, unlike price it is not

among the top three factors in purchasing decisions to all purchasers. We note that Parker has been able to achieve

high just-in-time delivery rates, which mitigates the need for consigned inventory.

 115 See Sanhua’s Prehearing Brief at 5-8.

 116 As explained above, Chatleff produced FSVs until ***. In addition, importer ***, along with respondents’

affiliates, imported subject merchandise during the period. CR/PR at IV-1.

 117 *** purchasers reported that they prefer to have dual sourcing. CR at II-3 , PR at II-2. By the end of the

period of investigation five of the OEMs purchased product solely from one Chinese producer. See CR/PR at Table

D-1 (amended); Tr. at 23, 98 (Mr. Nelson), 28 (Mr. Magrath); Parker’s U.S. Producer Questionnaire Response at IV22 (customer list).

-18-

producers, three purchasers paid a lower price for the Chinese product than for the domestic like

product.110

Sanhua also claims that longer lead times and poor service were the causes of the domestic

industry’s problems.111 With respect to Sanhua’s allegations regarding the domestic industry’s on-time

delivery performance,112 we note that lead times vary widely among the producers, with Parker providing

FSVs on a rolling three-day basis and importers providing their products in *** to ***.113 Parker

provided evidence that its on-time delivery rates ranged from *** percent to *** percent in 2006, and

were essentially all *** percent in 2007, the two years of the period in which it lost customers to the

Chinese producers.114

Sanhua argues that the Commission should not determine that there is a causal link between the

presence of subject imports and Parker’s performance because any declines in Parker’s performance are

the expected result of Parker losing its alleged status as a monopolist in the U.S. market.115 We disagree. 

First, Parker was not the only significant supplier of the market during any part of the period of

investigation.116 Even had it been, a loss of one customer in an industry in which there are only seven

customers is significant; the loss of over *** has serious consequences.117

Second, Parker was *** in 2005 and 2006, notwithstanding the presence of substantial volumes
 118 See CR/PR at Table VI-1.

 119 Compare CR/PR at Table VI-1 with CR/PR at Table IV-3.

 120 USITC Pub. 3999 at 11-12 n.64. See generally, e.g., USX Corp. v. United States, 682 F. Supp. 60, 67 (Ct.

Int’l Trade 1988) (disapproving former Commissioner Liebeler’s “predatory pricing” analysis as not being consistent

with the statute’s focus on injury to the industry, not injury to competition); Maverick Tube Corp. v. United States,

687 F. Supp. 1569, 1573-74 (Ct. Int’l Trade 1988). See also Elkem Metals Co. v. United States, 342 F. Supp. 2d

1207 (Ct. Int’l Trade 2004) at 1213-14 (“ITC did not commit legal error by failing to apply the civil antitrust law

standard of causation;” “[n]owhere in the statutory scheme governing the ITC’s material injury determination did

Congress provide for the application of antitrust law standards of causation;” “[t]hat one of the factors [ITC] found

relevant was a price fixing conspiracy did not, as CCMA contends, trigger any obligation . . . to examine the

individual motives of the Conspirators.”) (citing USX)).

 121 On March 19, 2008, petitioner alleged that there was a reasonable basis to believe or suspect that critical

circumstances exist with respect to imports of FSVs from China. Commerce found in its final determination that

critical circumstances do not exist with respect to subject imports. 74 Fed. Reg. at 10,889. Thus, the Commission

makes no finding as to critical circumstances in this investigation. See 19 U.S.C. §1673d(b)(4)(A)(i).

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of subject imports in the U.S. market.118 As the volume of low-priced subject imports increased, however,

its financial performance swiftly deteriorated.119

Third, even if Parker held monopoly power during the period of investigation, respondent’s 

arguments seem predicated on the notion that the Commission should ignore any adverse effects or

impact by the subject imports on the domestic industry because any negative impact is directly related to

the domestic industry’s loss of its alleged monopoly position. The Commission is not empowered to

enforce the antitrust laws, and to the extent Sanhua’s argument is that, as a matter of “policy,” the

Commission should make a negative determination so that U.S. purchasers might have an alternative to

the domestic producer’s alleged “monopoly,” such a determination would not be in accordance with the

statute.120 Based on the foregoing analysis, the injury we have found from subject imports cannot be

attributed to other factors.

Consequently, the record in this investigation indicates a causal nexus between the subject

imports and the condition of the domestic industry and thus demonstrates material injury by reason of

subject imports. We therefore conclude that subject imports have had a significant adverse impact on the

domestic industry.121

CONCLUSION

For the reasons stated above, we find that an industry in the United States is materially injured by

reason of imports of frontseating service valves from China that have been found by Commerce to be sold

at less than fair value.
 
 1

 A complete description of the imported product subject to this investigation is presented in the section entitled

The Subject Merchandise 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

This investigation results from a petition filed by Parker-Hannifin Corp. (“Parker”) of Cleveland,

OH, the sole current domestic producer of frontseating service valves (“FSVs”),1

 on March 19, 2008,

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

reason of less-than-fair-value (“LTFV”) imports of FSVs from China. Information relating to the

background of the investigation is provided below.2

Effective date Action

March 19, 2008

Petition filed with Commerce and the Commission; institution of the

Commission’s investigation (73 FR 16059, March 26, 2008)

April 15, 2008 Commerce’s notice of initiation (73 FR 20250) 

May 12, 2008 Commission’s preliminary determination (73 FR 28507, May 16, 2008)

October 22, 2008 Commerce’s preliminary determination (73 FR 62952)

November 17, 2008

Commission’s scheduling of its final phase investigation (73 FR 70672,

November 21, 2008)

March 10, 2009 Commission’s hearing1

March 13, 2009 Commerce’s final determination (74 FR 10886)

April 8, 2009 Commission’s vote

April 20, 2009 Commission’s determination and views transmitted to Commerce

 1 A list of witnesses that appeared at the hearing 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 determination 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 . . . 
I-2

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.

. . .

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 the Report

Part I of this report presents information on the subject merchandise, the dumping margins, and

the domestic like product. Part II of this report presents information on conditions of competition and

other relevant economic factors. Part III presents information on the condition of the U.S. industry,

including data on capacity, production, shipments, inventories, and employment. Parts IV and V present

the volume and pricing of imports of the subject merchandise, respectively. Part VI presents information

on the financial experience of the U.S. producer. 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 on any production of FSVs in countries other than China. 

U.S. MARKET SUMMARY

FSVs are used as service valves in split air conditioning systems. Generally, FSVs isolate

sections of the system for servicing and provide a means of charging refrigerant into an air conditioning

unit. Consumption of FSVs totaled approximately *** units ($***) in the U.S. market in 2008. 
 3

 Danfoss Chatleff LLC (“Chatleff”) ceased production in ***. Chatleff’s domestic producer questionnaire

response. 

 4

 Zhejiang DunAn Hetian Metal Co., Ltd. (“DunAn”) and Zhejiang Sanhua Co., Ltd. (“Sanhua”) foreign producer

questionnaire responses. DunAn is affiliated with U.S. importer DunAn Precision Inc. (“DunAn Precision”). 

Sanhua is affiliated with U.S. importer Sanhua International, Inc. (“Sanhua International”). 

 5 Frontseating Service Valves from the People’s Republic of China: Final Determination of Sales at Less Than

Fair Value and Final Negative Determination of Critical Circumstances, 74 FR 10886, March 13, 2009.

I-3

Currently only one firm, Parker, produces FSVs in the United States.3

 The U.S. producer’s reported U.S.

shipments of FSVs totaled *** units ($***) in 2008 and accounted for *** percent of apparent U.S.

consumption by quantity and *** percent by value. U.S. shipments of imports from China totaled ***

units ($***) in 2008 and accounted for *** percent of apparent U.S. consumption by quantity and

*** percent by value. There were no known U.S. imports from nonsubject sources during the period for

which data were collected in the investigation, i.e., 2005-2008. 

SUMMARY DATA AND DATA SOURCES

A summary of data collected in the investigation is presented in appendix C, table C-1. U.S.

industry data are based on the questionnaire response of Parker, which accounts for all current U.S.

production of FSVs. U.S. imports are based on questionnaire responses and not on official statistics of

the Department of Commerce (“Commerce”), as FSVs are believed to enter the United States under one

or more Harmonized Tariff Schedule of the United States (“HTS”) “basket” categories and data on FSVs

cannot be obtained from the aggregate Commerce information. Data regarding the industry in China are

based on Chinese producers’ questionnaire responses, which are believed to account for *** percent of

2008 FSV production in China and *** percent of Chinese export shipments to the United States.4

 

PREVIOUS AND RELATED INVESTIGATIONS

The Commission has not previously conducted an investigation on FSVs. However, the

Commission did conduct a preliminary investigation on pneumatic directional control valves from Japan

in 2002 that was filed by a trade association, the Pneumatics Group, that included Parker. The

Commission found that there was no reasonable indication that an industry in the United States was

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

States was materially retarded, by reason of imports of pneumatic directional valves from Japan.

NATURE AND EXTENT OF SALES AT LTFV

On March 13, 2009, Commerce published a notice in the Federal Register setting forth its final

determination with regard to its antidumping investigation on FSVs from China.5

 Commerce determined

that imports from China are being sold, or likely to be sold, in the United States at less than fair value. 

The weighted-average dumping margins (in percent ad valorem), as reported by Commerce, are presented

in the following tabulation:
 6

 For purposes of the scope, the Department of Commerce has determined that the term “unassembled” FSV

means a brazed subassembly requiring any one or more of the following processes: the insertion of a valve core pin,

the insertion of a valve stem and/or O ring, the application or installation of a stem cap, charge port cap or tube dust

cap. The term “complete” FSV means a product sold ready for installation into an air conditioning or refrigeration

unit. The term “incomplete” FSV means a product that when sold is in multiple pieces, sections, subassemblies or

components and is incapable of being installed into an air conditioning or refrigeration unit as a single, unified valve

without further assembly. Department of Commerce definitions differ somewhat from those in the general rules of

interpretation. 

The major parts or components of FSVs intended to be covered by the scope under the term “certain parts

thereof” are any brazed subassembly consisting of any two or more of the following components: a valve body, field

connection tube, factory connection tube or valve charge port. The valve body is a rectangular block, or brass

forging, machined to be hollow in the interior, with a generally square shaped seat (bottom of body). The field

connection tube and factory connection tube consist of copper or other metallic tubing, cut to length, shaped and

brazed to the valve body in order to create two ports, the factory connection tube and the field connection tube, each

on opposite sides of the valve assembly body. The valve charge port is a service port via which a hose connection

can be used to charge or evacuate the refrigerant medium or to monitor the system pressure for diagnostic purposes. 

Frontseating Service Valves from the People’s Republic of China: Final Determination of Sales at Less Than Fair

Value and Final Determination of Critical Circumstances, 74 FR 10886, March 13, 2009. 

 7

 The frontseating service valve differs from a backseating service valve in that a backseating service valve has

two sealing surfaces on the valve stem. This difference typically incorporates a valve stem on a backseating service

valve to be machined of steel, where a frontseating service valve has a brass stem. The backseating service valve

dual stem seal (on the back side of the stem) creates a metal-to-metal seal when the valve is in the open position,

thus sealing the stem from the atmosphere. Ibid.

 8

 In its comments to the Department of Commerce relating to the scope of the investigation, respondent Sanhua

requested that the scope not include forged products with integrated feet and be limited to FSVs made of brass or

copper. Sanhua argued that the scope as written covers too broad a range of service valves and that service valves

(continued...)

I-4

Foreign producer/exporter Margin (percent ad valorem)

Zhejiang Sanhua Co., Ltd. 28.44

Zhejiang DunAn Hetian Metal Co., Ltd. 12.95

China-wide entity1 55.62

 1

 Including Anhui Tianda Group, Ltd. 

Source: Frontseating Service Valves from the People’s Republic of China: Final Determination of Sales at Less

Than Fair Value and Final Negative Determination of Critical Circumstances, 74 FR 10886, March 13, 2009.

THE SUBJECT MERCHANDISE

Commerce’s Scope

Commerce has defined the imported product subject to this investigation as:

Frontseating service valves, assembled or unassembled, complete or incomplete, and

certain parts thereof.6

 Frontseating service valves contain a sealing surface on the front

side of the valve stem that allows the indoor unit or outdoor unit to be isolated from the

refrigerant stream when the air conditioning or refrigeration unit is being serviced. 

Frontseating service valves rely on an elastomer seal when the stem cap is removed for

servicing and the stem cap metal to metal seat to create this seal to the atmosphere

during normal operation.7

 The scope includes frontseating service valves of any

size,configuration, material composition or connection type.8 
 8

 (...continued)

may be erroneously classified as FSVs when they enter the United States under the current scope description. 

Additionally, Sanhua argued that FSVs must stand up to certain operating conditions and brass FSVs are the only

product that meet those conditions and demands. In its rebuttal comments, petitioner Parker argued that the

Department should not consider any changes that would limit the scope to specific material composition or mounting

type or that would attempt to remove all forged valve bodies from the scope. In its determination, the Department of

Commerce found that the scope of the merchandise under consideration, as it is currently written, clearly describes

the scope of the merchandise under consideration. Ibid.

 9

 Frontseating Service Valves from the People’s Republic of China: Final Determination of Sales at Less Than

Fair Value and Final Determination of Critical Circumstances, 74 FR 10886, March 13, 2009. For purposes of the

scope of this investigation, the narrative description is dispositive, not the tariff classifications, which are provided

for convenience and customs purposes only. Ibid. 

 10 E-mail from ***, March 17, 2008. 

 11 In fact, ***. ***. 

 12 FSVs are neither pneumatic nor hydraulic valves, but are refrigeration isolation valves. They are used

primarily in residential air conditioning systems. 

 13 Hearing transcript, p. 24 (Nelson). In 1987 the Montreal Protocol, an international environmental agreement,

established requirements that began the worldwide phase out of ozone-depleting CFCs (chlorofluorocarbons). Under

the terms of the Montreal Protocol, the U.S. agreed to meet certain obligations by specific dates and that affected all

residential production of the heat pumps and air conditioning industry. After 2010, chemical manufacturers may still

produce CFC R-22 to service existing equipment, but not for use in new equipment. As a result, air conditioning

system manufacturers will only be able to use pre-existing supplies of R-22 to produce new air conditioning

equipment and heat pumps. These existing supplies include R-22 recovered from existing equipment and recycled. 

In response to the need to replace R-22, the U.S. air conditioning industry developed a more energy-efficient and

non-ozone depleting refrigerant gas, R-410A. For more information see, U.S. Environmental Protection Agency,

“What You Should Know about Refrigerants When Purchasing or Repairing a Residential A/C System or Heat

Pump,” http://www.epa.gov/ozone/title6/phaseout/22phaseout.html (accessed March 13, 2009). Flare valves made

in China do not comply with U.S. environmental regulations due to potential refrigerant leakage into the ozone layer. 

FSVs are produced to prohibit hydrofluorocarbon (HCFC) refrigerant gases from being vented into the atmosphere.

I-5

Tariff Treatment

Commerce indicated in its final determination that FSVs are classified (imported) under HTS

subheadings (statistical reporting numbers) 8481.80.10 (8481.80.1095) or 8415.90.80 (8415.90.8085), but

(if manufactured out of primary materials other than copper or brass) subject product can also be imported

under HTS statistical reporting numbers 8481.80.3040, 8481.80.3090, or 8481.80.5090 and (for parts and

components if the FSVs are imported unassembled or incomplete) HTS subheadings 8481.90.10,

8481.90.30, and 8481.90.50;9

 the column 1-general ad valorem rates of duty (applicable to product

imported from China) for those subheadings and statistical reporting numbers range from 1.4 to 5.6

percent. However, *** indicated that FSVs, when imported as finished products, are properly classified

under HTS subheading 8481.80.10,10 which has a column 1-general ad valorem rate of duty of 4.0

percent.11

THE PRODUCT

Description and Applications

FSVs are designed to be used in residential air conditioning and heating systems such as split air

conditioning equipment and heat pumps.12 The production of FSVs is capital intensive and FSVs are

exclusively produced for the North American market primarily for the purpose of meeting environmental

regulations.13 FSVs are used to isolate sections of an air conditioning system during diagnostic servicing,
 14 Transcript of the Commission’s April 18, 2008 conference (“conference transcript”), p. 12 (Miller).

 15 Conference transcript, p. 11 (Miller).

 16 Conference transcript, p. 12 (Miller).

I-6

installation, repair, and to permit technicians to provide refrigerant charging and evacuating capabilities. 

FSVs contain one sealing surface on the front side of the valve stem. Every split air conditioning and

heat pump unit makes use of two FSVs. One FSV is a larger diameter valve used for outgoing refrigerant

gas and the other is a smaller diameter suction valve used for incoming compressed liquid.14 Figure I-1

illustrates typical FSVs. The angles, size, and diameters can be customized for their final use in a unit. 

Figure I-1

FSVs: Large and small diameter FSVs

Source: WilspecTechnologies, Service Valves, found at http://www.wilspec.com/products/service_valves.asp,

retrieved April 18, 2008. 

FSVs perform essentially three primary functions in split air conditioning units and heat pumps: 

(1) contain the refrigerant in the condensing unit prior to the installation;15 (2) provide a shut-off

capability which enables the unit to be serviced once installed; and (3) provide a service port by which a

hose connection can be used to evacuate the refrigerant medium or monitor the system pressure for

diagnostic purposes.16

Split air conditioning systems have separate heating and cooling components inside and outside

of a house (figure I-2). FSVs can be found outside of a residence on the pipes that connect the air

conditioner or heat pump compressor and fan to the unit equipment inside the home. This two-part air

conditioning system typically consists of a condenser, condenser coil, fan, electric motor, and compressor

located outside the house. The indoor unit comprises an evaporator coil mounted on a furnace with a

blower and filter. 
 17 Petitioner’s postconference brief, p. 6.

 18 Hearing transcript, p. 20 (Nelson).

 19 Hearing transcript, p. 19 (Nelson).

 20 E-mail from ***, April 9, 2008. 

 21 ***. Ibid.

 22 E-mail from ***, March 27, 2009.

I-7

Figure I-2: Residential split air conditioning unit

Source: Air-Conditioning, Heating, and Refrigeration Institute, How Central Air Conditioning Works, found at

http://ari.org/Content/HowCentralAirConditioningWorks_305.aspx, retrieved April 16, 2008.

FSV customers purchase the domestically produced product directly from the manufacturer while

imported FSVs are sold through importers that are affiliates of the foreign producers. Distributors are not

commonly used in the FSV market; in fact, over the period for which data were collected, *** U.S.

producer’s and importers’ shipments were to end users, and there were ***. Additional information on

channels of distribution can be found in Part II of this report, entitled Conditions of Competition in the

U.S. Market; Part II also discusses the interchangeability and customer and producer perceptions of

domestically produced and imported FSVs. Pricing practices and prices reported for FSVs in response to

the Commission’s questionnaires are presented in Part V of this report, entitled Pricing and Related

Information. 

Manufacturing Processes

The production of FSVs incorporates a variety of manufacturing processes, including cutting,

machining, washing, brazing, and assembly. The major components of FSVs are made on dedicated

machinery and equipment.17 FSVs are manufactured to Original Equipment Manufacture (“OEM”) and

air conditioning industry specifications.18 FSVs are sold directly to all seven OEM manufacturers of air

conditioning units in the United States.19

Production of the FSV starts by ***.20 All FSV manufacture also includes the production of

refrigerant copper connection tubing. 

In the United States *** FSVs are produced by the bar stock method.21 ***.22 High-quality brass

bars are machined to form the brass bodies and brass stems of the FSVs. After machining the brass valve
 23 Petition, p. 6.

 24 E-mail from ***, April 9, 2008. 

 25 Conference transcript, p. 47 (Miller). 

 26 Transcript of the Commission’s March 10, 2009 hearing (“hearing transcript”), p. 207 (Dinan).

 27 Ibid.

 28 Brazing is a process for joining metals using a filler metal that typically includes a base of copper combined

with silver, nickel, zinc, or phosphorous. Brazing covers a temperature range of 900°F- 2,200°F (470°C- 1,190°C). 

Brazing differs from welding in that brazing does not melt the base metals. Aufhauser, Brazing Technical Guide,

found at http://www.brazing.com/techguide/popup/definition_brazing.htm, retrieved April 28, 2008. 

 29 E-mail from ***, April 9, 2008. 

 30 Conference transcript, p. 76 (Miller).

 31 Frontseating Service Valves from China, Investigation No. 731-TA-1148 (Preliminary), USITC Publication

3999, May 2008, pp. 7-8.

I-8

bodies, the product is deburred to remove rough edges and washed to dislodge any dirt or materials that

could interfere with proper functioning. Brass stems are machined to precise shape, size, and threading in

order to fit these components into the interior of the valve body. Copper connection tubes are formed by

cutting copper tubes to length and by machining tube ends as necessary.23 

In China some FSVs are produced using the forged body method ***.24 When asked if

production of FSVs in China differs from domestic production, a Parker official stated that production in

the United States is highly automated, but in China a significant amount of labor is used, particularly for

brazing, testing, and assembly.25

Unlike the United States where FSVs are used exclusively in split air conditioning systems and

heat pump applications, China relies largely on the use of forged flare valves. The production of forged

flare valves used in the residential air conditioning industry is widespread throughout Asia, parts of

Europe, and other developing countries. There is no interchangeability between FSVs and forged flare

valves.26 Flare valves use a threaded connection that eliminates the need to make a brazed sealed joint

during air conditioning installation. The use of a threaded joint in flare valves in the United States is not

environmentally acceptable as a result of HCFC refrigerant leakage that erodes the ozone layer.27

***28 ***.29 The entire FSV assembly is subjected to a battery of tests to ensure that the

components function and meet or exceed manufacturing specifications. Following the completion of tests

on the valve components, the charge port caps are installed as well as tube dust caps when necessary.30 

DOMESTIC LIKE PRODUCT ISSUES

In the preliminary phase of this investigation, the Commission defined a single domestic like

product that is coextensive with the scope of the investigation and consists of all FSVs, regardless of size,

configuration, material composition, or connection type, but does not include backseating service valves

(“BSVs”) or ball valves. The Commission did not include BSVs or ball valves in the domestic like

product because of differences among FSVs, BSVs, and ball valves in physical characteristics and end

uses, manufacturing facilities, customers’ and producers’ perceptions, and price, in addition to limited

practical interchangeability among products. Moreover, the Commission found that all sizes of FSVs

have similar physical characteristics and general uses, are sold through the same channels of distribution,

are made on the same dedicated machinery using the same manufacturing process, and are perceived by

customers and producers as the same product, and therefore included all sizes of FSVs in the single

domestic like product.31 
 1 Residential split air conditioning units typically last 10 to 15 years. Conference transcript, p. 44 (Nelson).

 2 Conference transcript, pp. 11-12 (Miller).

 3

 U.S. importer DunAn Precision Inc. (“DunAn Precision”) is affiliated with FSV producer Zhejiang DunAn

Hetian Metal Co., Ltd., (“DunAn”). U.S. importer Sanhua International, Inc. (“Sanhua International”) is affiliated

with FSV producer Zhejiang Sanhua Co., Ltd., (“Sanhua”).

 4

 Petitioner’s postconference brief, p. 3.

 5

 ***.

 6

 ***’s importer questionnaire, question III-21.

 7

 ***’s importer questionnaire, question III-21.

 8 See app. D for purchases, by source, as reported by purchasers, from January 2005 to September 2008. As

shown in app. D, ***.

II-1

PART II: CONDITIONS OF COMPETITION IN THE U.S. MARKET

U.S. MARKET SEGMENTS/CHANNELS OF DISTRIBUTION

FSVs are typically used to isolate sections of residential split air conditioning units during

installation and servicing. The demand for FSVs is thus determined by the demand for new and

replacement residential split air conditioning units. The replacement market reportedly accounts for

approximately 70 percent of the total U.S. market for FSVs.1 FSVs are produced to order for original

equipment manufacturers (“OEMs”) of residential split air conditioning units, and typically range in size

from 3/4-inch to 7/8-inch in diameter. Each residential split air conditioning unit requires two FSVs,

typically both a small and a large valve.2

FSVs may be produced by either the bar stock method or the forged body method. Parker

produces bar-stock FSVs ***. ***. ***. *** forged FSVs only and *** reported that it only sells barstock FSVs.3

***. Another purchaser (***) reported that it is ***. Purchaser *** reported that it does not

currently purchase forged FSVs, but that ***. This purchaser also reported that ***. Purchaser ***

reported that it does not currently purchase forged FSVs because ***. Purchaser *** reported that it does

not currently purchase forged FSVs ***.

Parker sells FSVs directly to its OEM customers. FSVs imported from China are sold directly to

OEM customers through importers that are affiliates of the foreign manufacturers. *** U.S. producer’s

and *** importers’ shipments were to end users over the period for which data were collected. There are

seven major OEM air conditioner manufacturers in the United States.4 Based on questionnaire responses,

there is some customer overlap for U.S. producers and importers. *** listed *** customers in ***: ***,

which reportedly accounted for *** percent of ***’s shipments by value in ***; and ***, which

accounted for the remainder.5

 Importer *** listed ***.6 Importer *** listed *** customers in the United

States, with *** accounting for the majority of its shipments in ***. It also listed *** as smaller

customers.7

The Commission received purchasers’ questionnaire responses from 6 purchasers: ***.8

Purchasers were asked how many suppliers they generally contact before making a purchase. Three

purchasers reported that they contact two to three suppliers, one reported that it contacts three or more,

one reported that it contacts one to two, and one reported that it uses only one supplier. Two purchasers

(***) reported that they have purchased from ***. Purchaser (***) reported that it purchases from ***. 

Two purchasers (***) reported that they *** only purchase FSVs from China. One purchaser (***)

reported that it buys *** from the U.S. producer and another (***) reported that it *** purchases ***

imports from China. Two purchasers stated that they prefer to have dual sourcing in order to foster

competition. 
 9

 ***.

 10 Hearing transcript, p. 62 (Miller). Petitioner’s posthearing brief, p. 7.

 11 Sanhua’s April 14, 2008 responses to questions of staff, p. 4. 

 12 Hearing transcript, p. 176 (Jin). Sanhua International’s posthearing brief, responses to Commission questions,

p. 3.

 13 Hearing transcript, p. 21 (Nelson) and p. 66 (Miller).

II-2

When purchasers were asked if they had changed the amount of their purchases of FSVs from

China due to the filing of the petition or due to the Department of Commerce’s preliminary determination

of sales at less than fair value, *** of the responding purchasers reported that they had not changed the

amount. When purchasers were asked if the relative shares of their total purchases of FSVs from different

sources had changed since 2005, three (***) reported that their share of purchases from U.S. producers

had decreased and that they had increased purchases of imports from China. *** cited the poor quality,

high cost, and slow delivery of the U.S. producer. *** and *** reported that their total purchases of

FSVs had decreased due to slowing demand; *** increased its relative share of purchases from China,

while *** maintained its relative shares ***. *** reported that its relative share of purchases from

different sources had remained constant.

When purchasers were asked the reasons they may have changed suppliers since 2005, ***9

 ***.

When purchasers were asked what they believe have been the principal reasons for increases in

imports of FSVs from China since 2005, *** cited price; *** cited quality, improved design and

technology, price, delivery, and inventory management; *** cited quality, sales terms, price, and

availability of consigned inventory; *** cited delivery reliability, quality, customer and technical service,

and price; and *** cited price, with consistent quality and delivery.

When firms were asked to list market areas in the United States where they sell FSVs, Parker ***

nationwide, *** importers listed geographic regions including the Southwest, the Midwest, the Southeast,

and the mid-Atlantic.

U.S. inland shipping distances for U.S.-produced FSVs were compared with those for imports

from China. For the U.S. producer, *** percent of its U.S. sales in 2007 occurred within distances of ***

miles from its facility. For importers from China, *** percent of ***’s sales occurred within *** miles of

its storage facilities, *** percent of ***’s sales occurred within *** miles of its storage facilities, and ***

percent of ***’s sales in *** occurred within *** miles of its storage facilities. 

*** of Parker’s sales were produced to order, whereas *** percent of ***’s sales, *** percent of

***’s sales, and *** percent of ***’s sales of imports from China were sold from inventory. Lead times

for delivery of FSVs ranged widely. For Parker, lead times were *** for sales of product produced to

order. Parker also reported that its purchasers send it manufacturing forecast requirements for the next

few months, as well as daily requirements for the next three days, allowing Parker to supply FSVs on a

rolling three-day basis.10 For importers, lead times were *** for ***’s sales from inventory and *** for

***’s sales produced to order and *** for ***’s sales from inventory and *** for ***’s sales produced to

order. ***. 

Parker ***. *** importers reported that they offer consigned inventories. Specifically, ***

Sanhua International reported that it keeps consignments ***, and that it typically keeps non-consigned

inventory stocked in its own warehouse *** based on its customers’ forecasts.11

Three of 6 purchasers reported purchasing FSVs on a consigned inventory basis. Two purchasers

reported that importer *** maintains *** of inventory in consignment as well as ***. Sanhua

International reported that the cost of offering consigned inventory services is included in its quoted

prices.12 Purchaser *** reported that importer *** offers it consigned inventory, while ***. Parker

reported that it had provided consigned inventory to purchaser Trane in a third-party warehouse, at

Trane’s request, before Trane switched its purchases to Sanhua.13 Parker reported that it maintained on-
 14 Hearing transcript, p. 61 (Nelson). Petitioner’s posthearing brief, p. 6 and exh. 4.

 15 Hearing transcript, p. 22 (Nelson) and p. 49 (Miller). Parker estimated its cost of capital at 10 percent. Hearing

transcript, p. 68 (Miller). Parker also reported that ***. Petitioner’s posthearing brief, exh. 1, p. 9 and exh. 7.

 16 Sanhua International’s posthearing brief, p. 13.

 17 These exports were ***.

II-3

time deliveries at *** to 100 percent of customer request dates and that it did not consider that adding

consignment was providing “anything beneficial” to its customers.14 Parker also reported that it is “too

expensive” to offer consigned inventory “at no cost,” citing costs such as leasing or purchasing

warehouse space, the operating costs associated with the warehouse, additional truckloads, and the cost of

capital of holding inventory.15 Sanhua International, however, noted that if raw material costs are rising,

the sales price (including the monthly raw material surcharge) of FSVs may rise from the time of

production to the time the purchaser purchases the product from the consigned warehouse, thereby

increasing the profit the supplier can obtain from such consignment sales.16

SUPPLY AND DEMAND CONSIDERATIONS

U.S. Supply

Domestic Production

The supply response of Parker to changes in price depends on such factors as the level of excess

capacity, the availability of alternate markets for U.S.-produced FSVs, inventory levels, and the ability to

shift to the manufacture of other products. The evidence indicates that the U.S. supply is likely to be

relatively elastic, due primarily to the ***. 

Industry capacity

The U.S. industry’s annual capacity utilization rates for FSVs decreased over the period of

investigation, falling from *** percent in 2005 to *** percent in 2008. This level of capacity utilization

indicates that the U.S. producer *** unused capacity with which it could increase production of FSVs in

the event of a price change. 

Alternative markets

Parker’s exports, as a share of its total shipments, decreased from *** percent in 2005 to ***

percent in 2007 before increasing to *** percent in 2008.17 These data indicate that the U.S. producer has

*** ability to divert shipments to or from alternative markets in response to changes in the price of FSVs. 

Inventory levels

Parker’s ratio of end-of-period inventories to its total shipments decreased from *** percent in

2005 to *** percent in 2008. These data indicate that the U.S. producer has *** ability to use inventories

as a means of increasing shipments of FSVs to the U.S. market.

Production alternatives

Parker ***. Therefore, Parker is believed to *** the ability to produce alternative products.
 18 China provides a rebate on exports of FSVs of the value-added tax that was 13 percent through December 1,

2008, after which it increased to 14 percent. Sanhua International’s supplement to response to Commission

questions, p. 1.

 19 ***’s posthearing brief, p. 5.

 20 ***’s foreign producer questionnaire response, question II-7, “Explanation to the response.”

II-4

Subject Imports

The responsiveness of the supply of imports from China to changes in price in the U.S. market is

affected by such factors as capacity utilization rates and the availability of home markets and other export

markets. Based on available information, producers in China have the capability to respond to changes in

demand with moderate changes in the quantity of shipments of FSVs to the U.S. market. The main

contributing factors to the moderate degree of responsiveness of supply are the *** capacity and ***

inventory levels.

Industry capacity

During the period of investigation, the capacity utilization rate for reporting Chinese producers of

FSVs decreased irregularly over the period, from *** percent in 2005 to *** percent in 2008; it was

projected to be *** percent in 2009. 

Alternative markets

Available data indicate that producers in China have *** ability to divert shipments to or from

alternative markets in response to changes in the price of FSVs. The share of China’s shipments going to

the United States increased *** from *** percent of total shipments in 2005 to *** percent in 2008; it

was projected to be *** percent in 2009. The share of China’s shipments to export markets other than the

United States increased from *** percent of total shipments in 2005 to *** percent in 2008; it was

projected to be *** percent in 2009.18 The share of China’s shipments going to the home market

decreased from *** percent of total shipments in 2005 to *** percent in 2008; it was projected to be ***

percent in 2009.

Inventory levels

Responding Chinese producers’ inventories, as a share of total shipments, increased from ***

percent in 2005 to *** percent in 2008; they were projected to be *** percent in 2009. These data

indicate that producers in China have *** ability to use inventories as a means of increasing shipments of

FSVs to the U.S. market.

Production alternatives

***. It also reported that it ***.19 Therefore, ***. ***.20 Therefore, ***.
 21 FSV producers in Japan, Korea, and Thailand reportedly produce FSVs that are within the scope of this

investigation, but there have been no known imports in the United States of FSVs from these nonsubject countries. 

Parker reports that China is likely to remain the only foreign source of FSVs in the foreseeable future, due partly to

the lengthy qualification processes of OEM customers. Petitioner’s postconference brief, p. 13.

 22 Conference transcript, p. 44 (Nelson).

 23 U.S. Census Bureau, http://www.census.gov/const/compann.pdf.

 24 IBISWorld Inc. Heating and Air Conditioning Equipment Manufacturing in the U.S., November 5, 2008, p. 17. 

Advances in energy conservation technology are also expected to lead to future increased demand in the replacement

market as consumers choose to upgrade existing air conditioning units. Ibid., p. 51.

 25 Current Industrial Reports: Refrigeration, Air-Conditioning, and Warm Air Heating Equipment: 2007, 2006,

2005, 2004, 2003, and 2002. U.S. Census Bureau. http://www.census.gov/cir/www/333/ma333m.html. 

 26 IBISWorld Inc. Heating and Air Conditioning Equipment Manufacturing in the U.S., November 5, 2008, p. 7. 

The demand figures cited for 2007 and 2008 are ***. ***.

II-5

Nonsubject Imports

There are no known U.S. imports of FSVs from nonsubject sources.21

U.S. Demand

Demand Characteristics

U.S. apparent consumption decreased by *** percent from 2005 to 2008. The lack of

competitively priced substitutes for FSVs discussed below indicates that the demand for this product is

likely to be relatively price inelastic. The demand for FSVs is determined by the demand for new and

replacement residential split air conditioning units. The replacement market reportedly accounts for

approximately 70 percent of the total U.S. market for such FSVs.22 Demand for new residential split air

conditioning units is largely dependent on the demand for single-family housing construction, which is

subject to changes in interest rates, housing prices, and population growth, among other factors. 

According to the Census Bureau, new privately owned housing units completed in the United States

decreased by 42.2 percent from 2005 to 2008, with all of the decrease occurring in 2007 and 2008.23

Demand for replacements of air conditioning systems is partly driven by aging buildings and weather

events, such as floods and hurricanes, that damage property.24

 As shown in figure II-1, according to the U.S. Census Bureau, U.S. shipments of split system air

conditioning units increased by 18.3 percent from 2004 to 2005 before decreasing by 24.1 percent from

2005 to 2006, and decreasing by 12.6 percent from 2006 to 2007.25 In the years preceding the period of

investigation, annual growth rates in shipments of split system air conditioning units were approximately

8.7 percent in 2002, 8.8 percent in 2003, and 13.3 percent in 2004. According to industry sources,

demand for heating and air conditioning equipment in the United States grew at *** percent in 2005 and 

at *** percent in 2006, followed by an *** and an ***.26
 27 Parker’s producer questionnaire response, question IV-14.

 28 Conference transcript, p. 45 (Nelson). Petitioner’s postconference brief, p. 9. U.S. Department of Energy,

“Stronger Manufacturers’ Energy Efficiency Standards for Residential Air Conditioners Go Into Effect Today,”

January 23, 2006. http://www.energy.gov/news/3097.htm.

 29 Parker reported that consumption of air conditioning units is typically approximately six to seven million units

per year and increased to over eight million in 2005. Conference transcript, p. 45 (Nelson). Petitioner’s

postconference brief, pp. 9-10. Staff telephone interview with ***. However, these figures cited by petitioner are

based on data from the Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”) on shipments of units that

include heat pumps that do not use FSVs. When these data are adjusted to exclude heat pumps, they are very similar

to the Census data on shipments of split-system air conditioning units presented in figure II-1.

 30 Conference transcript, p. 44 (Magrath) and p. 45 (Nelson). According to Appliance Magazine, the share of

U.S. households with one air conditioner unit has increased from *** percent in 1999 to *** percent in 2006. 30th

Annual Portrait of the U.S. Appliance Industry, Appliance Magazine, September 2007, p. 6.

 31 Hearing transcript, p. 93 (Miller). Petitioner cited AHRI forecasts that shipments of air conditioning

condensing units and heat pump condensing units will decrease from 6 million units in 2008 to 5.6 million units in

2009, a decrease of approximately 6.7 percent. Petitioner’s posthearing brief, exh. 1, p. 2.

II-6

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2001 2002 2003 2004 2005 2006 2007

(units)

Figure II-1

FSVs: Historical perspective of U.S. shipments of split system air conditioning units, 2001-2007

Source: U.S. Census Bureau, Current Industrial Reports.

When asked how the overall demand for FSVs has changed since January 2005, Parker reported 

that ***.27 Parker also reported that there was a spike in demand in 2005 due to a build-up of inventory

of residential split air conditioning units in anticipation of the change in the U.S. Department of Energy’s

mandated seasonal energy efficiency ratio (“SEER”) requirements that took effect in January 2006.28

Parker reported that the growth rate of consumption of residential split air conditioning units averaged

roughly *** to *** percent per year prior to 2004 and rose to *** percent in 2005, due mostly to the

demand spike caused by the new SEER requirements, before returning to more normal levels of growth in

2006 and 2007.29 Parker reported that it expects the long-term trend in future demand to be relatively flat,

due to a strong replacement market and the fact that air conditioning systems are now virtually standard

equipment in residential units.30 Parker reported that there will be a sharp downturn in sales of FSVs in

2009 relative to previous years.31 Parker also reported that, due to the current economic downturn, it
 32 Hearing transcript, p. 92 (Miller).

 33 One of these purchasers reported that its share of the U.S. market increased over the period, but that overall

demand for FSVs decreased. ***’s purchaser questionnaire, question III-5.

 34 Conference transcript, p. 70 (Miller).

 35 Parker was issued a patent in May 2006 for a plug style air conditioning valve called a “Genesis” valve that

was developed to improve efficiencies, but it was never launched into production. Parker reported that this valve

was significantly more expensive than a FSV. Hearing transcript, p. 43 (Miller).

 36 Conference transcript, pp. 37-38 (Dinan) and p. 73 (Nelson). Parker reported that in 2007, the price of BSVs 

was *** percent higher than the price of FSVs and the price of ball valves was *** percent higher than the price of

comparatively sized FSVs. Petitioner’s postconference brief, exh. 1, question 2.

 37 Conference transcript, p. 13 (Miller). Petitioner’s postconference brief, p. 5.

 38 Conference transcript, p. 78 (Nelson). BSVs are primarily used in refrigeration applications, whereas FSVs are

primarily used for residential air conditioning applications. Petitioner’s postconference brief, p. 5. Parker reported

that only one OEM uses a backseating valve for a high-end residential air conditioning system, and *** OEMs use

ball valves. Petitioner’s postconference brief, p. 6. Conference transcript, p. 72 (Magrath).

II-7

expects that homeowners will repair rather than replace existing residential air conditioning units, which

may negatively affect the demand for FSVs in the future.32

*** reported that demand for FSVs has increased since January 2005, due to new housing

construction over the period and the growth of the middle class. *** reported that demand has followed

the trend of the U.S. housing market and new housing construction in particular, being strong in 2005 and

2006 and declining in 2007 and 2008. 

Five of six responding purchasers reported that demand for FSVs decreased since January 2005.33

The other responding purchaser reported that demand increased in 2006 due to the new SEER

requirements and decreased in 2007 and 2008 due to the downturn in the housing market. Four of six

responding purchasers reported that the new SEER requirements had minimal or no effect on demand,

one reported that it resulted in an increase in demand in 2005, and the other reported that it resulted in

increased demand in 2006. Five purchasers reported that the downturn in the housing market has

negatively impacted demand, with one citing that the decline began in July 2007 and another citing the

fourth quarter of 2007.

Seasonality exists in the market, with reportedly 60 percent of annual sales occurring between

January and May. Parker reported that this seasonality does not have an effect on prices, as they are 

negotiated mostly on a long-term contract basis.34

Substitute Products

Parker *** reported that there are no substitutes for FSVs.35 *** cited some possible substitute

products, including backseating service valves (BSVs), ball valves, and aluminum service valves. One

importer reported that these substitutes are more expensive than FSVs. Two of six responding purchasers

cited ball valves as substitutes, but also stated that they are not functional economic substitutes for FSVs. 

The prices of these alternate products have reportedly been consistently higher than the prices of FSVs.36

Parker reported that BSVs and ball valves are not substitutes for FSVs because they have different

performance requirements, different customer specifications, and different physical characteristics.37

BSVs and ball valves are reportedly mostly used in high-end, premium residential air conditioning units

that have accounted for, and will reportedly continue to account for, a very small share of the total

residential air conditioning market.38 BSVs and ball valves can reportedly also be used in residential split
 39 Conference transcript, p. 58 (Dinan).

 40 Parker’s producer questionnaire, question IV-12. Goodman’s postconference brief, p. 9.

II-8

air conditioning systems in place of FSVs, but only after redesign of the air conditioning unit, which is

reportedly cost-prohibitive.39 

Cost Share

Parker and OEM purchaser Goodman Global, Inc. (“Goodman”) reported that FSVs account for

between *** and *** percent of the value of the typical residential split air conditioning unit.40

SUBSTITUTABILITY ISSUES

The extent of substitutability between domestic products and subject and nonsubject imports and

between subject and nonsubject imports is examined in this section. Information is based primarily on

questionnaire responses from producers, importers, and purchasers.

Factors Affecting Purchasing Decisions

Available information indicates that a variety of factors are considered important in the

purchasing decision for FSVs. While quality and price were mentioned as being important factors in the

sale of the product, other factors such as availability and delivery are also important considerations. 

Purchasers were asked to list the top three factors that they consider when choosing a supplier of FSVs. 

Table II-1 summarizes the responses.

Table II-1

FSVs: Ranking of factors used in purchasing decisions, as reported by U.S. purchasers

Factor

Number of purchasers

Number one factor Number two factor Number three factor

Quality 4 2 0

Price 0 1 5

Availability 0 1 0

Other1 2 2 1

 1 Other factors include one firm reporting ”delivery reliability” for the number one factor; one firm reporting

“compliance to engineering requirements” for the number one factor; one firm reporting “reliability” for the number

two factor; one firm reporting “reliable supply” for the number two factor; and one firm reporting “delivery” for the

number three factor. Other factors cited as the number four factor include one firm reporting “consigned inventory;”

one firm reporting “logistics/pipeline costs;” one firm reporting “existing relationship with supplier;” and one firm

reporting “technology and growth potential.”

Source: Compiled from data submitted in response to Commission questionnaires.

Quality was named by 4 purchasers as the number one factor generally considered in deciding

from whom to purchase FSVs, while 2 purchasers indicated that it was the number two factor. As

indicated in table II-2, all 6 responding purchasers indicated that product consistency was a “very

important” factor in their purchasing decisions and 5 of 6 purchasers indicated that quality meeting

industry standards was a “very important” factor. 
II-9

Table II-2

FSVs: Importance of factors used in purchasing decisions, as reported by U.S. purchasers

Factor

Number of firms reporting

Very important Somewhat Important Not important

Availability 6 0 0

Delivery terms 5 1 0

Delivery time 6 0 0

Discounts and rebates 1 5 0

Extension of credit 0 4 2

Price 6 0 0

Minimum quantity requirements 0 4 2

Packaging 2 4 0

Product consistency 6 0 0

Quality meets industry standards 5 1 0

Quality exceeds industry standards 4 2 0

Product range 0 5 1

Reliability of supply 6 0 0

Technical support/service 5 1 0

U.S. transportation costs 1 5 0

Availability of consigned inventory 2 3 1

Frequency of price changes 5 1 0

Willingness to negotiate price or

price terms 5 1 0

Willingness of supplier to accept raw

material cost increase risk 4 2 0

Other1 4 0 0

 1 Other factor include one instance of “speed to market,” one instance of “new technology,” one instance of

“improved cost-reduced design,” and one instance of “ability to grow to meet customer demands.”

Source: Compiled from data submitted in response to Commission questionnaires.

Price was not named by any purchasers as the number one factor generally considered in deciding

from whom to purchase FSVs, while one purchaser indicated that it was the number two factor, and 5

purchasers responded that it was the number three factor. All 6 responding purchasers indicated that price

was a “very important” factor in their purchasing decisions. 

Availability was not named by any purchasers as the number one factor generally considered in

deciding from whom to purchase FSVs, while 1 purchaser indicated that it was the number two factor. 

All 6 responding purchasers indicated that availability was a “very important” factor in their purchasing

decisions. All 6 responding purchasers also reported that “reliability of supply” was a very important

factor. 
 41 Hearing transcript, pp. 86-88 (Miller).

 42 Hearing transcript, p. 88 (Miller).

 43 Petitioner’s postconference brief, p. 24 and exh. 11 and 12.

 44 Conference transcript, pp. 110, 117 (Knights). Parker disagrees with Goodman’s reported qualification time

frame.

 45 Sanhua’s April 14, 2008 responses to questions of staff, p. 3.

 46 Petitioner’s posthearing brief, exh. 3.

II-10

Two of 6 responding purchasers indicated that availability of consigned inventory was a “very 

important” factor in their purchasing decisions. Five of 6 responding purchasers indicated that frequency

of price changes and willingness to negotiate price or price terms were “very important” factors.

All 6 responding purchasers reported that they require suppliers for all of their purchasers to

become certified. Qualification times can reportedly last anywhere from three months to 3 years. When

asked if any suppliers have failed in their attempts at certification, one purchaser cited importer *** for

poor quality and delivery and one purchaser cited *** for process failures and poor quality. Parker

reported that there are qualification processes with each OEM customer that could take anywhere from

six months up to two years during which producers work to meet the OEM customer’s specifications,

undergo repeated product testing, and submit samples.41 Parker reported that once a producer is qualified,

field performance of the FSVs is monitored but there is no further testing.42 Parker also reported that its

OEM customer *** has a qualification process for new FSVs that is ***, which is reportedly shorter than

***’s previous qualification processes due to current difficult market conditions.43 Goodman reported

that the qualification process takes 10 to 14 weeks.44 Sanhua International reported that certification

process times can vary depending on the OEM.45

When asked what characteristics they generally consider when determining the quality of 

FSVs, purchasers cited leakage, pressure drops, how valves open and close, accuracy meeting

specifications, meeting or exceeding warranty and reliability expectations, and achieving a target rating of

zero defective parts per million (DPPM). When asked for their DPPM ratings of suppliers of their

purchases in 2007, one purchaser (***) reported that it gave Parker a DPPM rating of *** and Sanhua

International a rating of ***; another purchaser (***) reported that it gave Sanhua International a DPPM

rating of ***; another purchaser (***) reported that it gave Sanhua International a DPPM rating of *** in

***; and one purchaser (***) reported that it gave DunAn Precision a DPPM rating of ***. The other

two responding purchasers (***) reported that their DPPM ratings ***.

***.46

Comparisons of Domestic Product and Subject Imports

In order to determine whether U.S.-produced FSVs can generally be used in the same applications

as imports from China, producers, importers, and purchasers were asked whether the products can

“always,” “frequently,” “sometimes,” or “never” be used interchangeably. Parker reported that they are

*** interchangeable, as shown in table II-3. The majority of importers that compared China with the

United States reported that they are frequently interchangeable, and a majority of purchasers reported that

they are always interchangeable. 
II-11

Table II-3

FSVs: Perceived degree of interchangeability of product produced in the United States and in

other countries

Country comparison

U.S. producers U.S. importers U.S. purchasers

AFSNAFSNAFSN

U.S. vs. China *** *** *** *** *** *** *** *** 4 2 0 0

U.S. vs. Nonsubject *** *** *** *** *** *** *** *** 0 0 0 0

China vs. Nonsubject *** *** *** *** *** *** *** *** 0 0 0 0

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

 

Importer *** reported that U.S.-produced FSVs utilize Schrader valve ports to check the 

pressure, whereas FSVs produced in China do not. This importer also reported that U.S.-produced FSVs

can function not only with the typical refrigerant used in most residential air conditioning units, but also

with refrigerants that operate at higher pressures, whereas the FSVs from China can only operate with

low-pressure refrigerant.

All 6 responding purchasers reported that they “always” know whether the FSVs they purchase is

imported or produced domestically and that they “always” know the manufacturer. Three of 6 responding

purchasers reported that FSVs produced in the United States always meet minimum quality specifications

and 5 of 6 responding purchasers reported that FSVs produced in China always meet minimum quality

specifications.

As indicated in table II-4, Parker reported that differences other than price are *** significant. 

The importers that compared the United States with China said that the differences are frequently or

sometimes significant. 

Table II-4

FSVs: Differences other than price between products from different sources1

Country comparison

U.S. producers U.S. importers

AFSNAFSN

U.S. vs. China *** *** *** *** *** *** *** ***

U.S. vs. Nonsubject *** *** *** *** *** *** *** ***

China vs. Nonsubject *** *** *** *** *** *** *** ***

 1

 Producers and importers were asked if differences other than price between FSVs produced in the United

States and in other countries are a significant factor in their firms’ sales of FSVs.

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.
 47 Goodman’s postconference brief, p. 2, app. 2 and 3 and ***. See Part V for more detailed discussion.

 48 Conference transcript, p. 120 (Knights). 

 49 Goodman’s postconference brief, p. 3. Goodman also cites to Parker reporting that it uses “standard

components {which} have been used for several years.” Conference transcript, p. 74 (Miller).

 50 Hearing transcript, p. 21 (Nelson). Petitioner’s postconference brief, p. 23 and exh. 8.

 51 Sanhua’s April 14, 2008 responses to questions of staff, p. 1 and exh. Q-1.

 52 ***. ***, p. 4. 

 53 ***.

 54 ***.

 55 ***.

 56 ***.

 57 ***. ***.

II-12

Purchaser Goodman reported that importers DunAn Precision and Sanhua International offer

superior *** delivery times than Parker.47 It reported that it can take seven to ten days to receive FSVs

from Parker, whereas consigned inventory from alternative suppliers makes FSVs available virtually

immediately.48 Goodman also reported that importers Sanhua International and DunAn Precision are

more collaborative regarding product design and sales terms.49 

Parker objects to Goodman’s claims about its poor quality and late delivery. Specifically, Parker

contends that its quality was superior to the industry standard and Goodman’s standard of 200 DPPM and

that its share of on-time delivery shipments for Goodman was *** percent over the period.50

Sanhua International reported that its products have consistent and improving high quality and

defect levels that are well under the target for the industry.51 Importer *** reported that it had quality

problems in ***; however, *** began purchasing FSVs from *** in 2007 and reported that the quality of

product produced by *** is superior to product produced by ***.52 *** also reports that the *** FSVs

that it purchases from *** reduce the chance for leaking by *** percent over *** FSVs that are produced

by ***.53

Three OEM purchasers, ***, ***, and ***, were contacted by staff in the preliminary phase of

this investigation to report on differences other than price between U.S.-produced FSVs and imports from

China. *** reported that ***. It also reported that ***.54 *** reported that it ***.55 *** reported that

there were ***.56 Additionally, purchaser *** reported that ***.57 This purchaser also reported that

Sanhua International’s FSVs are of reliable, high quality and ***.

For some factors that all or almost all responding purchasers indicated were “very important” in 

their purchasing decisions (see table II-2), purchaser comparisons as shown in table II-5 indicate that

responding purchasers are split as to whether the U.S. product is comparable or inferior to the product

from China with respect to availability, delivery time and terms, product consistency, and reliability of

supply. A majority of responding purchasers indicated that the U.S. product is inferior to the product

from China with respect to price (i.e., the U.S. product is generally higher in price), frequency of price

changes, willingness to negotiate price reductions, and willingness to offer more favorable sales terms. A

majority of purchasers reported that the U.S. product is comparable to the product from China with

respect to discounts offered, extension of credit, minimum quantity requirements, packaging, quality

meeting or exceeding industry standards, product range, and technical support/service. 
II-13

Table II-5

FSVs: Comparisons between U.S.-produced and subject imported product, as reported by U.S.

purchasers

Factor

China

SC I

Availability 0 3 3

Delivery terms 0 3 3

Delivery time 0 3 3

Discounts offered 0 4 2

Extension of credit 0 4 2

Lower price1 1 1 4

Minimum quantity requirements 0 5 1

Packaging 0 6 0

Product consistency 0 3 3

Quality meets industry standards 0 4 2

Quality exceeds industry standards 0 4 2

Product range 1 5 0

Reliability of supply 0 3 3

Technical support/service 1 4 1

Availability of consigned inventory2 1 2 3

Frequency of price changes 0 2 4

Willingness to negotiate price reductions 0 2 4

Willingness to offer more favorable sales terms 0 1 5

Willingness to assume foreign exchange risk 1 2 2

Other3 0 0 4

 1

 A rating of superior means that the price is generally lower. For example, if a firm reports “U.S. superior,” this

means that it rates the U.S. price generally lower than the subject import price.

 2 Note that the U.S. producer ***.

 3 Other factors include one instance of “commitment to year over year productivity improvements;” one instance

of “technology and cost-reduced designs;” one instance of “growth potential;” and one instance of “speed to

market.”

Note.--S=U.S. product is superior, C=U.S. product is comparable, I=U.S. product is inferior.

Source: Compiled from data submitted in response to Commission questionnaires.

 
 58 A supply function is not defined in the case of a non-competitive market.

 59 The substitution elasticity measures the responsiveness of the relative U.S. consumption levels of the subject

imports and the domestic like products to changes in their relative prices. This reflects how easily purchasers switch

from the U.S. product to the subject products (or vice versa) when prices change.

II-14

Other Country Comparisons

In addition to comparisons between the U.S. product and imports from the subject country, U.S.

producer and importer comparisons between the United States and imports from nonsubject countries and

between subject imports and nonsubject imports are also shown in tables II-3 and II-4. 

Importer *** reported that manufacturers in *** produce FSVs that are *** interchangeable with

U.S.-produced FSVs and are *** interchangeable with FSVs imported from China. This importer also

reported that differences other than price between U.S.-produced FSVs and FSVs produced in *** are

*** a significant factor and that such differences between FSVs imported from China and FSVs produced

in *** are *** a significant factor. 

ELASTICITY ESTIMATES

U.S. Supply Elasticity58

The domestic supply elasticity for FSVs measures the sensitivity of the quantity supplied by U.S.

producers to changes in the U.S. market price of FSVs. The elasticity of domestic supply depends on

several factors including the level of excess capacity, the ease with which producers can alter capacity,

producers’ ability to shift to production of other products, the existence of inventories, and the availability

of alternate markets for U.S.-produced FSVs. Analysis of these factors above indicates that the U.S.

industry is likely to be able to increase or decrease shipments to the U.S. market; an estimate in the range

of 4 to 6 is suggested. 

U.S. Demand Elasticity

The U.S. demand elasticity for FSVs measures the sensitivity of the overall quantity demanded to

a change in the U.S. market price of FSVs. This estimate depends on factors discussed above such as the

existence, availability, and commercial viability of substitute products, as well as the component share of

FSVs in the production of downstream products. Based on the available information, the aggregate

demand elasticity for FSVs is likely to be in the range of -0.5 to -0.75.

Substitution Elasticity

The elasticity of substitution depends upon the extent of product differentiation between the

domestic and imported products.59 Product differentiation, in turn, depends upon such factors as quality

and conditions of sale (availability, sales terms/discounts, etc.). Based on available information, the

elasticity of substitution between U.S.-produced FSVs and FSVs from China is likely to be in the range of

2 to 4.
 1

 Staff telephone interview with ***. The petitioner confirmed that it is not aware of any U.S. production of

FSVs in recent years by integrated U.S. producers of air conditioning systems. Conference transcript, p. 82 (Miller). 

 2

 Chatleff submitted an incomplete response and therefore data for Chatleff are not included in the tables and

figures of this report except for capacity, production, and capacity utilization data in tables III-2, IV-5, and C-1. 

 3

 Chatleff produced *** FSV units from *** until *** when it ceased production. In its domestic producer

questionnaire response, Chatleff stated ***. Chatleff’s domestic producer questionnaire response. 

 4

 Chatleff produced FSVs domestically ***. Parker reported production capacity for its operations based on

operating *** hours per week, *** weeks per year, operating *** shifts per day. 

 5

 E-mail from ***, April 14, 2008.

III-1

PART III: U.S. PRODUCER’S PRODUCTION, SHIPMENTS, 

AND EMPLOYMENT 

U.S. PRODUCERS

The petition identified the current U.S. producer of FSVs, Parker, as the sole domestic producer

of FSVs, but subsequent to the filing of the petition, Chatleff Controls, Inc. (“Chatleff”), was also

identified as a producer.1

 The Commission received a completed questionnaire response from Parker.2

Parker’s headquarters are located in Cleveland, OH, and its FSV plant is located in New Haven, IN. 

Parker accounted for all reported U.S. production in *** and Chatleff accounted for *** percent of total

reported U.S. production in ***, the year that it ceased FSV production.3

 Table III-1 presents the U.S.

producers’ positions on the petition, ownership, plant locations, and shares of total reported U.S.

production in 2008. 

Table III-1

FSVs: U.S. producers, positions on the petition, ownership, plant locations, and shares of total

reported 2008 U.S. production 

* * * * * * *

The Parker Appliance Company was founded in 1918 as an automobile brake company, later

expanding into aviation parts. In 1957, Parker acquired the Hannifin Corp., a manufacturer of hydraulic

and air-power cylinders and of presses, and changed its name to the Parker-Hannifin Corp. In the mid1970s, Parker entered the FSV market by designing, testing, and becoming a qualified supplier of FSVs. 

During the 1990s, Parker expanded through acquisitions. In 2001, Parker acquired the New Haven, IN

plant of Aeroquip and broadened its FSV business. Today, Parker is divided into nine technology

segments supporting 1,200 markets worldwide. Some of Parker’s key markets include aerospace,

hydraulics, seals, filtration, and climate controls. The Climate Systems Division produces valves and

other controls for a number of climate control applications using residential and commercial air

conditioning, refrigeration, and transport cooling. 

U.S. CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION

Table III-2 presents data on the U.S. producers’ capacity, production, and capacity utilization

during 2005-2008. U.S. producers’ capacity *** apparent U.S. consumption of FSVs ***. Domestic

FSV capacity decreased by ***.4

 

Capacity remained stable from ***. Parker attributed its decrease in capacity *** to ***.5
 6

 Petitioner’s postconference brief, p. 10. 

 7

 Conference transcript, p. 75 (Miller). 

 8

 Parker’s domestic producer questionnaire response, question II-4. 

 9

 Conference transcript, p. 48 (Miller).

 10 Parker’s domestic producer questionnaire response, question II-3.

 11 Parker’s domestic producer questionnaire response, question II-7.

 12 Parker’s domestic producer questionnaire response, question II-6.

 13 ***. E-mail from ***, March 25, 2009. 

 14 E-mail from ***, April 14, 2008. Air conditioner manufacturers ***. ***. 

III-2

However, ***.6

 The machinery was not moved to the production of other types of valves or other

products.7

 U.S. production of FSVs decreased between 2005 and 2008, for an overall decrease of ***

percent. The average capacity utilization for the U.S. producers fell from *** percent in 2005 to *** in

2008. 

Table III-2

FSVs: U.S. capacity, production, and capacity utilization, 2005-2008

* * * * * * *

Parker reported one constraint on its production capacity: the ***. According to Parker, the

***.8

 However, the changeover time to switch between FSVs for different customers is relatively short,

about 10 minutes or less.9

 Parker’s New Haven plant equipment is ***. However, the ***.10 Parker

***.11 Since January 1, 2005, Parker ***.12

U.S. PRODUCER’S SHIPMENTS

Table III-3 presents information on Parker’s shipments of FSVs. Parker reported ***. Its U.S.

shipments of FSVs decreased by *** percent by quantity and *** percent by value from 2005 to 2008. 

The unit values of U.S. shipments increased by *** percent, or by $*** per FSV from 2005 to 2008. 

Rising average unit values, however, did not offset declining shipment quantities, and total shipment

values for the domestic producer declined by *** percent from 2005 to 2008. 

Parker’s reported exports during the period for which data were collected *** of its total FSV

shipments by quantity, ***.13 Parker reported exporting to ***.14

Table III-3

FSVs: U.S. producer’s shipments, by types and shares, 2005-2008

* * * * * * *
 15 Parker’s domestic producer questionnaire response, question IV-14. 

 16 Hearing transcript, pp. 21-22 (Nelson).

 17 Hearing transcript, p. 61 (Nelson). Petitioner submitted on-time delivery rates for Parker from 2006-2007, the

time period when Parker lost customers to the Chinese producers. In 2006, the rates ranged from *** percent to ***. 

In 2007, the rates were essentially all *** percent. Petitioner’s posthearing brief, p. 6.

 18 Conference transcript, p. 68 (Miller), and p. 144 (Dinan). According to Goodman, Parker failed to meet the

delivery target measures of delivery on time and days of supply inventory levels every month in 2006. Conference

transcript, p. 99 (Knights). According to ***. Staff interview with ***. 

 19 Parker’s domestic producer questionnaire response, question II-8.

 20 Parker’s domestic producer questionnaire response, question II-11.

 21 Parker’s domestic producer questionnaire response, question II-5.

 22 ***. E-mail from ***, April 14, 2008.

 23 Hearing transcript, p. 97 (Hudgens).

III-3

U.S. PRODUCER’S INVENTORIES

Table III-4, which presents end-of-period inventories for FSVs, shows that inventories were ***

as a ratio to production and shipments throughout the period examined. Reported inventories were ***.15

Parker offered FSVs under a consignment for a short period; however, Parker stopped due to the 

“holding, handling, and warehousing costs associated with this service.”16 According to hearing

testimony by a Parker official, on-time deliveries were maintained at levels that were in the 98-to-100

percent range to their customers’ requested dates.17 Parker reported a typical turnaround of within five to

seven days from the time it receives an order to shipment.18 

Table III-4

FSVs: U.S. producer’s end-of-period inventories, 2005-2008

* * * * * * *

U.S. PRODUCER’S IMPORTS AND PURCHASES

During the period for which data were collected *** FSVs.19 In addition, ***.20 Parker reported

that it ***.21

U.S. EMPLOYMENT, WAGES, AND PRODUCTIVITY

Table III-5 presents data on the U.S. producer’s employment-related indicia. A comparison

between 2005 and 2008 data shows that employment of production and related workers (“PRWs”)

decreased by *** percent while the number of hours worked decreased by *** percent. Wages paid to

PRWs also declined at a similar rate throughout the period, but hourly wages increased each year. 

Productivity decreased between 2005 and 2007, which can be explained in part by ***.22 However,

productivity increased between 2007 and 2008 ***. According to testimony provided at the hearing, this

increase can be explained in part by Parker’s reduced employment levels, since productivity is based on

employment hours over production.23

Table III-5

FSVs: U.S. producer’s employment-related data, 2005-2008

* * * * * * *
 
 1

 Staff telephone interview with ***. E-mail from ***, April 16, 2008. 

 2

 *** importer questionnaire response, questions I-3 and I-4. 

 3

 *** importer questionnaire response, questions I-3 and I-4. 

 4

 *** foreign producer questionnaire responses, question I-3. 

 5

 Staff interview with ***. E-mails from ***. 

 6

 *** importer questionnaire responses, questions I-8, I-9. 

 7

 *** importer questionnaire responses, question II-2. 

 8

 *** importer questionnaire response, question II-3. 

IV-1

PART IV: U.S. IMPORTS, APPARENT U.S. CONSUMPTION, 

AND MARKET SHARES

U.S. IMPORTERS

The petition identified two potential importers of FSVs, DunAn Precision Inc. (“DunAn

Precision”) and Sanhua International, Inc. (“Sanhua International”). DunAn Precision and Sanhua

International submitted complete questionnaire responses. Import data in this report are based on

questionnaire responses because official Commerce statistics are not available for FSVs separately from

other goods. Moreover, the questionnaire coverage is believed to be 100 percent because ***. Prior to

2006 ***, which also submitted a complete U.S. importers questionnaire.1

 The combined questionnaire

responses of *** are believed to account for all U.S. imports of FSVs from China, by quantity, in the

period examined. The responding importers reported *** from other sources during the period examined. 

Table IV-1 presents information on U.S. importers. 

Table IV-1

FSVs: U.S. importers and imports from China, 2008

* * * * * * *

DunAn Precision and Sanhua International are affiliated with FSV producers in China. DunAn

Precision is owned by *** which also owns FSV producer Zhejiang DunAn Hetian Metal Co., Ltd.

(“DunAn”).2

 Sanhua International is wholly owned by *** and through this relationship is a sister

company to FSV producer Zhejiang Sanhua Co., Ltd. (“Sanhua”).3

 These two producers reportedly

export FSVs to the United States through their affiliate U.S. importers ***.4

 

***.5

 

*** reported importing the subject product through a foreign trade zone or under the temporary

importation under bond program. *** reported importing FSVs from bonded warehouses.6

 The

Commission asked importers to comment on any changes in the character of their operations or

organization relating to FSVs. ***. ***.7

 

The Commission asked importers to comment on whether they changed or planned to change the

amount of imports of FSVs from China because of the filing of the petition in this investigation. ***.

***.8
 9

 Official Commerce statistics were not used because FSVs are covered by “basket category” HTS reporting

numbers and data for FSVs separately are not available. 

 10 *** importer questionnaire responses, question II-5. 

 11 Section 733(a)(1) of the Act.

 12 Section 771(24) of the Act.

 13 The replacement market reportedly accounts for 70 percent of the total U.S. market for FSVs. New home

construction accounts for the remaining 30 percent. Hearing transcript, p. 92 (Miller). 

IV-2

U.S. IMPORTS

Table IV-2 presents U.S. imports of FSVs during 2005 to 2008. U.S. import data are based on

questionnaire responses.9

Table IV-2

FSVs: U.S. imports, by sources, 2005-2008

* * * * * * *

U.S. imports of FSVs from China increased by *** units or by *** percent between 2005 and

2006, increased by *** percent in 2007 to *** units, and decreased by *** percent in 2008 to *** units. 

The unit value of imports from China increased by *** percent or by $*** between 2005 and 2008.

The Commission asked importers to indicate, in order of importance, what they believe to have

been the principal reasons for any increases in U.S. imports from China since 2005. DunAn Precision

***. Sanhua International reported ***. ***.10 

NEGLIGIBILITY

The statute requires that an investigation be terminated without an injury determination if imports

of the subject merchandise are found to be negligible.11 Negligible imports are generally defined in the

Tariff Act of 1930, as amended, as imports from a country or merchandise corresponding to a domestic

like product where 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 or the initiation of the investigation.12 During the most recent such 12-

month period for which data are available, China accounted for all known U.S. imports of FSVs.

APPARENT U.S. CONSUMPTION

 Table IV-3 presents data on the apparent U.S. consumption of FSVs. Between 2005 and 2008,

total apparent U.S. consumption decreased by *** percent by quantity and *** percent by value. This

decrease in total apparent U.S. consumption can be attributed in part to the ongoing economic downturn

as well as an increasing trend in which homeowners are choosing to repair, rather than replace their air

conditioning units.13 Between 2005 and 2008, U.S. shipments of subject imports increased by ***

percent by quantity and *** percent by value. U.S. producer’s U.S. shipments decreased by *** percent

by quantity and *** percent by value between 2005 and 2008. 
IV-3

Table IV-3

FSVs: Apparent U.S. consumption, by sources, 2005-2008

* * * * * * *

U.S. MARKET SHARES

Table IV-4 presents data on apparent U.S. consumption. Between 2005 and 2008, the U.S.

producer’s share of apparent U.S. consumption decreased by *** percentage points by quantity and ***

percentage points by value while imports from China increased in both share of quantity and share of

value.

Table IV-4

FSVs: Apparent U.S. consumption and market shares, 2005-2008

* * * * * * *

RATIO OF IMPORTS TO U.S. PRODUCTION

Table IV-5 presents information on the ratio of subject imports to U.S. production of FSVs. The

ratio of subject imports to U.S. production increased from *** percent in 2005 to *** percent in 2008. 

Table IV-5

FSVs: Ratio of U.S. imports to U.S. production, 2005-2008

* * * * * * *
 
 1

 Parker’s producer questionnaire response, question IV-19.

 2

 American Metal Market.

 3

 London Metal Exchange. International Monetary Fund, primary commodity pricing data. 

http://www.imf.org/external/np/res/commod/index.asp

V-1

1

51

101

151

201

251

Jan-05

Mar

May

Jul

Sept

Nov

Jan-06

Mar

May

Jul

Sept

Nov

Jan-07

Mar

May

Jul

Sept

Nov

Jan-08

Mar

May

Jul

Sept

Nov

Cents per pound

Monthly price

PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

Brass and copper are the principal raw materials used in producing FSVs, with brass reportedly

accounting for *** percent of total raw material costs and copper accounting for *** percent. U.S.

producer Parker reported that its prices for brass and copper have increased by *** percent since 2005.1

As shown in figure V-1, the monthly price for brass increased by 164.3 percent from January 2005 to

September 2008, after which it decreased by 63.8 percent to November 2008, the last month for which

data were available.2 As shown in figure V-2, the London Metal Exchange (LME) monthly price for

copper increased by 165.4 percent from January 2005 to July 2008, after which it decreased by 63.1

percent to December 2008.3

Figure V-1

FSVs: Monthly brass prices, January 2005-November 2008

Source: American Metal Market.
 4

 Based on import data on the HTS subheadings ***, transportation costs for FSVs shipped from China to the

United States averaged 4.0 percent of the customs value in 2005 and decreased to 3.4 percent in 2008. The

estimated cost was obtained by subtracting the customs value from the c.i.f. value of the imports and then dividing

by the customs value. 

V-2

0.70

1.20

1.70

2.20

2.70

3.20

3.70

4.20

Jan-05

Mar

May

Jul

Sept

Nov

Jan-06

Mar

May

Jul

Sept

Nov

Jan-07

Mar

May

Jul

Sept

Nov

Jan-08

Mar

May

Jul

Sept

Nov

Dollars per pound

Monthly price

Figure V-2

FSVs: Monthly copper prices, January 2005-December 2008

Source: International Monetary Fund, Primary Commodity Prices, February 4, 2009.

Transportation Costs to the U.S. Market

Transportation costs for FSVs shipped from China to the United States that would typically be

derived from official import data are unavailable because the importers ***.4

U.S. Inland Transportation Costs

FSVs are sold on an f.o.b. basis and purchasers reportedly arrange for transportation. Parker and

the importers reported that U.S. inland transportation costs of FSVs are *** to *** percent of the

delivered price. 

Exchange Rate

While the nominal exchange rate for the Chinese yuan was pegged to the U.S. dollar during the

first six quarters of the period for which data were collected in the investigation, the dollar depreciated by

21.1 percent relative to the yuan in nominal terms from January 2005 to December 2008, as shown in

figure V-3. A real value is unavailable. 
 5 Conference transcript, pp. 83-84 (Nelson). 

 6

 DunAn Precision’s postconference brief, pp. 24-25.

 7 Sanhua’s April 14, 2008 responses to questions of staff, p. 4. 

 8

 ***. Sanhua International’s posthearing brief, exh. 1.

 9

 Conference transcript, p. 91 (Craven). Sanhua’s postconference brief, pp. 7-8. Goodman’s postconference

brief, pp. 1 and 6.

V-3

China

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2005200620072008

(January-March 2005=100)

Nominal

Figure V-3

Exchange rate: Index of the nominal exchange rate of the Chinese currency relative to the U.S.

dollar, by quarters, January 2005-December 2008

Source: International Monetary Fund, International Financial Statistics, March 17, 2009.

 

PRICING PRACTICES

Pricing Methods

When questionnaire respondents were asked how they determined the prices that they charge for

FSVs, responses were varied. Parker reported the use of ***. It reported that prices are based on ***. It

also reports the use of a monthly surcharge or debit for changes in the price of copper.5

 Among

importers, ***. More specifically, importer DunAn Precision reported that its contract with its ***. 

DunAn Precision also reported that it protects itself from increasing costs by purchasing forward

exchange contracts on the open market.6 Sanhua International reported that its contracts have included a

raw material surcharge for some customers beginning in 2006 and now apply to all customers who buy on

a contract basis.7

 Sanhua International also reported that its prices ***.8 *** responding firms reported

the use of price lists. Prices of FSVs are quoted on an f.o.b. rather than a delivered basis, for both Parker

and the importers. 

Sanhua and OEM customer Goodman alleged that, prior to the existence of the imports from

China in the U.S. market, Parker had market power in the United States due to it being the sole remaining

U.S. producer of FSVs. According to Sanhua and Goodman, Parker kept prices of FSVs high, mandated

supply agreements with no open competition or commercial exit clauses, and ignored customer

complaints regarding quality and delivery time.9

 Parker maintains that its declining market share is
 10 Conference transcript, p. 145 (Dinan). Hearing transcript, p. 81 (Nelson).

 11 ***.

 12 Hearing transcript, p. 75 (Miller).

 13 See ***.

 14 Hearing transcript, p. 42 (Nelson).

 15 Hearing transcript, p. 143 (Jin).

V-4

evidence that it does not have market power and reports that it has not received complaints regarding

quality from customers.10

Sales Terms and Discounts

Parker and importers of FSVs from China were asked what share of their sales were on a (1)

long-term contract basis (multiple deliveries for more than 12 months), (2) short-term contract basis, and

(3) spot sales basis (for a single delivery) during 2007. Parker reported that ***. Among the importers

that reported sales of imports from China, ***. *** reported that ***. *** reported that ***.

For Parker, ***. It reported that its ***. Parker reported that ***. Parker also reported that

***.11 Parker reported that it will only hedge raw materials with a customer’s permission and has done so

only two to four times.12

In the case of importers, long-term contracts can also range from ***. Importer Sanhua

International reported that ***. Sanhua International also reported that its contract with ***. ***. ***.13

***. These importers’ long-term contracts *** meet-or-release provisions. 

Parker and the importers ***. ***. Importer *** reported that ***. Importer *** reported that

***.

Parker reported that its sales contracts for FSVs are typically negotiated specifically for FSVs

only and do not include other products.14 Alternatively, Sanhua International reported that it typically

negotiates contracts that include a package of products, not limited to FSVs.15

Purchasers were asked if the contract terms differ between the domestic producer and those of

importers of FSVs from China. Three purchasers reported that the contract terms are the same. Three

other purchasers reported that, while suppliers from both sources offer contract terms that account for

changes in raw material prices, contract terms with importers also cover fluctuations in the U.S.-China

exchange rate.

PRICE DATA

The Commission requested U.S. producers and importers of FSVs from China to provide

quarterly data for the total quantity and f.o.b. value (including all price adjustments for raw material

surcharges and exchange rate movements) of selected products that were shipped to unrelated OEM

customers in the U.S. market. Data were requested for the period January 2005-December 2008. The

products for which pricing data were requested are as follows:

Product 1. -- 3/8 inch—SAE—6 size: Frontseating service valves that have brass bodies with

copper tube extensions, double 90-degree flow pattern, metal-to-metal seating, with

Schrader Bridgeport access valves and captivated stem with OD solder connection of 3/8

inch.
 16 Prior to ***, the prices of products imported from China are ***. Importer *** also reported that all of its

pricing data are ***. ***. Importer *** provided unusable pricing data because ***.

V-5

Product 2.-- 3/4 inch—SAE—12 size: Frontseating service valves that have brass bodies

with copper tube extensions, double 90-degree flow pattern, metal-to-metal seating, with

Schrader Bridgeport access valves and captivated stem with OD solder connection of 3/4

inch.

Product 3.-- 7/8 inch—SAE—14 size: Frontseating service valves that have brass bodies

with copper tube extensions, double 90-degree flow pattern, metal-to-metal seating, with

Schrader Bridgeport access valves and captivated stem with OD solder connection of 7/8

inch.

Parker and two importers provided pricing data for sales of the requested products, although not

all firms reported sales for all products for all quarters.16 Pricing data reported by these firms accounted

for approximately *** percent of Parker’s U.S. commercial shipments of FSVs during January 2005-

December 2008 and *** percent of U.S. shipments of imports from China over the same period. 

Price Trends

When purchasers were asked if prices of FSVs had increased, decreased, or remained the same

since 2005, all six purchasers responded that prices had increased. Purchasers attributed the rising prices

to raw material cost increases. One purchaser reported that it “always” purchases the FSVs offered at the

lowest price; three reported “sometimes;” and two reported “usually.” When asked to cite firms they

considered price leaders, two purchasers cited *** because of its low prices and two cited *** because of

its ***.

Weighted-average f.o.b. prices reported for U.S. producers and importers are presented in tables

V-1 through V-3 and in figures V-4 through V-6 on a quarterly basis during January 2005-December

2008. Domestic prices of pricing products increased *** over the period, ***. The prices of products

imported from China also increased, ***. For sales reported by Parker, ***. For sales of products

imported from China, ***.

The weighted-average sales price of U.S.-produced product 1 increased by *** percent from the

first quarter of 2005 to the fourth quarter of 2008, first increasing by *** percent from the first quarter of

2005 to the *** before decreasing *** in *** and rebounding in ***, after which it *** by *** percent to

the fourth quarter of 2008. The weighted-average sales price of product 1 imported from China, as

reported by importers DunAn Precision and Sanhua International, increased by *** percent over the

entire period, with *** increase occurring in the ***, after which the price fluctuated and decreased by

*** percent to the fourth quarter of 2008.

The weighted-average sales price of U.S.-produced product 2 increased by *** percent from the

first quarter of 2005 to the fourth quarter of 2008, first increasing by *** percent from the first quarter of

2005 to the *** before *** decreasing to *** and rebounding in ***, after which it decreased by ***

percent to the fourth quarter of 2008. The weighted-average sales price of product 2 imported from

China, as reported by importers DunAn Precision and Sanhua International, increased by *** percent

over the entire period, after having decreased from the first quarter of 2005 to the *** and *** increasing

in the ***, after which the price increased by *** percent to the fourth quarter of 2008.
 17 Sales of product 3 imported from China in *** as reported by *** matched ***’s first data submission in the

preliminary phase of this investigation, which was later revised. Staff used the revised data submitted by *** in the

preliminary phase of the investigation for its sales of product 3 for those quarters in the data presented here. See

***’s revision to its Importers’ Questionnaire, ***.

V-6

The weighted-average sales price of U.S.-produced product 3 increased by *** percent from the

first quarter of 2005 to the fourth quarter of 2008, first increasing by *** percent from the first quarter of

2005 to the *** before *** decreasing in *** and rebounding in ***, after which it fluctuated and ***

decreased by *** percent to the fourth quarter of 2008. The weighted-average sales price of product 3

imported from China, as reported by importers DunAn Precision and Sanhua International, fluctuated

over the period, increasing overall by *** percent over the entire period, first increasing by *** percent

from the first quarter of 2005 to the *** before decreasing by *** percent to the fourth quarter of 2008.17

Table V-1

FSVs: Weighted-average f.o.b. prices and quantities of domestic and imported product 1 and

margins of underselling/(overselling), by quarters, January 2005-December 2008

* * * * * * *

Table V-2

FSVs: Weighted-average f.o.b. prices and quantities of domestic and imported product 2 and

margins of underselling/(overselling), by quarters, January 2005-December 2008 

* * * * * * *

Table V-3

FSVs: Weighted-average f.o.b. prices and quantities of domestic and imported product 3 and

margins of underselling/(overselling), by quarters, January 2005-December 2008 

* * * * * * *

Figure V-4

FSVs: Weighted-average f.o.b prices and quantities of domestic and imported product 1, by

quarters, January 2005-December 2008 

* * * * * * *

Figure V-5

FSVs: Weighted-average f.o.b prices and quantities of domestic and imported product 2, by

quarters, January 2005-December 2008

* * * * * * *

 

Figure V-6

FSVs: Weighted-average f.o.b prices and quantities of domestic and imported product 3, by

quarters, January 2005-December 2008

* * * * * * *
 18 Parker also reported that its remaining customers have said that Parker could lose their business for FSVs if

Parker does not meet the quoted Chinese price. Conference transcript, pp. 25-26 (Miller).

 19 ***.

 20 ***.

 21 ***. 

 22 ***.

V-7

Price Comparisons

Margins of underselling and overselling for the period are presented by product category in tables

V-4 and V-5 below. The data show that prices of imports from China were lower than the U.S. producer

prices in all 48 quarterly comparisons of products 1-3, by margins ranging from 11.0 percent to 45.9

percent. 

Table V-4

FSVs: Margins of underselling/(overselling) by product, quarterly, January 2005-December 2008 

* * * * * * *

Table V-5

FSVs: Instances of underselling/overselling and the range and average of margins for products 1-

3, January 2005-December

* * * * * * *

LOST SALES AND LOST REVENUES

The Commission requested that Parker report any instances of lost sales or revenues it

experienced due to competition from imports of FSVs from China since January 2005. Parker provided

*** lost sales allegations totaling $*** and *** totaling $***.18 Staff contacted the *** purchasers cited

in the allegations; *** responded, *** of which confirmed *** allegations, valued at a total of $***.19

The results are summarized in tables V-6 and V-7 and are discussed below.

Table V-6

FSVs: U.S. producer’s lost sales allegations

* * * * * * *

Table V-7

FSVs: U.S. producer’s lost revenue allegations

* * * * * * *

***.

***.20 ***.21 ***.22 
 23 ***. 

 24 ***. ***. ***.

 25 ***. ***. 

 26 ***.

 27 ***. 

 28 ***.

 29 ***.

 30 ***.

 31 ***.

V-8

***.23 ***.24 ***.25 ***.26

***.27 ***.28 ***.29 ***.30

***.31

***.

***.

***.
 1

 Parker’s fiscal year ends June 30 but it provided questionnaire data on a calendar-year basis. Commission staff

verified the questionnaire response of Parker on February 10-11, 2009. See verification report, Memorandum to the

Commission, INV-GG-012, February 23, 2009.

 2 The other known U.S. producer, Danfoss Chatleff, LLC, ceased producing FSVs in ***. It responded ***.

 3 Parker had approximately *** percent of the OEM market in 2005 when it supplied six out of the seven major

producers of residential air conditioning systems. Since 2005, it lost the entire business of four of its OEM

customers, and Parker’s sales to those two remaining OEMs have fallen as well. Most of the decline in sales to

OEMs occurred in *** (see Parker’s posthearing brief, exh. 1, p. 9). Parker stated that it is threatened with the loss

of its last two customers when their contracts expire unless it meets the “China price.” Petitioner’s prehearing brief,

p. 19 and hearing transcript, p. 15 (Miller). With regard to Parker’s operating results from the loss of business in

2005-2006, see hearing transcript, pp. 93-94 (Miller and Magrath). Sanhua started to sell product to its customers in

***. Sanhua’s posthearing brief, responses to Commission questions, p. 4.

 4 Sales include raw material surcharges, which are discussed later. See petitioner’s postconference brief, exh. 1. 

 5 Brass and copper scrap is reclaimed and sold to Parker’s suppliers of those metals resulting in a *** recovery of

the cost of brass bar and copper tubing. In this final phase of the investigation, the Commission’s questionnaire

requested Parker to show its byproduct scrap cost recovery separately from other categories of COGS. Parker

complied with the Commission’s request ***. The cost recovery is shown as a deduction from COGS in table VI-1.

VI-1

PART VI: FINANCIAL EXPERIENCE OF THE U.S. PRODUCER

BACKGROUND

Parker provided production, shipment, and financial data on its operations on FSVs, reporting on

a calendar-year basis.1

 These data accounted for all known U.S. production of FSVs in 2008.2

OPERATIONS ON FSVs

Parker’s total net sales quantities and values of FSVs fell *** in 2005–2006, and *** in 2006-

2007, following the loss of most of its OEM customer base; sales fell again by *** percent and ***

percent on a quantity and value basis, respectively, between 2007 and 2008 (table VI-1).3

 Parker’s sales

value did not fall as much as sales quantity because unit sales values increased by *** percent from 2005

to 2006, by *** percent from 2006 to 2007, and by *** percent from 2007 to 2008.4

 Cost of goods sold

(“COGS”) net of scrap credit5

 fell in absolute terms with the decline in production and net sales quantity,

but rose *** whether expressed as a ratio to net sales or on a per-unit basis, driven by raw material costs

and other factory costs. The increase in the unit value of COGS net of scrap credit was *** than the

increase in the average unit value of sales, $*** versus $*** between 2005 and 2006, and $*** versus

$*** between 2006 and 2007; the increase in the average unit value of raw materials, net of scrap credit,

was $*** and $*** between 2005 and 2006, and 2006 and 2007, respectively. From 2007 to 2008,

Parker’s sales unit value increased by $*** compared with a decrease in the unit value of COGS net of

scrap credit of $*** and *** in raw materials net of scrap credit. Parker’s gross profit decreased by

approximately *** percent from 2005 to 2008, and was *** (Parker ***) in 2007. Selling, general, and

administrative (“SG&A”) expenses fell in value terms (***) from 2005 to 2007, but increased in 2008;

when expressed as a ratio to net sales, SG&A expenses declined *** in 2006, and rose in 2007 and 2008

to a level above that in 2005. Parker’s operating ***. Net income before taxes and cash flows followed

operating income. 
 6

 Conference transcript, p. 47 (Miller).

 7 Conference transcript, p. 16 (Miller). Copper and brass prices are discussed further in Part V of this report.

 8 Parker’s postconference brief, exh. 1, Parker’s filing of January 22, 2009, and e-mail to staff from ***, March

23, 2009. A metal surcharge is a sales price adjustment mechanism built into a contract to protect against risk due to

price fluctuations of the input raw material; it may be added to and included in the sales price and offsets (at least

partially) the cost increase recorded in raw materials in COGS. Parker’s contracts for FSVs ***. While the invoice

price is on a per-unit basis, the *** is based on the contained weight of copper and brass in each FSV. 

Correspondence between staff and *** on February 5, 2009. Copper and brass prices are discussed further in Part V

of this report.

 9 Calculated by staff by comparing the data in the filing of January 22, 2009 and e-mail to staff from ***, March

23, 2009, with Parker’s U.S. commercial sales in question II-9. The sales reported to OEMs accounted for *** and

*** percent of Parker’s U.S. commercial sales by value in 2005 and 2006, respectively, and for *** percent of

Parker’s U.S. commercial sales by value in 2007 and 2008, respectively. 

 10 Calculated by staff by comparing the data in the filing of January 22, 2009 and e-mail to staff from ***, March

23, 2009, with Parker’s U.S. commercial sales in question II-9. These data are consistent with the pricing products

data that Parker submitted. The pricing product data cover approximately *** percent, *** percent, *** percent, and

*** percent, of Parker’s U.S. commercial sales by value, in 2005, 2006, 2007, and 2008, respectively. The per-unit

surcharges for the three pricing products average $*** and $*** in 2005 and 2006, respectively, and $*** and $***

in 2007 and 2008, respectively. Calculated by staff from Parker’s pricing product data by subtracting the average

unit values of Parker’s pricing product data that do not include the metal surcharges from Parker’s pricing product

data that include the metal surcharges. The pricing product data in 2008 reflect a fall in the prices of copper and

brass that resulted in ***.

VI-2

Table VI-1

FSVs: Results of Parker’s operations, calendar years 2005–2008

* * * * * * *

The per-unit value of other factory costs also rose *** the per-unit value of raw materials. This

cost behavior is consistent with fixed costs being spread over a declining base of production and sales

(the *** is attributable to Parker’s efforts to adjust to lower sales volume of FSVs). On the other hand,

labor costs declined whether expressed as per-unit or as a ratio to net sales. This decline is supported by

statements of Parker personnel indicating that the firm made capital investments in automation to improve

its competitiveness.6

 It also assigned personnel to other duties or to other products during the period

investigated.

 Raw materials represent a large component of total COGS. The raw material costs of an FSV are

chiefly composed of the costs of copper (used in the tubing) and brass (comprising the body of an FSV)

and reflect changes in the prices of those materials.7

 Because of lower sales, the absolute value of raw

materials fell during 2005-2008. However, the ratio of raw material costs to total COGS, the ratio of raw

material costs to sales, and the average unit value of raw materials generally rose during 2005–2008. 

Data provided by Parker show that the firm obtained *** recovery of rising raw material costs

through a metal surcharge mechanism.8

 Parker’s metal surcharges were $*** and $*** in 2005 and 2006,

respectively, and $*** and $*** in 2007 and 2008, respectively; they accounted for *** percent, ***

percent, *** percent, and *** percent of the total reported U.S. commercial sales, by value, in the four

years, respectively.9

 On a per-unit basis, the surcharges were $*** and $*** in 2005 and 2006,

respectively, and $*** and $*** in 2007, and 2008, respectively.10 These data reflect the price increases

of copper and brass, as well as the decline in Parker’s net sales by quantity during the period investigated.

Changes in Parker’s operating income are further evidenced by a variance analysis that shows the

effects of prices and volume on net sales and of costs and volume on their total costs (table VI-2). 
 11 Hearing transcript, p. 68 (Miller).

 12 Mr. Miller, General Manager of Parker’s CLS division, testified that “we have done everything possible to

lower our cost structure and prices. We have implemented a number of capital investments to improve our

production efficiency. For example, we have installed computer automated machining and assembly equpment

which exceed $7 million in cost prior to the period of investigation. This allowed us to significantly lower labor cost

at capacity and improve productivity.” Hearing transcript, p. 15 (Miller). He also stated that Parker has “made

significant investments in machining centers that produce the parts from barstock complete in one cycle {and that the

parts} do not have to be machined in multiple cycles. It improves significantly on the quality. Parker has made

significant investments on automation of the furnace up front and then through the whole assembly, testing, and

copper forming and bending portion of the product line so that we can minimize the amount of labor impact that

goes in and improve the first run yield or the quality of the product through the cycle.” Hearing transcript, pp. 84-85

(Miller). 

 13 Hearing transcript, p. 17 (Miller).

 14 Verification report and hearing transcipt, pp. 54 (Nelson) and 64 (Miller).

VI-3

Table VI-2

FSVs: Variance analysis on results of Parker’s operations, calendar years 2005–08

* * * * * * *

This analysis shows that the *** in Parker’s operating income in 2005–2008 of $*** generally

was attributable to the combined negative net cost/expense variance *** and *** lower sales volume that

were greater than the favorable price variance ***. Parker’s operating income fell by *** between 2005

and 2006 as it did between 2006 and 2007. Parker’s *** between 2007 and 2008, reflecting the effect of

a favorable price variance that was greater than the unfavorable net cost/expense variance, and a favorable

volume variance.

CAPITAL EXPENDITURES AND RESEARCH AND DEVELOPMENT EXPENSES

Parker reported capital expenditures *** and *** research and development (“R&D”) expenses

for FSVs, as shown in table VI-3. Both capital expenditures and R&D efforts are directed at “lean”

manufacturing and an ability to manufacture to just-in-time delivery schedules.11 For example, some of

Parker’s capital expenditures have been directed toward *** the period for which data were collected.12

Parker’s capital expenditures were *** in 2005, its *** for which data were gathered, but declined

thereafter, attributed to Parker’s worsening financial condition.13 This is reflected in the data where the

reported charges for *** exceeded *** in each year investigated. R&D expenses represent the *** in

research efforts. Much of Parker’s R&D efforts are directed at ***.14

Table VI-3

FSVs: Capital expenditures and R&D expenses of Parker, calendar years 2005–2008

* * * * * * *

ASSETS AND RETURN ON INVESTMENT

The Commission’s questionnaire requested data on assets used in the production, warehousing,

and sale of FSVs to compute return on investment (“ROI”) for 2005 to 2008. The data for operating

income are from table VI-1. Operating income was divided by total assets, resulting in the asset turnover

ratio. ROI fell *** from *** percent in 2005 to *** percent in 2007 before improving *** percent in

2008. These data and calculations are shown in table VI-4.
 15 Email from *** to Commission staff, April 9, 2008.

VI-4

Table VI-4

FSVs: The value of assets and return on investment of Parker, calendar years 2005–2008

* * * * * * *

Accounts receivable *** percent between 2005 and 2006, and *** percent between 2006 and

2007 because of the loss of *** major OEM accounts. Parker also reported *** reduced inventories of

finished goods from 2005 to 2008, from *** percent of the value of total net sales in 2005 to *** percent

of the value of total net sales in 2008 (although the ratio had *** in 2006). Combined, these reductions

led to an overall fall in current assets. Parker also disposed of various assets, worth $***, resulting in

lower values of fixed plant and equipment and total noncurrent assets in 2007 compared with 2006.15

Changes in the allocation *** led to lower total noncurrent assets between 2005 and 2006; an increase in

allocated assets in 2007 or 2008 was not sufficient to offset the effects of the ***.

CAPITAL AND INVESTMENT

The Commission requested U.S. producers to describe any actual or anticipated negative effects

of imports of FSVs from China on their firms’ growth, investment, and ability to raise capital or

development and production efforts (including efforts to develop a derivative or more advanced version

of the product). Parker’s responses are presented here.

Actual Negative Effects

Parker: ***. 

Parker made the following additional statement with regard to other actual negative effects:

***.

Anticipated Negative Effects

Parker: ***. 
 1

 Zhejiang Sanhua Co., Ltd., (“Sanhua”), which is owned by *** and Zhejiang DunAn Hetian Metal Co., Ltd.,

(“DunAn”), which is owned by ***. Sanhua is affiliated to Sanhua International, which is a U.S. importer of FSVs. 

DunAn is affiliated with DunAn Precision, which is a U.S. importer of FSVs.

 2

 Goodman’s postconference brief, p. 2. 

 3

 Petitioner’s postconference brief, p. 10. 

 4

 ***. 

 5

 *** foreign producer questionnaire responses, question II-3. 

 6

 *** foreign producer questionnaire responses, question II-5. 

 7

 *** Sanhua’s April 14, 2008 responses to questions of staff, p. 1. Sanhua also identified “other small makers

such as Jinhui and Hequn who manufacture on a cottage industry basis.” Ibid.

 8

 Guangdong Hangji Metal Product Industries Co., Ltd., Profile, found at http://en.hangji.com, retrieved April 16,

2008. 

 9

 Riyue Refrigerating, company information, found at http://www.cnriyue.com/about.asp, retrieved April 18,

2008. 

VII-1

PART VII: THREAT CONSIDERATIONS AND INFORMATION ON 

NONSUBJECT COUNTRIES

The Commission analyzes a number of factors in making threat determinations (see 19 U.S.C. §

1677(7)(F)(i)). Information on Commerce’s final determination of sales at less than fair value was

presented earlier in this report; information on the volume and pricing of imports of the subject

merchandise is presented in Parts IV and V; and information on the effects of imports of the subject

merchandise on the U.S. producer’s existing development and production efforts is presented in Part VI. 

Information on inventories of the subject merchandise and foreign producers’ operations, including the

potential for “product-shifting,” follows. Also presented in this section of the report is any information

obtained for consideration by the Commission on nonsubject countries and the global market.

THE INDUSTRY IN CHINA

Overview 

The petition identified two potential producers of FSVs in China.1

 Staff sent the foreign producer

questionnaire, by fax and by e-mail, to both manufacturers listed. Both foreign producers entered notices

of appearance, submitted foreign producer and importer questionnaires, participated at the Commission’s

hearing, and provided prehearing and posthearing briefs. 

DunAn and Sanhua’s FSV operations in China are both ISO 9000 and ISO 14001 approved.2

 ***

reportedly the dominant producers of flare-type service valves used in Asia, the world’s biggest market

for air conditioning equipment, according to Parker.3

 Sanhua ***, and DunAn ***.4 DunAn and Sanhua

***.5

 Neither producer in China ***.6 

*** two additional potential FSV producers in China: Guangdong Hangji Metal Product

Industries Co., Ltd. (“Guangdong”) and Ningbo Riyue Refrigerating Equipment Co., Ltd. (“Riyue”).7

Guangdong advertises its main businesses as heating, ventilating, and air conditioning, or HVAC, and the

fabrication of various types of metal parts. Its product offerings include service valves and ball valves

and it lists Carrier and Trane as among its customers.8

 Riyue specializes in producing a variety of air

conditioner valves including ball valves and what it describes as square valves but which appear identical

to FSVs (see figure VII-1).9

 These valves are made with brass bodies and are offered in six connection
 10 Riyue Refrigerating, Product Center, Square Valves, found at

http://www.cnriyue.com/product_detail.asp?id=00010003, retrieved April 18, 2008. 

 11 Made in China, Taizhou Double Winners Copper Co., Ltd., Product list, found at 

http://www.made-in-china.com/showroom/jemmylee/product-list/catalog-1.html, retrieved January 29, 2009. 

 12 Hearing transcript, pp. 112 and 115-116 (Hudgens). The valves which DunAn sells in China and Asia differ in

the shape and outdoor unit connection method to the FSVs subject to this investigation. DunAn’s posthearing brief,

p. 4. Upon request, counsel on behalf of DunAn submitted revised data that excluded the valves that DunAn sells in

China and Asia.

VII-2

diameters and four body sizes.10 The Commission sent foreign producer questionnaires to Guangdong

and Riyue, but neither firm provided responses. 

The Commission identified another apparent FSV producer in China, Taizhou Double Winners

Copper Co., Ltd. (“Double Winners”). Established in 2001, Double Winners advertises itself as one of

the largest suppliers of copper and copper alloy fittings in China, manufacturing products for air

conditioning and refrigeration systems that are widely used in the United States, Germany, the United

Kingdom, Italy, Spain, and Australia. Its product offerings include frontseating service valves and ball

valves as well as a number of brass and bronze fittings. The FSVs advertised by Double Winners have

brass bodies and copper-connection tubes and are available in many sizes.11 The Commission sent a

foreign producer’s questionnaire to Double Winners, but the firm did not provide a response. 

Figure VII-1

FSVs: Riyue’s square valve product offerings

Source: Riyue Refrigerating website found at http://www.cnriyue.com/product_detail.asp?id=00010003,

retrieved April 18, 2008. 

FSV Operations

Data on China’s reported FSV capacity, production, inventories, and shipments are presented in

table VII-1. These data include Chinese production of FSVs sold for the North American market, since

there is no FSV market outside of North America.12 Between 2005 and 2008, Chinese FSV capacity and

production increased by *** percent and *** percent, respectively. Capacity utilization fluctuated and

was highest at *** percent in ***.
 13 DunAn’s and Sanhua’s foreign producer questionnaire responses, question II-4.

 14 E-mail from ***, March 11, 2009. E-mail from ***, March 12, 2009. 

 15 DunAn’s and Sanhua’s foreign producer questionnaire responses, question I-5. 

 16 *** foreign producer questionnaire response, question II-7. 

 17 China to raise export tax rebates for machinery products, China Daily, December 29, 2008, found at

http://www.chinadaily.com.cn/china/2008-12/29/content_7350536.htm, retrieved March 20, 2009. 

 18 China to adjust export tax rebate mechanism, China Daily, July 23, 2007, found at

http://www.chinadaily.com.cn/china/2006-07/23/content_647201.htm, retrieved April 17, 2008. 

 19 The most recent increase took effect on December 1, 2009 and covered 3,770 items of labor-intensive,

mechanical, and electrical products, or 27.9 percent of China’s total exports. China to raise export tax rebates for

machinery products, China Daily, December 29, 2008, found at http://www.chinadaily.com.cn/china/2008-

12/29/content_7350536.htm, retrieved March 20, 2009. 

 20 Counsel on behalf of Sanhua explains that the VAT tax is refunded upon export of the product. Sanhua’s

posthearing brief, supplement to response to Commission questions, March 17, 2009.

 21 DunAn’s and Sanhua’s foreign producer questionnaire responses, question II-1. 

 22 DunAn’s and Sanhua’s foreign producer questionnaire responses, question II-5. 

VII-3

Table VII-1

FSVs: Data for reporting producers in China, 2005-2008, and projected 2009

* * * * * * *

Internal consumption and home market shipments accounted for *** share of the Chinese

industry’s total FSVs total shipments in 2008, while exports accounted for the remaining *** percent. 

Total exports increased by *** percent between 2005 and 2008, an increase that was *** increased

exports to the United States of *** percent. 

Chinese producers were asked to comment on reasons for any increases in U.S. imports of FSVs

from China since 2005. DunAn reported ***. Sanhua reported ***.13 

In 2008, *** percent of DunAn and Sanhua’s exports to the United States were imported by

***.14 Both producers responded that ***.15 Sanhua identified its principal non-U.S. export markets as: 

***.16 

The Chinese government levies a value-added tax (VAT tax) on most products, but provides a

rebate for a certain amount of that tax on exported goods. The rates of these export tax rebates are often

adjusted by the Chinese government when it is trying to encourage or discourage growth in a particular

industry.17 For instance, by lowering export rebates in 2005, the Chinese government was able to curb

exports of high energy consuming, high-polluting and resource-intensive products.18 However, in 2008,

the Chinese government increased export tax rebates four times in an effort to counter the global

economic downturn.19 Counsel on behalf of Sanhua has stated that on December 1, 2008, the Chinese

government increased the export rebate of the VAT tax on FSVs. Effective that date, the export rebate of

the VAT tax increased from 13 percent to 14 percent.20 

*** did not respond to a question on plans to add, expand, curtail, or shut down production

capacity or production of FSVs in China, ***. *** reported that it ***.21 The two producers in China

project that full-year 2009 production will be *** 2008 production, by *** percent, or *** units. 

Chinese producers’ reported end-of-period inventories increased by *** percent between 2005

and 2008. DunAn and Sanhua reported that, since 2005, ***.22 For information on the inventories held

in the United States by ***, see U.S. Importers’ Inventories in this section of the report.
 23 Petitioner maintains that the forged body valve produced by Sanhua is a completely different valve known as a

flare valve, which is not interchangeable with an FSVand is not and cannot be sold in the United States due to

environmental regulations that the OEMs have to meet. Hearing transcript, p. 207 (Dinan). 

 24 Sanhua’s foreign producer questionnaire response, question II-7, “Explanation to the response.”

 25 *** importer questionnaire responses, question II-6. 

VII-4

Data on DunAn’s FSV capacity, production, inventories, and shipments during 2005-2008, and

projected data for 2009, are presented in table VII-2. 

Table VII-2

FSVs: Data for DunAn’s operations, 2005-2008, and projected data for 2009

* * * * * * *

Data on Sanhua’s FSV capacity, production, inventories, and shipments during 2005-2008, with

projections for 2009, are presented in table VII-3. 

Table VII-3

FSVs: Data for Sanhua’s operations, 2005-2008, and projected 2009

* * * * * * *

Sanhua produces FSVs using two different manufacturing methods. The first employs a bar stock

and is the method used by Parker in the United States, while the second uses a forged body.23 The

company stated that ***. According to Sanhua, ***.24 

U.S. IMPORTS SUBSEQUENT TO SEPTEMBER 30, 2008

The Commission requested importers to indicate whether they imported or arranged for the

importation of FSVs from China after September 30, 2008. *** reported arrangements for the

importation of FSVs from China for delivery after September 30, 2008 but did not supply information on

the quantities involved and the months in which the imports would occur.25 *** importer reported

importing parts or components of FSVs separately (such as any brazed assembly consisting of any two or

more of the following components): a valve body, a field tube, a factory connection tube, or a valve

charge port.

U.S. IMPORTERS’ INVENTORIES

Inventories of U.S. imports as reported are presented in table VII-4. Inventories of Chinese FSVs

increased by *** percent during the period for which data were gathered, reaching *** in 2006.

Table VII-4

U.S. importers’ end-of-period inventories from China, 2005-2008

* * * * * * *
 26 According to Goodman, Parker refused to offer a consignment inventory of FSVs. Goodman’s postconference

brief, p. 2. 

 27 Conference transcript, p. 143 (Dinan) ***. 

 28 Versus Parker which produces FSVs to order (typically with a five-day lead time). Sanhua’s postconference

brief, p. 4. 

 29 Goodman’s postconference brief, p. 1. 

 30 ***. Goodman’s postconference brief, p. 1 and app. 1, p. 9. 

 31 Sanhua’s responses to questions of staff, p. 4. 

 32 Sanhua’s postconference brief, p. 14. 

 33 *** foreign producer questionnaire responses, question II-6. *** importer questionnaire responses, question I10. 

 34 Mittal Steel Point Lisas Ltd. v. United States, Slip Op. 2007-1552 at 17 (Fed. Cir., Sept. 18, 2008), quoting

from Statement of Administrative Action on Uruguay Round Agreements Act, H.R. Rep. 103-316, Vol. I at 851-52;

see also Bratsk Aluminum Smelter v. United States, 444 F.3d 1369 (Fed. Cir. 2006).

 35 Petitioner’s posthearing brief, p. 10. 

VII-5

Both DunAn and Sanhua offer a consignment inventory for their customers in the United States.26

The inventories are kept in Ohio and Texas.27 According to Sanhua, the Chinese producers went “far

beyond price in order to obtain” the FSV business of U.S. air conditioner manufacturers by providing

inventories for them to draw upon, thereby providing instant access to the needed valves.28 Goodman

indicated that the willingness of the Chinese FSV producers to maintain a consigned inventory in a U.S.

location was important.29 ***.30 Sanhua International keeps *** consignments in *** or in ***. Sanhua

International typically keeps *** non-consigned inventory stocked in its own warehouse based on its

customers’ rolling forecasts.31 Counsel on behalf of Sanhua argued that these inventories are maintained

solely to fulfill the demands of customers and that the nature of the contracts in the industry makes the

existence of inventories, or lack thereof, irrelevant.32

DUMPING IN THIRD-COUNTRY MARKETS

Exports of FSVs from China are not subject to antidumping or countervailing duty orders in

third-country markets. No questionnaire respondent reported any antidumping duty or countervailing

duty orders on FSVs from China in third-country markets.33 

INFORMATION ON NONSUBJECT COUNTRIES

In assessing whether the domestic industry is materially injured or threatened with material injury

“by reason of subject imports,” the legislative history states “that the Commission must examine all

relevant evidence, including any known factors, other than the dumped or subsidized imports, that may be

injuring the domestic industry, and that the Commission must examine those other factors (including nonsubject imports) ‘to ensure that it is not attributing injury from other sources to the subject imports.’”34

 Nonsubject Source Information

China is believed to account for 100 percent of all imports of FSVs into the United States.35

During the preliminary phase of these investigations, the Commission sought pricing data from U.S.

importers of FSVs from China and all other countries. No imports or pricing data for nonsubject-country

FSVs were reported. With respect to nonsubject-country sources of supply, the Commission sought
 36 Conference transcript, p. 104 (Pardo, Craven). Goodman identified three companies that could potentially

supply the U.S. market with FSVs: P.C. Takashima of Thailand, Unix of Korea, and Fujikoki of Japan. Goodman’s

postconference brief, p. 7. P.C. Takashima Co., Ltd. is a refrigeration components manufacturer and lists service

valves among its main products on its company website found at http://www.pctakashima.com/profile.html, retrieved

April 16, 2008 and ISO 9000, List of Certified Companies in Thailand- ISO 9000, Machinery and Equipment sector,

found at http://www.tisi.go.th/syscer/9000.html, retrieved April 16, 2008. Fujikoki describes itself as a manufacturer

of control devices for refrigeration and air conditioning for automobiles, office, and home use. Its product offerings

include service valves used to connect piping between indoor and outdoor units of air conditioning systems. These

valves have a stem cap similar to imported and domestically produced FSVs. Fujikoki Corp.’s home page, Company

Profile, Products, found at http://www.fujikoki.co.jp/en/product/ro/pr_ro_bulb.html, retrieved April 16, 2008. 

 37 Petitioner’s postconference brief, p. 29. Conference transcript, p. 7 (Dinan), p. 22 (Nelson). 

 38 Petitioner’s postconference brief, p. 13. There is some disagreement over the length of time required for an

OEM’s qualification of a new FSV part or design. Goodman’s witness stated that the qualification process took 12

to 14 weeks but could take longer. Conference transcript, p. 110 (Knights). Parker’s witness stated that “typically

on a brand new product it would be about a year time period.” Conference transcript, p. 40 (Nelson).

VII-6

publicly available information regarding international suppliers of FSVs since 2005 from national import

and export statistics, from conference testimony, and from interviews with industry sources. No

nonsubject-country sources of supply have been identified. 

Overview

As discussed in Part IV of this report, there are no known U.S. imports of FSVs from nonsubject

countries. Counsel representing the participating FSV producers in China confirmed that they are

unaware of FSV imports from any countries other than China.36 The petitioner has argued that the

decision in Bratsk has no bearing on this investigation because 100 percent of FSVs imported into the

United States are from China and therefore there were no nonsubject imports in the market during the

period of investigation.37

According to petitioner, in the foreseeable future there will be only two foreign producers

supplying the U.S. market, DunAn and Sanhua. They cite several barriers to new FSV market entrants

including (1) the OEMs’ lengthy qualification process; (2) alternative uses for copper and brass (the

major raw materials for FSV production); and (3) the capital-intensive nature of FSV production.38
A-1

APPENDIX A

FEDERAL REGISTER NOTICES

70672 Federal Register / Vol. 73, No. 226 / Friday, November 21, 2008 / Notices 

1Commerce defined the subject merchandise in 

its notice of preliminary determination (73 FR 

62952, October 22, 2008). 

to the Commission, as provided in 

section 201.11 of the Commission’s 

rules, no later than 21 days prior to the 

hearing date specified in this notice. A 

party that filed a notice of appearance 

during the preliminary phase of the 

investigation need not file an additional 

notice of appearance during this final 

phase. The Secretary will maintain a 

public service list containing the names 

and addresses of all persons, or their 

representatives, who are parties to the 

investigation. 

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 the final phase of this 

investigation available to authorized 

applicants under the APO issued in the 

investigation, provided that the 

application is made no later than 21 

days prior to the hearing date specified 

in this notice. Authorized applicants 

must represent interested parties, as 

defined by 19 U.S.C. 1677(9), who are 

parties to the investigation. A party 

granted access to BPI in the preliminary 

phase of the investigation need not 

reapply for such access. A separate 

service list will be maintained by the 

Secretary for those parties authorized to 

receive BPI under the APO. 

Staff report.—The prehearing staff 

report in the final phase of this 

investigation will be placed in the 

nonpublic record on February 5, 2009, 

and a public version will be issued 

thereafter, pursuant to section 207.22 of 

the Commission’s rules. 

Hearing.—The Commission will hold 

a hearing in connection with the final 

phase of this investigation beginning at 

9:30 a.m. on February 25, 2009, at the 

U.S. International Trade Commission 

Building. Requests to appear at the 

hearing should be filed in writing with 

the Secretary to the Commission on or 

before February 16, 2009. A nonparty 

who has testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the hearing. All parties and 

nonparties desiring to appear at the 

hearing and make oral presentations 

should attend a prehearing conference 

to be held at 9:30 a.m. on February 18, 

2009, at the U.S. International Trade 

Commission Building. Oral testimony 

and written materials to be submitted at 

the public hearing are governed by 

sections 201.6(b)(2), 201.13(f), and 

207.24 of the Commission’s rules. 

Parties must submit any request to 

present a portion of their hearing 

testimony in camera no later than 7 

business days prior to the date of the 

hearing. 

Written submissions.—Each party 

who is an interested party shall submit 

a prehearing brief to the Commission. 

Prehearing briefs must conform with the 

provisions of section 207.23 of the 

Commission’s rules; the deadline for 

filing is February 12, 2009. Parties may 

also file written testimony in connection 

with their presentation at the hearing, as 

provided in section 207.24 of the 

Commission’s rules, and posthearing 

briefs, which must conform with the 

provisions of section 207.25 of the 

Commission’s rules. The deadline for 

filing posthearing briefs is March 4, 

2009; witness testimony must be filed 

no later than three days before the 

hearing. In addition, any person who 

has not entered an appearance as a party 

to the investigation may submit a 

written statement of information 

pertinent to the subject of the 

investigation, including statements of 

support or opposition to the petition, on 

or before March 4, 2009. On March 18, 

2009, the Commission will make 

available to parties all information on 

which they have not had an opportunity 

to comment. Parties may submit final 

comments on this information on or 

before March 20, 2009, but such final 

comments must not contain new factual 

information and must otherwise comply 

with section 207.30 of the Commission’s 

rules. All written submissions must 

conform with the provisions of section 

201.8 of the Commission’s rules; any 

submissions that contain BPI must also 

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). 

Additional written submissions to the 

Commission, including requests 

pursuant to section 201.12 of the 

Commission’s rules, shall not be 

accepted unless good cause is shown for 

accepting such submissions, or unless 

the submission is pursuant to a specific 

request by a Commissioner or 

Commission staff. 

In accordance with sections 201.16(c) 

and 207.3 of the Commission’s rules, 

each document filed by a party to the 

investigation must be served on all other 

parties to the investigation (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: This investigation is being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.21 of the 

Commission’s rules. 

Issued: November 18, 2008. 

By order of the Commission. 

William R. Bishop, 

Acting Secretary to the Commission. 

[FR Doc. E8–27750 Filed 11–20–08; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 731–TA–1148 (Final)] 

Frontseating Valves From China 

AGENCY: United States International 

Trade Commission. 

ACTION: Scheduling of the final phase of 

an antidumping investigation. 

SUMMARY: The Commission hereby gives 

notice of the scheduling of the final 

phase of antidumping investigation No. 

731–TA–1148 (Final) under section 

735(b) of the Tariff Act of 1930 (19 

U.S.C. 1673d(b)) (the Act) to determine 

whether 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 less-than-fair-value imports 

from China of frontseating service 

valves and certain parts thereof 

(‘‘frontseating service valves’’), provided 

for under subheadings 8415.90.80, 

8481.80.10, 8481.80.30, 8481.80.50, 

8481.90.10, 8481.90.30, or 8481.90.50 of 

the Harmonized Tariff Schedule of the 

United States.1

For further information concerning 

the conduct of this phase of the 

investigation, hearing procedures, 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 C (19 CFR part 207). 

DATES: Effective Date: November 17, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Edward Petronzio (202–205–3176), 

Office of Investigations, U.S. 

International Trade Commission, 500 E 

Street SW., Washington, DC 20436. 


dwashington3 on PRODPC61 with NOTICES
Federal Register / Vol. 73, No. 226 / Friday, November 21, 2008 / Notices 70673 

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 

this investigation may be viewed on the 

Commission’s electronic docket (EDIS) 

at http://edis.usitc.gov. 

SUPPLEMENTARY INFORMATION: 

Background.—The final phase of this 

investigation is being scheduled as a 

result of an affirmative preliminary 

determination by the Department of 

Commerce that imports of frontseating 

service valves from China are being sold 

in the United States at less than fair 

value within the meaning of section 733 

of the Act (19 U.S.C. 1673b). The 

investigation was requested in a petition 

filed on March 19, 2008, by ParkerHannifin Corporation, Cleveland, OH. 

Participation in the investigation and 

public service list.—Persons, including 

industrial users of the subject 

merchandise and, if the merchandise is 

sold at the retail level, representative 

consumer organizations, wishing to 

participate in the final phase of this 

investigation as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

section 201.11 of the Commission’s 

rules, no later than 21 days prior to the 

hearing date specified in this notice. A 

party that filed a notice of appearance 

during the preliminary phase of the 

investigation need not file an additional 

notice of appearance during this final 

phase. The Secretary will maintain a 

public service list containing the names 

and addresses of all persons, or their 

representatives, who are parties to the 

investigation. 

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 the final phase of this 

investigation available to authorized 

applicants under the APO issued in the 

investigation, provided that the 

application is made no later than 21 

days prior to the hearing date specified 

in this notice. Authorized applicants 

must represent interested parties, as 

defined by 19 U.S.C. 1677(9), who are 

parties to the investigation. A party 

granted access to BPI in the preliminary 

phase of the investigation need not 

reapply for such access. A separate 

service list will be maintained by the 

Secretary for those parties authorized to 

receive BPI under the APO. 

Staff report.—The prehearing staff 

report in the final phase of this 

investigation will be placed in the 

nonpublic record on February 24, 2009, 

and a public version will be issued 

thereafter, pursuant to section 207.22 of 

the Commission’s rules. 

Hearing.—The Commission will hold 

a hearing in connection with the final 

phase of this investigation beginning at 

9:30 a.m. on March 10, 2009, at the U.S. 

International Trade Commission 

Building. Requests to appear at the 

hearing should be filed in writing with 

the Secretary to the Commission on or 

before March 3, 2009. A nonparty who 

has testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the hearing. All parties and 

nonparties desiring to appear at the 

hearing and make oral presentations 

should attend a prehearing conference 

to be held at 9:30 a.m. on March 5, 2009, 

at the U.S. International Trade 

Commission Building. Oral testimony 

and written materials to be submitted at 

the public hearing are governed by 

sections 201.6(b)(2), 201.13(f), and 

207.24 of the Commission’s rules. 

Parties must submit any request to 

present a portion of their hearing 

testimony in camera no later than 7 

days prior to the date of the hearing. 

Written submissions.—Each party 

who is an interested party shall submit 

a prehearing brief to the Commission. 

Prehearing briefs must conform with the 

provisions of section 207.23 of the 

Commission’s rules; the deadline for 

filing is March 3, 2009. Parties may also 

file written testimony in connection 

with their presentation at the hearing, as 

provided in section 207.24 of the 

Commission’s rules, and posthearing 

briefs, which must conform with the 

provisions of section 207.25 of the 

Commission’s rules. The deadline for 

filing posthearing briefs is March 17, 

2009; witness testimony must be filed 

no later than three days before the 

hearing. In addition, any person who 

has not entered an appearance as a party 

to the investigation may submit a 

written statement of information 

pertinent to the subject of the 

investigation, including statements of 

support or opposition to the petition, on 

or before March 17, 2009. On April 1, 

2009, the Commission will make 

available to parties all information on 

which they have not had an opportunity 

to comment. Parties may submit final 

comments on this information on or 

before April 3, 2009, but such final 

comments must not contain new factual 

information and must otherwise comply 

with section 207.30 of the Commission’s 

rules. All written submissions must 

conform with the provisions of section 

201.8 of the Commission’s rules; any 

submissions that contain BPI must also 

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). 

Additional written submissions to the 

Commission, including requests 

pursuant to section 201.12 of the 

Commission’s rules, shall not be 

accepted unless good cause is shown for 

accepting such submissions, or unless 

the submission is pursuant to a specific 

request by a Commissioner or 

Commission staff. 

In accordance with sections 201.16(c) 

and 207.3 of the Commission’s rules, 

each document filed by a party to the 

investigation must be served on all other 

parties to the investigation (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: This investigation is being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.21 of the 

Commission’s rules. 

By order of the Commission. 

Issued: November 18, 2008. 

William R. Bishop, 

Acting Secretary to the Commission. 

[FR Doc. E8–27686 Filed 11–20–08; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Notice of Lodging of a Consent Decree 

Under the Comprehensive 

Environmental Response, 

Compensation, and Liability Act 

Notice is hereby given that on 

November 4, 2008, a proposed Consent 

Decree in the case of United States and 

State of North Carolina v. Plantation 

Pipeline Company, Docket No. 3:08–cv– 

500, was lodged with the United States 


dwashington3 on PRODPC61 with NOTICES
10886 Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Notices 

1See Verification of the Sales and Factors 

Response of DunAn in the Antidumping 

Investigation of Frontseating Service Valves from 

the People’s Republic of China, dated January 15, 

2009 (‘‘DunAn Verification Report’’); and 

Verification of the U.S. sales questionnaire 

responses of Zhejiang DunAn Precision Industries 

Co., Ltd., Zhejiang DunAn Hetian Metal Co., Ltd., 

and their U.S. subsidiary DunAn Precision Inc. in 

the Antidumping Investigation of Frontseating 

Service Valves from the People’s Republic of China, 

dated January 14, 2009 (‘‘DunAn CEP Verification 

Report’’). 

2See Verification of the Sales and Factors 

Response of Zhejiang Sanhua Co., Ltd. in the 

Antidumping Investigation of Frontseating Service 

Valves from the People’s Republic of China, dated 

January 16, 2009 (‘‘Sanhua Verification Report’’), 

and Verification of the U.S. Sales Response of 

Zhejiang Sanhua Co., Ltd. and Sanhua International 

Inc. in the Antidumping Investigation of 

Frontseating Service Valves from the People’s 

Republic of China, dated January 16, 2009 (‘‘Sanhua 

CEP Verification Report’’). 

The preliminary results for these 

administrative reviews are currently due 

no later than April 2, 2009. 

Statutory Time Limits 

Section 751(a)(3)(A) of the Tariff Act 

of 1930, as amended (‘‘the Act’’), 

requires the Department to issue the 

preliminary results of an administrative 

review within 245 days after the last day 

of the anniversary month of an order for 

which a review is requested and a final 

determination within 120 days after the 

date on which the preliminary results 

are published. If it is not practicable to 

complete the review within the time 

period, section 751(a)(3)(A) of the Act 

allows the Department to extend these 

deadlines to a maximum of 365 days 

and 180 days, respectively. 

Extension of Time Limit for Preliminary 

Results 

The Department finds that it is not 

practicable to complete the preliminary 

results of this review within the original 

time frame because additional 

information from the respondents is 

necessary to complete our analysis and 

we will not have sufficient time to 

obtain and analyze the new information 

prior to the current deadline for the 

preliminary results (i.e., 245 days). 

Furthermore, we require additional time 

to conduct verifications in the review of 

stainless steel sheet and strip in coils 

from Japan. Therefore, the Department 

is extending the time limit for 

completion of the preliminary results by 

120 days, in accordance with section 

751(a)(3)(A) of the Act. The preliminary 

results are now due no later than July 

31, 2009. The final results continue to 

be due 120 days after publication of the 

preliminary results. 

We are issuing and publishing this 

notice in accordance with sections 

751(a)(1) and 777(i)(1) of the Act. 

Dated: March 9, 2009. 

John M. Andersen, 

Acting Deputy Assistant Secretary for 

Antidumping and Countervailing Duty 

Operations. 

[FR Doc. E9–5493 Filed 3–12–09; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–933] 

Frontseating Service Valves From the 

People’s Republic of China: Final 

Determination of Sales at Less Than 

Fair Value and Final Negative 

Determination of Critical 

Circumstances 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

DATES: Effective Date: March 13, 2009. 

SUMMARY: The Department of Commerce 

(the ‘‘Department’’) has determined that 

frontseating service valves (‘‘FSVs’’) 

from the People’s Republic of China 

(‘‘PRC’’) are being, or are likely to be, 

sold in the United States at less than fair 

value (‘‘LTFV’’) as provided in section 

735 of the Tariff Act of 1930, as 

amended (‘‘the Act’’). The estimated 

margins of sales at LTFV are shown in 

the ‘‘Final Determination Margins’’ 

section of this notice. 

FOR FURTHER INFORMATION CONTACT: 

Eugene Degnan or Lori Apodaca, AD/ 

CVD Operations, Office 8, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW., Washington, DC 20230; 

telephone: (202) 482–0414 or (202) 482– 

4551, respectively. 

SUPPLEMENTARY INFORMATION: 

Case History 

The Department published its 

preliminary determination of sales at 

LTFV on October 22, 2008. See 

Frontseating Service Valves from the 

People’s Republic of China: Preliminary 

Determination of Sales at Less Than 

Fair Value, Preliminary Negative 

Determination of Critical 

Circumstances, and Postponement of 

Final Determination, 73 FR 62952 

(October 22, 2008) (‘‘Preliminary 

Determination’’). The period of 

investigation (‘‘POI’’) is July 1, 2007, to 

December 31, 2007. 

Between November 10 and December 

18, 2008, the Department conducted 

verifications of Zhejiang DunAn 

Precision Industries Co., Ltd., Zhejiang 

DunAn Hetian Metal Co., Ltd. (‘‘DunAn 

Hetian’’) and their U.S. subsidiary, 

DunAn Precision, Inc. (‘‘DunAn 

Precision’’) (collectively, ‘‘DunAn’’) 1

and Zhejiang Sanhua Co., Ltd. 

(‘‘Zhejiang Sanhua’’) and Sanhua 

International Inc. (‘‘Sanhua 

International’’) (collectively 

‘‘Sanhua’’).2 See the ‘‘Verification’’ 

section below for additional 

information. 

We invited interested parties to 

comment on the Preliminary 

Determination and on January 26, 2009, 

Parker-Hannifin Corporation 

(‘‘Petitioner’’) and DunAn filed case 

briefs. On February 2, 2009, Petitioner, 

DunAn and Sanhua filed rebuttal briefs. 

The Department held a hearing on 

February 12, 2009. 

Verification 

As provided in section 782(i) of the 

Act, we verified the information 

submitted by DunAn and Sanhua for 

use in our final determination. See the 

Department’s verification reports on the 

record of this investigation in the 

Central Records Unit (‘‘CRU’’), Room 

1117 of the main Department building, 

with respect to these entities. For all 

verified companies, we used standard 

verification procedures, including 

examination of relevant accounting and 

production records, as well as original 

source documents provided by 

respondents. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by parties to this 

investigation are addressed in the 

‘‘Investigation of Frontseating Service 

Valves from the People’s Republic of 

China: Issues and Decision 

Memorandum’’ (‘‘Issues and Decision 

Memorandum’’), dated concurrently 

with this notice and which is hereby 

adopted by this notice. A list of the 

issues which parties raised and to 

which we respond in the Issues and 

Decision Memorandum is attached to 

this notice as Appendix I. The Issues 

and Decision Memorandum is a public 

document and is on file in the CRU, and 

is accessible on the Web http:// 

trade.gov/ia/index.asp. The paper copy 


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3The frontseating service valve differs from a 

backseating service valve in that a backseating 

service valve has two sealing surfaces on the valve 

stem. This difference typically incorporates a valve 

stem on a backseating service valve to be machined 

of steel, where a frontseating service valve has a 

brass stem. The backseating service valve dual stem 

seal (on the back side of the stem), creates a metal 

to metal seal when the valve is in the open position, 

thus, sealing the stem from the atmosphere. 

and electronic version of the 

memorandum are identical in content. 

Changes Since the Preliminary 

Determination 

Based on our analysis of information 

on the record of this investigation, we 

have made changes to the margin 

calculations for the final determination 

for all mandatory respondents. 

General Issues 

Calculation of Surrogate Financial 

Ratios 

• For the final determination, we are 

calculating the surrogate financial ratios 

using the statements of Siddhi Cast 

Private Limited (‘‘Siddhi’’), Pyrocast 

India Private Ltd. (‘‘Pyrocast’’), and 

Dharpat Casting Private Ltd (‘‘Dharpat’’). 

See Issues and Decision Memorandum 

at Comment 1. 

Calculation of Surrogate Values 

• For the final determination, we are 

valuing the inputs of brass connection 

tube heads and connection tube caps 

using WTA data for Indian HTS 

category 7412.20.19. See Issues and 

Decision Memorandum at Comments 6f 

and 6h. 

• For the final determination, we are 

valuing valve cores using WTA data for 

Indian HTS category 8481.90.90. See 

Issues and Decision Memorandum at 7. 

Company-Specific Issues 

DunAn 

• For the final determination, we are 

using the U.S. sales and factor of 

production (‘‘FOP’’) databases 

submitted by DunAn on January 22, 

2009. 

• For the final determination, we 

applied, as partial AFA to certain of 

DunAn’s December 2007 sales, a rate of 

55.62 percent (the rate from the 

initiation of this proceeding) which 

constitutes the highest rate from this 

proceeding. See Memorandum regarding 

‘‘Application of Partial Adverse Facts 

Available for Zhejiang DunAn Precision 

Industries Co., Ltd., Zhejiang DunAn 

Hetian Metal Co., Ltd., and their U.S. 

subsidiary DunAn Precision Inc. in the 

Antidumping Investigation of 

Frontseating Service Valves from the 

People’s Republic of China’’ (March 6, 

2009) (‘‘Partial AFA Memo’’) and Issues 

and Decision Memorandum at Comment 

12c. 

• For the final determination, we 

applied, as partial AFA to the inventory 

carrying cost (‘‘ICC’’) for all of DunAn’s 

sales during the months of October, 

November and December 2007, the 

highest ICC calculated for any sale 

during the POI. See Partial AFA Memo 

and Issues and Decision Memorandum 

at Comment 12c. 

• For the final determination, we are 

allowing, in part, DunAn’s claimed byproduct offsets for scrap sold, and scrap 

recycled into the production of subject 

merchandise. See Issues and Decision 

Memorandum at Comment 12j, and 

DunAn Analysis Memorandum for the 

Final Determination, dated March 6, 

2009. 

Sanhua 

• For the final determination, we are 

using the U.S. sales and FOP databases 

submitted by Sanhua on January 22, 

2009. However, for eight transactions in 

the U.S. sales database, which did not 

contain price or selling expense data, 

we are applying, as facts available, the 

average margin calculated for each of 

the CONNUMs associated with these 

sales. See Use of Facts Available, below. 

• For the final determination, we are 

allowing, in part, the by-product offset 

for scrap claimed by Sanhua. See Issues 

and Decision Memorandum at Comment 

10g. 

• For the final determination, to 

calculate normal value for certain sales 

that were sold during the POI but 

produced prior to the POI, we are using 

the FOPs of subject merchandise 

produced during the POI with the 

nearest similar physical characteristics 

(as demonstrated by the control 

numbers (‘‘CONNUMs’’)) to those 

products. See Sanhua Analysis 

Memorandum for the Final 

Determination. 

Scope of Investigation 

The merchandise covered by this 

investigation is frontseating service 

valves, assembled or unassembled, 

complete or incomplete, and certain 

parts thereof. Frontseating service 

valves contain a sealing surface on the 

front side of the valve stem that allows 

the indoor unit or outdoor unit to be 

isolated from the refrigerant stream 

when the air conditioning or 

refrigeration unit is being serviced. 

Frontseating service valves rely on an 

elastomer seal when the stem cap is 

removed for servicing and the stem cap 

metal to metal seat to create this seal to 

the atmosphere during normal 

operation.3

For purposes of the scope, the term 

‘‘unassembled’’ frontseating service 

valve means a brazed subassembly 

requiring any one or more of the 

following processes: the insertion of a 

valve core pin, the insertion of a valve 

stem and/or O ring, the application or 

installation of a stem cap, charge port 

cap or tube dust cap. The term 

‘‘complete’’ frontseating service valve 

means a product sold ready for 

installation into an air conditioning or 

refrigeration unit. The term 

‘‘incomplete’’ frontseating service valve 

means a product that when sold is in 

multiple pieces, sections, subassemblies 

or components and is incapable of being 

installed into an air conditioning or 

refrigeration unit as a single, unified 

valve without further assembly. 

The major parts or components of 

frontseating service valves intended to 

be covered by the scope under the term 

‘‘certain parts thereof’’ are any brazed 

subassembly consisting of any two or 

more of the following components: a 

valve body, field connection tube, 

factory connection tube or valve charge 

port. The valve body is a rectangular 

block, or brass forging, machined to be 

hollow in the interior, with a generally 

square shaped seat (bottom of body). 

The field connection tube and factory 

connection tube consist of copper or 

other metallic tubing, cut to length, 

shaped and brazed to the valve body in 

order to create two ports, the factory 

connection tube and the field 

connection tube, each on opposite sides 

of the valve assembly body. The valve 

charge port is a service port via which 

a hose connection can be used to charge 

or evacuate the refrigerant medium or to 

monitor the system pressure for 

diagnostic purposes. 

The scope includes frontseating 

service valves of any size, configuration, 

material composition or connection 

type. Frontseating service valves are 

classified under subheading 

8481.80.1095, and also have been 

classified under subheading 

8415.90.80.85, of the Harmonized Tariff 

Schedule of the United States 

(‘‘HTSUS’’). It is possible for 

frontseating service valves to be 

manufactured out of primary materials 

other than copper and brass, in which 

case they would be classified under 

HTSUS subheadings 8481.80.3040, 

8481.80.3090, or 8481.80.5090. In 

addition, if unassembled or incomplete 

frontseating service valves are imported, 

the various parts or components would 

be classified under HTSUS subheadings 

8481.90.1000, 8481.90.3000, or 

8481.90.5000. The HTSUS subheadings 

are provided for convenience and 

customs purposes, but the written 


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4See Frontseating Service Valves from the 

People’s Republic of China: Notice of Initiation of 

Antidumping Duty Investigation, 73 FR at 20250, 

2025 (April 15, 2008). 

description of the scope of this 

proceeding is dispositive. 

Scope Comments 

We set aside a period for interested 

parties to raise issues regarding product 

coverage. See Antidumping Duties; 

Countervailing Duties; Final Rule, 62 FR 

27296, 27323 (May 19, 1997). In our 

Initiation Notice, we encouraged parties 

to submit comments regarding the scope 

of the merchandise under investigation 

by April 28, 2008. On April 28, 2008, 

Sanhua submitted scope comments. No 

other party submitted scope comments. 

On May 8, 2008, Petitioner submitted 

rebuttal scope comments. No other party 

submitted rebuttal comments. Sanhua 

requested that the Department limit the 

scope to FSVs made of brass or copper 

and not include forged products with 

integrated feet because it believes the 

scope as written covers too broad a 

range of service valves. Sanhua argues 

that service valves may erroneously be 

classified as FSVs when they enter the 

United States under the current scope 

description. Specifically, Sanhua 

contends that the scope as written 

currently suggests that FSVs are made of 

any material. Sanhua argues that, in 

fact, FSVs must stand up to certain 

operating conditions and brass FSVs are 

the only product that meet those 

conditions and demands. Petitioner 

argues that the Department should not 

consider any changes that would limit 

the scope to specific material 

composition or mounting type or that 

would attempt to remove all forged 

valve bodies from the scope. 

In the Initiation Notice,4 we stated 

that the scope of merchandise includes 

FSVs of any size, configuration, material 

composition or connection type. FSVs 

are classified under subheading 

8481.80.1095, and also have been 

classified under subheading 

8415.90.80.85 of the HTSUS. 

Additionally, we stated that it is 

possible for FSVs to be manufactured 

out of primary materials other than 

copper and brass, in which case they 

would be classified under HTSUS 

subheadings 8481.80.3040, 

8481.80.3090, or 8481.80.5090. In the 

Preliminary Determination we stated 

that, based upon the above, we have 

preliminarily determined that the scope 

of the merchandise under consideration 

as it is currently written clearly 

describes the scope of the merchandise 

under consideration. No party 

submitted comments on scope issues 

addressed in the Preliminary 

Determination. Therefore, we are not 

making any changes to scope of the 

proceeding in this final determination. 

Surrogate Country 

In the Preliminary Determination, we 

stated that we had selected India as the 

appropriate surrogate country to use in 

this investigation for the following 

reasons: (1) It is a significant producer 

of comparable merchandise; (2) it is at 

a similar level of economic development 

comparable to that of the PRC; and (3) 

we have reliable data from India that we 

can use to value the factors of 

production. See Preliminary 

Determination at 62954. For the final 

determination, we received no 

comments and made no changes to our 

findings with respect to the selection of 

a surrogate country. 

Separate Rates 

In proceedings involving nonmarket 

economy (‘‘NME’’) countries, the 

Department begins with a rebuttable 

presumption that all companies within 

the country are subject to government 

control and, thus, should be assigned a 

single antidumping duty deposit rate. It 

is the Department’s policy to assign all 

exporters of merchandise subject to an 

investigation in an NME country this 

single rate unless an exporter can 

demonstrate that it is sufficiently 

independent so as to be entitled to a 

separate rate. See Final Determination of 

Sales at Less Than Fair Value: Sparklers 

from the People’s Republic of China, 56 

FR 20588 (May 6, 1991) (‘‘Sparklers’’), 

as amplified by Notice of Final 

Determination of Sales at Less Than 

Fair Value: Silicon Carbide from the 

People’s Republic of China, 59 FR 22585 

(May 2, 1994) (‘‘Silicon Carbide’’), and 

19 CFR 351.107(d). 

In the Preliminary Determination, we 

found that DunAn and Sanhua 

demonstrated their eligibility for 

separate-rate status. For the final 

determination, we continue to find that 

the evidence placed on the record of 

this investigation by DunAn and Sanhua 

demonstrates both a de jure and de facto 

absence of government control, with 

respect to their respective exports of the 

merchandise under investigation, and, 

thus both are eligible for separate rate 

status. 

Use of Facts Available 

Section 776(a)(2) of the Act, provides 

that, if an interested party: (A) 

Withholds information that has been 

requested by the Department; (B) fails to 

provide such information in a timely 

manner or in the form or manner 

requested subject to sections 782(c)(1) 

and (e) of the Act; (C) significantly 

impedes a proceeding under the 

antidumping statute; or (D) provides 

such information but the information 

cannot be verified as provided in 

section 782(i) of the Act, the Department 

shall, subject to subsection 782(d) of the 

Act, use facts otherwise available in 

reaching the applicable determination. 

Section 782(e) of the Act states that 

the Department shall not decline to 

consider information deemed 

‘‘deficient’’ under section 782(d) of the 

Act if: (1) The information is submitted 

by the established deadline; (2) the 

information can be verified; (3) the 

information is not so incomplete that it 

cannot serve as a reliable basis for 

reaching the applicable determination; 

(4) the interested party has 

demonstrated that it acted to the best of 

its ability; and (5) the information can 

be used without undue difficulties. 

Furthermore, section 776(b) of the Act 

states that if the Department ‘‘finds that 

an interested party has failed to 

cooperate by not acting to the best of its 

ability to comply with a request for 

information from the administering 

authority or the Commission, the 

administering authority or the 

Commission (as the case may be), in 

reaching the applicable determination 

under this title, may use an inference 

that is adverse to the interests of that 

party in selecting from among the facts 

otherwise available.’’ See also 

Statement of Administrative Action 

accompanying the Uruguay Round 

Agreements Act, H.R. Rep. No. 103–316, 

Vol. 1 (1994) (‘‘SAA’’) at 870. 

For this final determination, in 

accordance with sections 773(c)(3)(A) 

and (B) of the Act and section 776(a)(2) 

and 776(b) of the Act, we have 

determined that the use of total adverse 

facts available (‘‘AFA’’) is warranted for 

the PRC entity, and partial adverse facts 

available is warranted for both DunAn 

and Sanhua, as discussed below. 

The PRC-Wide Entity 

Because we begin with the 

presumption that all companies within 

an NME country are subject to 

government control and because only 

the companies listed under the ‘‘Final 

Determination Margins’’ section below 

have overcome that presumption, we are 

applying a single antidumping rate—the 

PRC-wide rate—to all other exporters of 

subject merchandise from the PRC. See, 

e.g., Synthetic Indigo from the People’s 

Republic of China: Notice of Final 

Determination of Sales at Less Than 

Fair Value, 65 FR 25706 (May 3, 2000). 

The PRC-wide rate applies to all entries 

of subject merchandise except for 

entries from the respondents identified 


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as receiving a separate rate in the ‘‘Final 

Determination Margins’’ section below. 

In the Preliminary Determination, the 

Department found that the PRC-wide 

entity did not respond to our requests 

for information because record evidence 

indicates there were more exporters of 

FSVs from the PRC during the POI than 

those that responded to the Q&V 

questionnaire or the full antidumping 

questionnaire. Therefore, in the 

Preliminary Determination, we treated 

these PRC exporters as part of the PRCwide entity because they did not 

demonstrate that they operate free of 

government control over their export 

activities. No additional information 

was placed on the record with respect 

to these entities after the Preliminary 

Determination. In addition, because the 

PRC-wide entity has not provided the 

Department with the requested 

information, pursuant to section 

776(a)(2)(A), (B) and (C) of the Act, the 

Department continues to find that the 

use of facts available is appropriate to 

determine the PRC-wide rate. Section 

776(b) of the Act provides that, in 

selecting from among the facts 

otherwise available, the Department 

may employ an adverse inference if an 

interested party fails to cooperate by not 

acting to the best of its ability to comply 

with requests for information. See 

Notice of Final Determination of Sales 

at Less Than Fair Value: Certain ColdRolled Flat-Rolled Carbon-Quality Steel 

Products from the Russian Federation, 

65 FR 5510, 5518 (February 4, 2000). 

See also SAA at 870. We have 

determined that, because the PRC-wide 

entity did not respond to our request for 

information, it has failed to cooperate to 

the best of its ability. Therefore, the 

Department finds that, in selecting from 

among the facts otherwise available, an 

adverse inference is warranted. 

DunAn 

The Department finds that it has 

insufficient information on the record to 

construct an accurate and otherwise 

reliable margin with respect to certain of 

DunAn’s December 2007 U.S. sales, and 

to value DunAn’s inventory carrying 

cost (‘‘ICC’’) for all sales for the months 

of October, November and December 

2007. Further, we find that the 

information is not on the record, and 

that DunAn significantly impeded this 

proceeding, and provided information 

that could not be verified, pursuant to 

sections 776(a)(1) and (2) of the Act. 

Accordingly, the Department is using 

the facts otherwise available. Moreover, 

because the Department finds that 

DunAn failed to cooperate to the best of 

its ability, pursuant to Section 776(b) of 

the Act, the Department has determined 

to use an adverse inference when 

applying partial facts available in this 

review. Accordingly, as partial AFA for 

certain U.S. sales, the Department is 

applying the rate from the initiation, 

which is 55.62 percent. 

Additionally, to value ICC for sales 

that took place in the months of 

October, November or December 2007, 

we have selected as partial AFA the 

highest ICC expense calculated for any 

sale during the POI. For a full 

discussion of this issue see Partial AFA 

Memo. 

Sanhua 

On January 16, 2009, subsequent to 

the verification of Sanhua, we requested 

that Sanhua submit revised FOP and 

U.S. sales data bases, incorporating all 

prior corrections and any additional 

corrections to its data based on the 

results of the verification. In that 

request, we notified Sanhua that upon 

receipt of a response that is incomplete 

or deficient, the Department may 

proceed with the use of facts available. 

Analysis of the data submitted in the 

U.S. sales database shows that for eight 

transactions Sanhua did not include 

either the sales prices of the FSVs or the 

selling expenses associated with those 

sales. Because the Department did not 

alert Sanhua to this deficiency, and 

because these eight sales comprise a 

very small percentage of overall sales 

that would not have a significant effect 

on the margin calculation, we have 

determined to apply to these sales, as 

facts available, the average margin 

calculated for each of the CONNUMs 

associated with these sales. 

Corroboration 

Section 776(c) of the Act provides 

that, when the Department relies on 

secondary information in using the facts 

otherwise available, it must, to the 

extent practicable, corroborate that 

information from independent sources 

that are reasonably at its disposal. We 

have interpreted ‘‘corroborate’’ to mean 

that we will, to the extent practicable, 

examine the reliability and relevance of 

the information submitted. See Notice of 

Final Determination of Sales at Less 

Than Fair Value: Certain Cold-Rolled 

Flat-Rolled Carbon-Quality Steel 

Products From Brazil, 65 FR 5554, 5568 

(February 4, 2000); see, e.g., Tapered 

Roller Bearings and Parts Thereof, 

Finished and Unfinished, From Japan, 

and Tapered Roller Bearings, Four 

Inches or Less in Outside Diameter, and 

Components Thereof, From Japan; 

Preliminary Results of Antidumping 

Duty Administrative Reviews and 

Partial Termination of Administrative 

Reviews, 61 FR 57391, 57392 (November 

6, 1996), unchanged in Tapered Roller 

Bearings and Parts Thereof, Finished 

and Unfinished, From Japan, and 

Tapered Roller Bearings, Four Inches or 

Less in Outside Diameter, and 

Components Thereof, From Japan: Final 

Results of Antidumping Duty 

Administrative Reviews and 

Termination in Part, 62 FR 11825 

(March 13, 1997). 

At the Preliminary Determination, in 

accordance with section 776(c) of the 

Act, we corroborated our AFA margin 

by comparing it to the margins we found 

for the respondents. We found that the 

margin from the initiation, 55.62 

percent, had probative value because it 

was in the range of margins we found 

for the mandatory respondents. 

Similarly, for the final determination, 

we have also compared the margin from 

the initiation to the margins calculated 

for the respondents. We found that the 

margin from the initiation is within the 

range of the margins calculated for the 

mandatory respondents in this 

investigation. 

Because no parties commented on the 

selection of the PRC-wide rate, we 

continue to find that the margin of 55.62 

percent has probative value. 

Accordingly, we find that the rate of 

55.62 percent is corroborated within the 

meaning of section 776(c) of the Act. 

Critical Circumstances 

In the Preliminary Determination, we 

did not find that critical circumstances 

exist with respect to either the PRCwide entity or the mandatory 

respondents. For this final 

determination, we continue to find that 

critical circumstances do not exist with 

respect to either the PRC-wide entity or 

the mandatory respondents. For a 

detailed discussion of our findings, see 

Issues and Decision Memorandum at 

Comment 2. 

Combination Rates 

In the Preliminary Determination, the 

Department stated that it would 

calculate combination rates for the 

respondents that are eligible for a 

separate rate in this investigation. See 

Preliminary Determination, 73 FR at 

62961. This change in practice is 

described in Policy Bulletin 05.1, 

‘‘Separate Rates Practice and 

Application of Combination Rates in 

Antidumping Investigations Involving 

Non-Market Economy Countries.’’ 

available at http://ia.ita.doc.gov/policy/ 

index.html. 

Final Determination Margins 

We determine that the following 

percentage weighted-average margins 

exist for the POI: 


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Exporter/Producer combination 

Percent 

margin 

Exporter: Zhejiang Sanhua Co., Ltd. 28.44 

Producer: Zhejiang Sanhua Co., Ltd.

Exporter: Zhejiang DunAn Hetian 

Metal Co., Ltd.

12.95 

Producer: Zhejiang DunAn Hetian 

Metal Co., Ltd.

PRC-Wide Entity * ............................. 55.62 

* The PRC-wide entity includes Tianda. 

Disclosure 

We will disclose the calculations 

performed within five days of the date 

of publication of this notice to parties in 

this proceeding in accordance with 19 

CFR 351.224(b). 

Continuation of Suspension of 

Liquidation 

In accordance with section 

735(c)(1)(B) of the Act, we are directing 

U.S. Customs and Border Protection 

(‘‘CBP’’) to continue to suspend 

liquidation of all imports of subject 

merchandise entered, or withdrawn 

from warehouse, for consumption on or 

after October 22, 2008, the date of 

publication of the Preliminary 

Determination in the Federal Register. 

We will instruct CBP to continue to 

require a cash deposit or the posting of 

a bond for all companies based on the 

estimated weighted-average dumping 

margins shown above. The suspension 

of liquidation instructions will remain 

in effect until further notice. 

ITC Notification 

In accordance with section 735(d) of 

the Act, we have notified the 

International Trade Commission (‘‘ITC’’) 

of our final determination of sales at 

LTFV. As our final determination is 

affirmative, in accordance with section 

735(b)(2) of the Act, within 45 days the 

ITC will determine whether the 

domestic industry in the United States 

is materially injured, or threatened with 

material injury, by reason of imports or 

sales (or the likelihood of sales) for 

importation of the subject merchandise. 

If the ITC determines that material 

injury or threat of material injury does 

not exist, the proceeding will be 

terminated and all securities posted will 

be refunded or canceled. If the ITC 

determines that such injury does exist, 

the Department will issue an 

antidumping duty order directing CBP 

to assess antidumping duties on all 

imports of the subject merchandise 

entered, or withdrawn from warehouse, 

for consumption on or after the effective 

date of the suspension of liquidation. 

Notification Regarding APO 

This notice also serves as a reminder 

to the parties subject to administrative 

protective order (‘‘APO’’) of their 

responsibility concerning the 

disposition of proprietary information 

disclosed under APO in accordance 

with 19 CFR 351.305. Timely 

notification of return or destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination and notice are 

issued and published in accordance 

with sections 735(d) and 777(i)(1) of the 

Act. 

Dated: March 6, 2009. 

Ronald K. Lorentzen, 

Acting Assistant Secretary for Import 

Administration. 

APPENDIX I—LIST OF ISSUES IN THE 

ACCOMPANYING ISSUES AND 

DECISION MEMORANDUM 

I. General Issues 

Comment 1: Selection of Surrogate Financial 

Statements and Calculation of the 

Surrogate Financial Ratios 

Comment 1a: Treatment of Job Work 

Expenses 

Comment 1b: Treatment of Commissions, 

Advertising and Other Selling Expenses 

Comment 1c: Treatment of Other Income 

Earned From Non-Essential Business 

Comment 1d: Treatment of Taxes Other 

Than Corporate Income Tax or Value 

Added Tax 

Comment 1e: Treatment of Generator 

Expenses 

Comment 1f: Treatment of ‘‘Gratuity’’ 

Benefit Program Expenses 

Comment 2: Whether Critical Circumstances 

Exist for Both Respondents and the PRCEntity 

Comment 3: Regression Analysis for the 

Labor Wage Rate 

Comment 4: Whether to Exclude Imports 

from Japan, France and the UAE in the 

Surrogate Value Calculation for Brass Bar 

Comment 5: Whether to Exclude Imports of 

Sri Lankan Re-Melted Brass Ingots and 

Cast ‘‘Wire Bars’’ from the Surrogate 

Value Calculation for Brass Bar 

Comment 6: Valuation of Valve Components 

Other Than Valve Cores 

Comment 7: Valuation of Valve Cores 

Comment 8: Surrogate Value Source for 

Electricity 

II. Sanhua-Specific Issues 

Comment 9: Whether to Apply Total Adverse 

Facts Available to Sanhua 

Comment 10: Whether to Apply Partial 

Adverse Facts Available to Sanhua 

Comment 10a: Certain Unreported U.S. 

Sales 

Comment 10b: Certain Omitted Credit 

Memos 

Comment 10c: Unreported Shrink Wrap 

Comment 10d: Pallet Use 

Comment 10e: Material and Exchange Rate 

Surcharges 

Comment 10f: Missing International 

Movement Expenses 

Comment 10g: Scrap Offsets 

Comment 10h: Unreported Electricity 

Consumption 

Comment 10i: Unreported Ammonia 

Consumption 

Comment 10j: Weight of Cardboard Cartons 

Comment 10k: Plastic Bags for Scrap 

III. DunAn-Specific Issues 

Comment 11: Whether to Apply Total 

Adverse Facts Available to DunAn 

Comment 12: Whether to Apply Partial 

Adverse Facts Available to DunAn 

Comment 12a: Affiliation With U.S. 

Customer 

Comment 12b: Whether DunAn Reported 

Wrong Date of Sale 

Comment 12c: Whether DunAn Failed to 

Reconcile Quantity and Value and 

Completeness 

Comment 12d: Reported Weights 

Comment 12e: Cost Reconciliation 

Comment 12f: Brass Bar and Other 

Materials 

Comment 12g: Electricity Consumption 

Comment 12h: Ammonia Consumption 

Comment 12i: Labor Consumption 

Comment 12j: By-Product Offset for Brass 

Scrap 

Comment 13: Weight of Pallets Consumed 

[FR Doc. E9–5480 Filed 3–12–09; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

Mission Statement; Aerospace 

Supplier Development Mission to 

Canada; May 5–6, 2009 

AGENCY: Department of Commerce. 

ACTION: Notice. 

Mission Description 

The U.S. Department of Commerce, 

International Trade Administration, 

U.S. and Foreign Commercial Service in 

Canada is organizing an Aerospace 

Supplier Development Mission to 

Montreal, May 5–6, 2009. This 

aerospace mission is designed to 

provide U.S. aerospace export-ready, 

small to medium-sized companies 

(SMEs) with a highly efficient and costeffective opportunity to establish 

profitable commercial relations with 

prospective agents, distributors and 

end-users in Canada’s aerospace market. 

Participating U.S. companies will 

receive market intelligence briefings by 

Canadian industry experts, networking 

opportunities and most importantly, 

pre-scheduled, pre-screened one-on-one 

meetings with Canadian aerospace 

company representatives. Mission 

participants will also benefit from 


sroberts on PROD1PC70 with NOTICES
 
B-1

APPENDIX B

LIST OF HEARING WITNESSES

CALENDAR OF PUBLIC HEARING

Those listed below appeared as witnesses at the United States International Trade Commission’s

hearing:

Subject: Frontseating Service Valves from China

Inv. No.: 731-TA-1148 (Final)

Date and Time: March 10, 2009 - 9:30 a.m.

Sessions were held in connection with this investigation in the Main Hearing Room (room 101), 500

E Street, SW, Washington, DC.

OPENING REMARKS:

Petitioner (Donald R. Dinan, Roetzel & Andress, LPA)

Respondents (David J. Craven, Riggle & Craven)

In Support of the Imposition of an Antidumping Duty Order:

Roetzel & Andress, LPA

Washington, DC

on behalf of

Parker-Hannifin Corporation

Darryl Miller, General Manager, Climate Systems Division, Parker-Hannifin

Chris J. Nelson, Division Market Development Manager, 

Climate Systems Division, Parker-Hannifin

Dr. Patrick Magrath, Managing Director, Georgetown Economic Services, LLC

Brad Hudgens, Economist, Georgetown Economic Services, LLC

Donald R. Dinan) – OF COUNSEL

 Craig A. Koenigs)

B-3
In Opposition to the Imposition of an Antidumping Duty Order:

Riggle & Craven

Chicago, IL

on behalf of

Zhejiang Sanhua Co., Ltd.

Mark Jin, Vice President, Sanhua International, Inc.

Tony Guo, Marketing Manager, Sanhua International, Inc.

David J. Craven – OF COUNSEL

Grunfeld, Desiderio, Lebowitz, Silverman & Kledstadt LLP

Washington, DC

on behalf of

Zhejiang DunAn Hetian Metal Co., Ltd.

Ned H. Marshak – OF COUNSEL

REBUTTAL/CLOSING REMARKS:

Petitioner (Donald R. Dinan, Roetzel & Andress, LPA)

Respondents (David J. Craven, Riggle & Craven)

B-4
C-1

APPENDIX C

SUMMARY DATA

C-3

Table C-1

FSVs: Summary data concerning the U.S. market, 2005-08

* * * * * * *
 
D-1

APPENDIX D

PURCHASERS’ REPORTED PURCHASES BY SOURCE

D-3

Table D-1

FSVs: Purchases of FSVs, by source, as reported by purchasers, 2005-2007, January-September 2007,

and January-September 2008

* * * * * * *