40434 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

all-others rate. Where the data is not

available to weight average the facts

available rates, the Statement of

Administrative Action accompanying

the URAA, H.R. Rep. No. 103–316,

(‘‘SAA’’), at 873, provides that we may

use other reasonable methods. Inasmuch

as we do not have the data necessary to

weight average the respondents’ facts

available margins, we are continuing to

base the all-others rate on a simple

average of the margins in the petition (as

adjusted by the Department), 19.45

percent.

Continuation of Suspension of

Liquidation

In accordance with section

735(c)(4)(A) of the Act, we are directing

the Customs Service to continue to

suspend liquidation of all entries of

stainless steel wire rod from Germany,

as defined in the ‘‘Scope of

Investigation’’ section of this notice, that

are entered, or withdrawn from

warehouse, for consumption on or after

March 5, 1998, the date of publication

of our preliminary determination in the

Federal Register. For these entries, the

Customs Service will require a cash

deposit or posting of a bond equal to the

estimated amount by which the normal

value exceeds the export price as shown

below. This suspension of liquidation

will remain in effect until further notice.

MFR/Producer/Exporter Margin

percentage

Krupp Edelstahlprofile

GmbH, Krupp Hoesch

Steel Products ................... 21.28

BGH Edelstahl Freital GmbH 21.28

All-Others .............................. 19.45

The all-others rate applies to all

entries of subject merchandise except

for the entries of merchandise produced

by the exporters/manufacturers listed

above.

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the

International Trade Commission (‘‘ITC’’)

of our determination. As our final

determination is affirmative, the ITC

will determine whether these imports

are causing material injury, or threat of

material injury, to the industry within

45 days of its receipt of this notification.

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

Customs officials 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merchandise entered, or withdrawn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.

This determination is published

pursuant to section 777(i) of the Act.

Dated: July 20, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 98–20019 Filed 7–28–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

(A–588–843)

Notice of Final Determination of Sales

at Less Than Fair Value: Stainless

Steel Wire Rod from Japan

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Sunkyu Kim or John Maloney, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW, Washington, D.C. 20230;

telephone: (202) 482–2613 or (202) 482–

1503, respectively.

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (the Act), are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all citations

to the Department of Commerce’s (the

Department’s) regulations are to the

regulations codified at 19 CFR part 351,

62 FR 27296 (May 19, 1997).

Final Determination

We determine that stainless steel wire

rod (SSWR) from Japan is being sold in

the United States at less than fair value

(LTFV), as provided in section 735 of

the Act. The estimated margins of sales

at LTFV are shown in the ‘‘Continuation

of Suspension of Liquidation’’ section of

this notice, below.

Case History

Since the preliminary determination

in this investigation on February 25,

1998 (see Notice of Preliminary

Determination of Sales at Less Than

Fair Value and Postponement of Final

Determination: Stainless Steel Wire Rod

from Japan, 63 FR 10854 (March 5,

1998) (Preliminary Determination)), the

following events have occurred:

In February 1998, we issued

supplemental requests for information

to the three participating respondents in

this case: Daido Steel Co., Ltd. (Daido);

Nippon Steel Corp. (Nippon); and

Hitachi Metals, Ltd. (Hitachi)

(collectively, the respondents). We

received responses in February and

March 1998.

In March 1998, we received revised

cost data from Nippon reflecting cost

breakouts for ultra-fine (UF) rod, and we

received revised sales and cost

information from Daido. In addition, on

March 18, 1998, we issued an amended

preliminary determination in this

investigation (see Notice of Amended

Preliminary Determination of Sales at

Less Than Fair Value: Stainless Steel

Wire Rod from Japan, 63 FR 14066

(March 24, 1998)).

In March and April 1998, we verified

the questionnaire responses of the

respondents. In May and June 1998, the

respondents submitted revised sales

databases, reflecting verification

revisions, at the Department’s request.

On June 1, 1998, the petitioners (i.e.,

AL Tech Specialty Steel Corp.,

Carpenter Technology Corp., Republic

Engineered Steels, Talley Metals

Technology, Inc., and the United Steel

Workers of America, AFL–CIO/CLC),

and Nippon and Hitachi submitted case

briefs. On June 8, 1998, the petitioners

and the respondents submitted rebuttal

briefs. The Department held a public

hearing on June 10, 1998.

Scope of Investigation

For purposes of this investigation,

SSWR comprises products that are hotrolled or hot-rolled annealed and/or

pickled and/or descaled rounds,

squares, octagons, hexagons or other

shapes, in coils, that may also be coated

with a lubricant containing copper, lime

or oxalate. SSWR is made of alloy steels

containing, by weight, 1.2 percent or

less of carbon and 10.5 percent or more

of chromium, with or without other

elements. These products are

manufactured only by hot-rolling or hotrolling, annealing, and/or pickling and/

or descaling, are normally sold in coiled

form, and are of solid cross-section. The

majority of SSWR sold in the United

States is round in cross-sectional shape,

annealed and pickled, and later coldfinished into stainless steel wire or

small-diameter bar.

The most common size for such

products is 5.5 millimeters or 0.217

inches in diameter, which represents

the smallest size that normally is

produced on a rolling mill and is the
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40435

size that most wire-drawing machines

are set up to draw. The range of SSWR

sizes normally sold in the United States

is between 0.20 inches and 1.312 inches

diameter. Two stainless steel grades,

SF20T and K–M35FL, are excluded

from the scope of the investigation. The

chemical makeup for the excluded

grades is as follows:

SF20T

Carbon ....................... 0.05 max.

Manganese ................ 2.00 max.

Phosphorous ............. 0.05 max.

Sulfur ......................... 0.15 max.

Silicon ........................ 1.00 max.

Chromium .................. 19.00/21.00.

Molybdenum .............. 1.50/2.50.

Lead .......................... added (0.10/0.30.

Tellurium .................... added (0.03 min).

K–M35FL

Carbon ....................... 0.015 max.

Silicon ........................ 0.70/1.00.

Manganese ................ 0.40 max.

Phosphorous ............. 0.04 max.

Sulfur ......................... 0.03 max.

Nickel ......................... 0.30 max.

Chromium .................. 12.50/14.00.

Lead .......................... 0.10/0.30.

Aluminum .................. 0.20/0.35.

The products under investigation are

currently classifiable under subheadings

7221.00.0005, 7221.00.0015,

7221.00.0030, 7221.00.0045, and

7221.00.0075 of the Harmonized Tariff

Schedule of the United States (HTSUS).

Although the HTSUS subheadings are

provided for convenience and customs

purposes, the written description of the

scope of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is

July 1, 1996, through June 30, 1997.

Facts Available

In the preliminary determination, the

Department found that Sanyo Special

Steel Co., Ltd. (Sanyo) and Sumitomo

Electric Industries Ltd. (SEI) failed to

respond fully to our questionnaire.

Accordingly, for the preliminary

determination, the Department based

the antidumping margins for these

companies on facts otherwise available

and assigned them Daido’s margin of

31.38 percent, which was the higher of

either the highest margin in the petition

or the highest margin calculated for a

respondent. See Notice of Preliminary

Determination of Sales at Less Than

Fair Value and Postponement of Final

Determination: Stainless Steel Wire Rod

From Japan, 63 FR 10854, 10855 (March

5, 1998). Neither company submitted

comments on the Department’s

preliminary determination to use facts

available. Accordingly, for the final

determination, the Department has

continued to base the antidumping

margins for these companies on facts

otherwise available and assigned them

Daido’s margin of 34.21 percent, which

was the higher of either the highest

margin in the petition or the highest

margin calculated for a respondent.

Fair Value Comparisons

To determine whether sales of SSWR

from Japan to the United States were

made at less than fair value, we

compared the Export Price (EP) or

Constructed Export Price (CEP) to the

Normal Value (NV). Our calculations

followed the methodologies described

in the preliminary determination.

On January 8, 1998, the Court of

Appeals for the Federal Circuit issued a

decision in CEMEX v. United States,

1998 WL 3626 (Fed Cir.). In that case,

based on the pre-URAA version of the

Act, the Court discussed the

appropriateness of using CV as the basis

for foreign market value (presently

normal value) when the Department

finds home market sales to be outside

the ‘‘ordinary course of trade.’’ This

issue was not raised by any party in this

proceeding. However, the URAA

amended the definition of sales outside

the ‘‘ordinary course of trade’’ to

include sales below cost. See Section

771(15) of the Act. Consequently, the

Department has reconsidered its

practice in accordance with this court

decision and has determined that it

would be inappropriate to resort

directly to CV, in lieu of foreign market

sales, as the basis for NV if the

Department finds foreign market sales of

merchandise identical or most similar to

that sold in the United States to be

outside the ‘‘ordinary course of trade.’’

Instead, the Department will use sales of

similar merchandise, if such sales exist.

The Department will use CV as the basis

for NV only when there are no abovecost sales that are otherwise suitable for

comparison. Therefore, in this

proceeding, when making comparisons

in accordance with section 771(16) of

the Act, we considered all products sold

in the home market as described in the

‘‘Scope of Investigation’’ section of this

notice, above, that were in the ordinary

course of trade for purposes of

determining appropriate product

comparisons to U.S. sales. Where there

were no sales of identical merchandise

in the home market made in the

ordinary course of trade to compare to

U.S. sales, we compared U.S. sales to

sales of the most similar foreign like

product made in the ordinary course of

trade, based on the characteristics listed

in Sections B and C of our antidumping

questionnaire. We have implemented

the Court’s decision in this case, to the

extent that the data on the record

permitted.

In instances where a respondent has

reported a non-AISI grade (or an

internal grade code) for a product that

falls within a single AISI category, we

have used the actual AISI grade rather

than the non-AISI grades reported by

the respondents for purposes of our

analysis. However, in instances where

the chemical content ranges of reported

non-AISI (or internal grade code) grades

are outside the parameters of an AISI

grade, we have used, for analysis

purposes, the grade code reported by the

respondents. For further discussion of

this issue, see Comment 1 in the

‘‘Interested Party Comments’’ section of

this notice, below.

Level of Trade

In the preliminary determination, we

conducted a level of trade analysis for

Daido, Hitachi, and Nippon. We

determined that a level of trade

adjustment was not warranted for any of

the respondents. See Memorandum to

the File from the Team regarding the

Department’s Level of Trade Analysis,

dated February 25, 1998. None of the

respondents commented on the

Department’s level of trade

determination. In the process of raising

arguments on another issue, the

petitioners claimed that it may be

necessary to reevaluate the level of trade

analysis. We have determined that this

is not necessary. See Comment 5 in the

‘‘Interested Party Comments’’ section of

this notice, below. Accordingly, for

purposes of the final determination, we

have continued to hold that a level of

trade adjustment is not warranted for

any of the respondents.

Export Price/Constructed Export Price

For Daido and Nippon, we used EP

methodology, in accordance with

section 772(a) of the Act, because the

subject merchandise was sold directly to

the first unaffiliated purchaser in the

United States prior to importation and

CEP methodology was not otherwise

indicated.

For Hitachi, because sales to the first

unaffiliated purchaser took place after

importation into the United States, we

used CEP methodology, in accordance

with section 772(b) of the Act.

We calculated EP and CEP based on

the same methodology used in the

preliminary determination.

Normal Value

We used the same methodology to

calculate NV as that described in the
40436 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

preliminary determination, with the

following exception:

Nippon

We included bank charges incurred

on U.S. sales to cash letters of credit in

the circumstance of sale adjustment

along with credit and warranty

expenses.

Cost of Production

We calculated the cost of production

(COP) based on the sum of each

respondent’s cost of materials and

fabrication for the foreign like product,

plus amounts for home market selling,

general and administrative (SG&A)

expenses and packing costs, in

accordance with section 773(b)(3) of the

Act. We relied on the submitted COPs

except in the following specific

instances where the submitted costs

were not appropriately quantified or

valued:

A. Daido

For the final determination, we have

included an allocated portion of bonus

payments that Daido distributed from its

retained earnings to its board of

directors and auditors, and excluded a

portion of the directors salaries which

were allocated to Daido’s subsidiaries in

the G&A expense variable used in the

calculation of COP and CV. See

Comments 8 and 9 in the ‘‘Interested

Party Comments’’ section of this notice,

below. In addition, we (1) recalculated

Daido’s fixed overhead costs, used in

the calculation of COP and CV, to

account for plant common variances;

and (2) revised Daido’s reported cost of

manufacture to include certain costs

that had been erroneously excluded

from this variable. See Memorandum

from Taija Slaughter to Chris Marsh,

dated July 20, 1998.

B. Hitachi

For the final determination, we have

adjusted Hitachi’s further

manufacturing cost database to reflect

one weighted-average cost for each

product. See Comment 16 in the

‘‘Interested Party Comments’’ section of

this notice, below.

C. Nippon

Pursuant to our findings at

verification, we have revised Nippon’s

G&A expenses to include certain nonoperating income and expenses. See

Memorandum from Peter Scholl to Chris

Marsh, dated July 20, 1998. In addition,

we have revised the costs of several

products to include certain costs

associated with the production of UF

SSWR which, for the preliminary

determination, had been allocated

across all products. See Comment 17 in

the ‘‘Interested Party Comments’’

section of this notice, below.

We also conducted our sales below

cost test in the same manner as that

described in our preliminary

determination. As with the preliminary

determination, we found that, for

certain models of SSWR, more than 20

percent of the respondent’s home

market sales were at prices less than the

COP within an extended period of time.

See Section 773(b)(1)(A) of the Act.

Further, the prices did not provide for

the recovery of costs within a reasonable

period of time. We therefore disregarded

the below-cost sales and used the

remaining above-cost sales as the basis

for determining NV, in accordance with

section 773(b)(1) of the Act.

Constructed Value

In accordance with section 773(e) of

the Act, we calculated CV based on the

sum of each respondent’s cost of

materials, fabrication, SG&A expenses,

profit, and U.S. packing costs. We relied

on the submitted CVs, except in the

following specific instances noted in the

‘‘Cost of Production’’ section above.

Currency Conversion

As in the preliminary determination,

we made currency conversions into U.S.

dollars based on the exchange rates in

effect on the dates of the U.S. sales, as

certified by the Federal Reserve Bank in

accordance with section 773A of the

Act.

Interested Party Comments

General Issues

Comment 1: Use of AISI Grade

Designations for Product Matching.

According to the petitioners, Daido

and Nippon should not be allowed to

rely on internal grade designations for

product matching purposes. The

petitioners claim that Daido and Nippon

designated special internal product

codes for certain high-priced home

market sales of products that would,

except for the addition of small amounts

of chemicals not typically found in

standard AISI designations, otherwise

fit within a standard AISI grade

designation. In Nippon’s case, the

petitioners assert that two specific

Nippon internal grades should have

been classified within certain AISI

grades. The petitioners argue that the

Department should assign each of Daido

and Nippon’s internal grades a standard

AISI grade for matching purposes.

Daido states that it only reported

internal product codes where the

chemical compositions of those internal

products were inconsistent with

standard AISI grade specifications.

Nippon asserts that it reported the AISI

grade, rather than its internal grade,

whenever the chemical composition of

the product at issue met the AISI

requirements. Daido and Nippon argue

that the Department should continue to

rely on internal grade designations, as

verified by the Department, for

matching purposes.

DOC Position

We agree with Daido and Nippon. We

examined their grade classifications at

verification and established that the

companies appropriately classified each

of their internal SSWR grades into the

corresponding AISI category, where

appropriate. See the Department’s May

13, 1998, Sales Verification Report for

Daido at page 7 and the Department’s

April 28, 1998, Sales Verification Report

for Nippon at page 4. We also confirmed

that, per the Department’s instructions,

Daido and Nippon reported their

internal SSWR grade, in lieu of a

standard AISI classification, only when

the composition of the internal SSWR

grade was inconsistent with AISI

specifications. Regarding the

petitioners’ claim that two specific

Nippon internal grades should have

been reported within standard AISI

grades, a review of the information on

the record indicates that Nippon

properly classified those products

within the appropriate grade

designations. Accordingly, we have

continued to accept Daido and Nippon’s

internal grade designations for purposes

of the final determination.

Comment 2: Selling Expenses

Incurred on behalf of End-Users.

According to the petitioners, selling

expenses incurred by Daido or Nippon

‘‘on behalf of’’ end-users for sales made

through unaffiliated trading companies

(i.e., downstream expenses) should be

treated as indirect selling expenses. The

petitioners assert that the selling

expenses claimed by Daido and Nippon

to be direct selling expenses did not

directly relate to the transactions with

the unaffiliated trading companies. In

support of this argument, the petitioners

cite Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from France, Germany, Italy,

Japan, Romania, Singapore, Sweden

and the United Kingdom: Final Results

of Antidumping Duty Administrative

Reviews, 62 FR 54052, 54054 (October

17, 1997) (Antifriction Bearings).

Daido and Nippon argue that such

expenses are directly related to their

sales to unaffiliated trading companies

and, thus, should be treated as direct

selling expenses. Daido and Nippon

assert that the Department’s
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40437

verifications confirmed that expenses

such as freight and warehousing, as well

as any adjustments to the sales price, are

directly related to the particular sales

transaction involved. Daido and Nippon

cite several cases purporting to establish

that Department practice considers such

expenses to be direct selling expenses if

they are directly related to a particular

sale.

DOCPosition

We agree with Daido and Nippon. The

information on the record and the

documents examined at verification

confirmed that the downstream selling

expenses and adjustments at issue are

directly related to the transactions with

the unaffiliated trading companies. See

Daido’s October 27, 1997, section A

response at page A–13, and the

Department’s May 13, 1998, Sales

Verification Report for Daido at pages 6–

7; Nippon’s October 24, 1997, section A

response at pages A–15 and A–29 and

in Exhibit 20, and the Department’s

April 28, 1998, Sales Verification Report

for Nippon at pages 5–6. Therefore, in

accordance with the Department’s

practice, these expenses are

appropriately categorized as direct

selling expenses. See, e.g., Final

Determination of Sales at Less Than

Fair Value: Certain Hot-Rolled Carbon

Steel Flat Products, Certain Cold-Rolled

Carbon Steel Flat Products, and Certain

Corrosion-Resistant Carbon Steel Flat

Products from Japan, 58 FR 37154,

37172–73 (July 9, 1993)(Carbon Steel

Flat Products from Japan); Antifriction

Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof from

France, Germany, Italy, Japan,

Romania, Singapore, Sweden, Thailand

and the United Kingdom: Final Results

of Antidumping Duty Administrative

Reviews and Revocation in Part of an

Antidumping Duty Order, 58 FR 39729,

39750 (July 26, 1993). Moreover, we

note that the case cited by the

petitioners, Antifriction Bearings,

supports this determination.

Specifically, in that case, the

Department stated that downstream

expenses would be treated as direct

expenses when a respondent could

directly tie those expenses to a

particular sale. In this case, Daido and

Nippon have documented that the

expenses at issue are directly tied to a

specific sale. See the Department’s May

13, 1998, Sales Verification Report for

Daido at pages 6–7 and the

Department’s April 28, 1998, Sales

Verification Report for Nippon at pages

5–6. Accordingly, we have continued to

treat these downstream expenses as

direct expenses for purposes of the final

determination.

Company-Specific Issues

Daido Steel Co., Ltd.

Comment 3: Collapsing of Daido’s

Reported Further Processing Codes.

According to the petitioners, Daido

reported more further processing codes

for purposes of product matching than

it kept in the ordinary course of

business for cost purposes. The

petitioners argue that several of Daido’s

further processing codes fit within the

same standard cost code. As a result, the

petitioners assert that the Department

should collapse Daido’s further

processing codes based on the further

processing groupings maintained by

Daido for cost purposes in the normal

course of trade.

Daido argues that the different further

processing codes it reported reflect

different physical characteristics and

that it provided details on those

differences, as requested by the

Department’s questionnaire. Daido notes

that the petitioners do not take issue

with the fact that Daido’s different

further processing codes reflect different

physical characteristics, only that

several different further processing

codes are included in the same standard

cost code. Daido argues that the detail

with which it reported its different

further processing codes allows the

Department to appropriately match U.S.

products with home market products

that have undergone the exact same

further processing. Accordingly, Daido

urges the Department to continue to

distinguish between the different further

processing codes reported by Daido in

conducting product matching for

purposes of the final determination.

DOC Position

We agree with Daido. The

Department’s questionnaire instructed

Daido to report any and all further

processing. While the Department

designated specific processes (i.e., ‘‘hotrolled,’’ ‘‘hot-rolled and annealed,’’ and

‘‘hot-rolled, annealed, and pickled’’), it

also requested that Daido report all

other further processing methods. In

response, Daido reported various further

processing methods which it claims

impart distinct physical characteristics

on the wire rod. See Daido’s November

17, 1997, sections B and C response at

Exhibit B–3. The petitioners do not

argue that the different further

processing methods fail to impart

distinct physical characteristics on the

wire rod, only that they are included in

the same standard cost code and,

therefore, should be grouped in the

same further processing code. However,

this methodology is inconsistent with

the Department’s practice, which is to

rely on physical characteristics, rather

than cost groupings, for model matching

purposes. See, e.g., Certain Hot-Rolled

Lead and Bismuth Carbon Steel

Products from the United Kingdom;

Final Results of Antidumping Duty

Administrative Review, 63 FR 18879,

18881 (April 16, 1998) (Carbon Steel 1).

Accordingly, we used the further

processing codes reported by Daido for

purposes of the final determination.

Comment 4: Product Code

Designation of Daido’s Proprietary Wire

Rod.

According to the petitioners, the cost

information submitted by Daido on its

proprietary wire rod was untimely and

should be rejected. The petitioners

argue that, in breaking out the cost for

its proprietary wire rod, Daido

significantly reduced its reported costs

of production for all other products. The

petitioners assert that these changes

affected all of Daido’s cost data and

were submitted after the preliminary

determination, thus denying the

petitioners the ability to comment on

that new cost information in a

meaningful way. The petitioners urge

the Department to reject the data as

untimely and rely on facts available.

If the Department accepts Daido’s data

as timely, the petitioners argue that the

information should be rejected as an

effort by Daido to create an

unauthorized matching criterion. The

petitioners state that Daido submitted

this proprietary wire rod information to

the Department using a product code

that included a new further processing

designation. The petitioners assert that

the process used to make the proprietary

wire rod involved unique steps taken to

manufacture the billet, the raw material

used to make wire rod, not any further

processing of wire rod. The petitioners

argue that processes used to

manufacture the billet were not

included as part of the matching criteria

in this investigation and cannot

appropriately be characterized as further

processing. Thus, the petitioners

contend that this proprietary wire rod

should not be given a unique product

code for matching purposes, because

processes used to manufacture the billet

were not established as a matching

criterion.

Daido argues that it first submitted

information on the record highlighting

its proprietary wire rod in January 1998,

and that several subsequent Daido

submissions referenced the unique

characteristics of this product.

According to Daido, those submissions

provided the petitioners ample

opportunity to respond to the new

information. In addition, Daido asserts

that there was no reallocation of costs
40438 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

from all of its other products to its

proprietary wire rod product. Instead,

Daido claims that, in breaking out costs

for its proprietary wire rod, it only

removed costs from the control number

in which that product was previously

included.

Daido further asserts that it did not

attempt to create an unauthorized

matching criterion. According to Daido,

the Department’s questionnaire

expressly allows a respondent to add

additional product characteristics to

those requested by the Department, and

that the Department has permitted this

practice in other cases. See, e.g., Final

Results of Antidumping Administrative

Review of Solid Urea From the Former

German Democratic Republic, 62 FR

61271, 61275–76 (November 17, 1997)

(Solid Urea).

Daido also argues that its proprietary

wire rod has different product

characteristics than the other products

initially included within the same

control number. According to Daido, the

substantial difference is evidenced by

the significant disparity in cost between

the proprietary wire rod and the other

products within its former control

number. Daido asserts that treating its

proprietary wire rod in the same control

number as the other products would

distort the dumping analysis, and that

such a result is inconsistent with the

Department’s practice. See, e.g., Notice

of Final Results and Partial Recission of

Antidumping Duty Administrative

Review: Roller Chain, Other Than

Bicycle From Japan, 62 FR 60472,

60474–75 (November 10, 1997) (Roller

Chain) and Solid Urea.

Finally, Daido argues that the

Department could not compare any of

Daido’s U.S. sales with its home market

sales of the proprietary wire rod because

of the large difference-in-merchandise

(DIFMER) adjustments that would be

required. According to Daido, the

resulting DIFMER adjustment from any

such comparison would exceed the

twenty percent limit established by the

Department’s policy and precedent.

Thus, Daido asserts that its proprietary

wire rod should not be used in

determining NV. Daido claims that the

Department’s precedent establishes that

differences in merchandise can warrant

the use of special product control

numbers for model matching purposes.

To support this position, Daido relies on

Carbon Steel 1 at 18881, and Certain

Hot-Rolled Lead and Bismuth Carbon

Steel Products from the United

Kingdom; Final Results of Antidumping

Duty Administrative Review, 60 FR

44009, 44011 (August 24, 1995) (Carbon

Steel 2).

DOC Position

We agree with the petitioners. Daido’s

information on its proprietary wire rod

represented an attempt by Daido to

distinguish that product’s

characteristics from its other home

market products for matching purposes.

The Department’s questionnaire of

September 19, 1997, indeed allowed for

supplemental product characteristics, in

addition to those specified by the

Department (i.e., grade, diameter,

further processing, and coating).

However, the Department emphasized

that ‘‘if you add characteristics not

specified in the questionnaire, describe

in the narrative response why you

believe that the Department should use

this information to define identical and

similar merchandise.’’ See the

Department’s September 19, 1997,

Questionnaire at page B–6. Daido,

however, never made a case for the

addition of a product characteristic not

specified in the questionnaire. Rather,

Daido uniquely classified its proprietary

wire rod by adding a further processing

code, a product characteristic

established by the Department, to the

list of further processing codes that it

had previously submitted to the

Department. However, the

distinguishing feature of Daido’s

proprietary wire rod appears to be its

expensive processing of the billet, the

raw material used to make wire rod,

rather than further processing of the

finished wire rod. Further processing of

wire rod can be defined as

manufacturing processes conducted on

the wire rod after it is produced. Thus,

the addition of a unique ‘‘further

processing’’ code by Daido to

distinguish its proprietary wire rod from

its other products, based on an

expensive processing of the billet before

it is hot-rolled into wire rod, was not

appropriate. Moreover, Daido’s reliance

on Solid Urea to support its claim that

the Department’s practice is to allow for

additional matching criteria submitted

by respondents is inappropriate. In

Solid Urea, the Department continued to

accept the use of an additional model

match criterion submitted to the

Department by the respondent prior to

the preliminary results of that review.

See Solid Urea at 61275–76. However,

since Daido has not submitted an

additional matching criterion to the

Department in this investigation, Solid

Urea does not address the issue raised

in this investigation.

The Department does not find that

including Daido’s proprietary wire rod

within its former control number will

distort the dumping analysis. Daido’s

proprietary wire rod and the other

products within its former control

number have the same product

characteristics, as specified by the

Department for matching purposes.

Furthermore, Daido’s reliance on Roller

Chain is misplaced. In Roller Chain, for

the preliminary determination, the

Department deviated from its prior

practice of using ten criteria to match

products and, instead, used only three

matching criteria. For the final

determination, the Department decided

that it should return to the practice from

previous reviews of using ten matching

criteria because of an overriding

concern that employing fewer matching

criteria might result in grouping

physically diverse products as identical

or similar merchandise. In this

investigation, however, Daido has not

proposed additional matching criteria

for the Department’s model match, nor

has it argued that the Department has

improperly limited the number of

matching criteria. Instead, Daido has

attempted to indirectly create a new

matching criterion by adding a new

‘‘further processing’’ code to a specific

product that has no unique further

processing, as established by the

Department’s description of its product

matching characteristics.

Moreover, Daido’s argument that any

comparison between its U.S. sales and

its proprietary wire rod would exceed

the Department’s DIFMER adjustment

limit relies on Daido’s proprietary wire

rod being classified as a separate

product with a unique control number.

However, the Department has

determined, given the matching criteria

in the questionnaire, that it would not

be appropriate to designate Daido’s

proprietary wire rod with a unique

control number, nor to separate its costs

from the other products in its original

control number.

Finally, we do not agree with the

petitioners that Daido’s information on

its proprietary wire rod was untimely.

Daido first provided information on its

proprietary wire rod in its January 14,

1998, supplemental questionnaire

response, two months prior to the

commencement of verification and, as

such, was not untimely. See section

351.301(b)(1) of the Department’s

regulations.

For discussion of a similar issue, see

Comment 17, below.

Comment 5: Daido’s Adjustment

Claims for Warehousing and Freight

Expenses.

The petitioners assert that, although

the Department verified Daido’s

reported channels of distribution and

related selling functions information,

which included information on whether

warehousing services were provided by
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40439

Daido in each of its channels of

distribution, the warehousing expenses

reported by Daido were inconsistent

with Daido’s description of the services

provided for sales in each of its home

market channels of distribution, as

verified by the Department. Specifically,

the petitioners claim that Daido’s

modified explanation that shipment

route, as opposed to channel of

distribution, determined whether

warehousing expenses were, in fact,

incurred raises serious questions about

the reliability of Daido’s reported

warehousing expense information. The

petitioners assert that we should

disregard Daido’s modified

explanations, or, in the alternative, if

such information is accepted, we should

revisit our level of trade analysis that

depended on Daido’s channels of

distribution information. The

petitioners argue that, if the Department

disregards Daido’s modified explanation

of its warehousing expenses, it should

not accept any reported inland freight or

warehousing expenses for the five

distribution channels in which Daido

indicated that sales were not distributed

through warehouses.

In addition, the petitioners allege that

Daido failed to report warehouse

shipment dates in cases where

warehousing expenses were reported.

According to the petitioners, in many

cases this situation occurred for

channels of distribution in which Daido

reported its sales as not being shipped

through warehouses. The petitioners

argue that the Department should not

accept any warehousing expenses in

such cases, because the failure to report

a shipment date from the warehouse

indicates that no warehousing expense

was incurred by Daido.

The petitioners also assert that,

according to the verification findings,

the Department should disallow any

reported warehousing expenses

whenever Daido reported the same dates

for shipment to the warehouse and

shipment from the warehouse to the

end-user. According to the petitioners,

since Daido overstated its expenses in

such cases (see the Department’s May

13, 1998, Sales Verification Report for

Daido at pages 3–4), the Department

should disallow these expenses in its

final margin analysis.

Finally, the petitioners assert that

Daido reported inland freight expenses

both for shipment to a warehouse

(INLFTWH) and for shipment from a

warehouse to the customer (INLFTCH)

in cases where the merchandise was

apparently not warehoused. The

petitioners argue that Daido’s

explanation that field INLFTWH

represented either the cost of shipment

to the warehouse or to the customer

directly was not consistent with its

reported expense information, and

resulted in the double reporting of

freight expenses. As a result, the

petitioners assert that the Department

should disallow any expense in field

INLFTWH for sales where Daido

reported no warehousing expenses.

Daido responds that the Department’s

Sales Verification Report explained the

relationship between its channels of

distribution and shipment route

information, and its reported

warehousing expenses. See the

Department’s May 13, 1998, Sales

Verification Report for Daido at page 2.

Daido asserts that the warehousing

expense information reflected in its

discussion of channels of distribution

was the standard situation for

transactions within each of the channels

of distribution. However, Daido argues

that exceptions existed because of the

circumstances of individual sales

transactions. As a result, Daido explains

that the reported shipment route

ultimately determined whether

warehousing expenses were incurred on

a sale-specific basis, regardless of the

standard established for the applicable

channel of distribution.

Regarding the petitioners’ concern

about Daido’s lack of reported

warehouse shipment dates in cases

where Daido reported a warehousing

expense, Daido answers that its

submissions established that it was

unable to provide a warehouse

shipment date for sales by Daido to

unaffiliated trading companies, despite

the fact that such shipments were made

through a warehouse. Thus, Daido

argues that the lack of a warehouse

shipment date in such instances does

not determine that no warehousing

expenses were incurred.

Responding to the petitioners’

concerns about Daido’s reported

warehousing expenses when the two

shipment dates (i.e., the date of

shipment to the warehouse and the date

of shipment from the warehouse to the

customer) were the same, Daido argues

that it has adopted a conservative

approach, even more conservative than

the petitioners’ recommendation, by

reporting no warehousing expense when

the difference between the two

shipment dates was less than or equal

to two days.

Finally, Daido asserts that the

petitioners’ concern about the alleged

double reporting of inland freight

expenses was, in fact, the result of

Daido’s sales to unaffiliated trading

companies. In such cases, Daido

explains that it did not have information

on the shipment dates from the

warehouse, which led the petitioners to

believe that no warehousing occurred.

However, Daido claims that expenses

were reported in both freight data fields

(i.e., INLFTWH and INLFTCH) only

when the merchandise was shipped

through a warehouse.

DOC Position

We disagree with the petitioners. At

verification, the Department confirmed

that Daido’s reported shipment route

determined whether Daido, in fact,

incurred warehousing expenses on a

transactions-specific basis. To that end,

we examined relevant freight and

warehousing documents at verification.

See the Department’s May 13, 1998,

Sales Verification Report for Daido at

page 3. Relying on such documents, we

confirmed that Daido incurred

warehousing expenses (even when the

explanation for the reported channel of

distribution did not indicate

warehousing) for sales where the

reported shipment route reflected

shipment through a warehouse. In

addition, at verification, we found no

cases where Daido reported

warehousing expenses when the

corresponding shipment route indicated

that shipment was not made through a

warehouse. Accordingly, the

Department accepted Daido’s reported

warehousing and inland freight (to the

warehouse) expenses for transactions

where the reported shipment route

indicated warehousing of the

merchandise, even when the reported

standard distribution channel did not

indicate warehousing services.

Contrary to the petitioners’

contention, the documents examined by

the Department at verification did not

raise questions about the reliability of

Daido’s reported warehousing expense

information. Rather, they consistently

showed that the reported shipment

route was the sale-specific key to

whether warehousing, in fact, occurred.

The channels of distribution

information submitted by Daido

explained the standard warehousing

and freight services provided for each

channel of distribution, despite the fact

that the shipment route determined

whether warehousing, in fact, occurred

for specific sales transactions. See the

Department’s May 13, 1998, Sales

Verification Report for Daido at page 16.

The Department’s verifiers found that,

as a general rule, the explanations of

freight and warehousing services

provided for each channel of

distribution were accurate and reliable.

Therefore, the Department did not

disregard the channels of distribution

information reported by Daido, nor did

it disregard Daido’s modified
40440 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

explanation that the reported shipment

route is determinative as to whether

warehousing occurred. Thus, since

Daido’s channels of distribution

information was verified by the

Department, the Department has not

reevaluated its level of trade analysis for

purposes of the final determination.

In addition, the Department did not

reject Daido’s reported warehousing

expenses in cases where no shipment

date from the warehouse was reported.

Daido explained, and the Department

found, that Daido did not have the

information on the shipment date from

the warehouse in every case in which a

shipment was, in fact, made through a

warehouse, particularly in cases where

sales were made to unaffiliated trading

companies. See Daido’s November 17,

1997, Sections B and C response, at page

B–19. Thus, the Department accepted

Daido’s reported warehousing expenses

for sales to unaffiliated trading

companies when the warehouse

shipment date was blank, provided that

the shipment route reported for the

specific transaction indicated shipment

through a warehouse as explained

above.

Furthermore, our examination of

Daido’s revised sales information

submitted on May 29, 1998, revealed

that Daido reported no warehousing

expenses (neither storage nor handling)

when the difference between the

shipment date to the warehouse and the

shipment date from the warehouse to

the customer was less than or equal to

two days. This is a conservative

methodology because Daido explained

that in such cases it still incurred some

handling charges even where no storage

expenses were paid as a result of the

short turnaround at the warehouse.

Thus, the Department accepted Daido’s

reported warehousing expense

information in such cases.

Moreover, the Department did not

disregard Daido’s reported inland

freight expenses, both to the warehouse

and from the warehouse to the

customer, in cases where the

merchandise was actually warehoused,

as indicated by Daido’s reported

shipment route information. The

petitioners’ concern that Daido had

double reported its freight expenses

hinged on its belief that no warehousing

occurred in cases where Daido reported

no date in the data field SHIPDT2H

(shipment from the warehouse).

However, as explained above, Daido did

not have the information on shipment

date from the warehouse (SHIPDT2H) in

every case where merchandise was

actually shipped through a warehouse.

Thus, provided the reported shipment

route indicated shipment through a

warehouse, the Department did not

disregard the reported freight expenses

for shipment to a warehouse and from

that warehouse to the customer.

Finally, the Department confirmed at

verification that data field INLFTWH

(shipment to a warehouse or end-user)

represented the expense to deliver

merchandise to the customer in cases

where no warehousing occurred. See the

Department’s May 13, 1998, Sales

Verification Report for Daido at page 13.

Therefore, the Department did not

disallow expenses in field INLFTWH

because no warehousing expense was

reported by Daido.

In conclusion, although the freight

and warehousing information reported

by Daido was intricate and required

further clarification at verification, our

findings at verification indicate that

Daido’s information was reliable. See

the Department’s May 13, 1998, Sales

Verification Report for Daido at pages

13–17. As a result, the Department did

not disregard the freight and

warehousing information reported by

Daido in its May 29, 1998, submission.

The Department used that information,

as verified by the Department and as

explained above, for purposes of the

final determination.

Comment 6: Corrections Arising from

Verification.

According to the petitioners, the

Department should correct Daido’s

reported COP/CV data based on the

corrections made by Daido at the outset

of verification.

DOC Position

We agree. We have made the

appropriate corrections for purposes of

the final determination.

Comment 7: Major Inputs.

The petitioners argue that the

Department should adjust the prices

paid by Daido for certain materials to

affiliated trading companies to reflect

the market price. The petitioners assert

that, consistent with the Department’s

practice, purchase prices for identical

inputs paid by a producer to affiliated

suppliers are compared first to prices

paid to unaffiliated suppliers. If the

price paid to an affiliated supplier is not

an arm’s-length transaction, the

Department will adjust the price based

on the arm’s-length prices paid to the

unaffiliated supplier.

Daido argues that the Department

generally prefers the use of the transfer

price for inputs purchased from

affiliated parties for the calculation of

COP and CV, provided that the

transaction occurred at an arm’s-length

price. According to Daido, input prices

paid to its affiliated trading company

were generally comparable to prices

paid to its unaffiliated trading

companies and, thus, should be

acceptable for the calculation of COP

and CV.

DOC Position

To the extent practicable, the

Department generally will use the

transfer price of inputs purchased from

affiliated suppliers in calculating COP

and CV, provided that the transactions

at issue occurred at arm’s-length prices.

See, e.g., Gray Portland Cement and

Clinker from Mexico: Final Results of

Antidumping Duty Administrative

Review, 62 FR 17148, 17161 (April 9,

1997). At verification, we examined the

input prices Daido’s affiliated trading

company paid its unaffiliated suppliers

for certain inputs sold to Daido. We

noted that, on average, the transfer price

between Daido and its affiliated trading

company exceeded the price paid by the

affiliated trading company to nonaffiliated suppliers. See Daido’s March

26, 1998, supplemental section D

questionnaire response at Exhibit SD–

11. In addition, we noted at verification

that the transfer price paid by Daido to

its affiliated trading company exceeded

the affiliated trading company’s fully

loaded cost of production (i.e., cost of

manufacturing plus general expenses).

See the Department’s May 20, 1998,

Cost Verification Report for Daido at

Exhibits 13 and 14. Therefore, in the

final margin analysis we relied on the

transfer prices paid by Daido to its

affiliated trading company for the inputs

at issue.

Comment 8: G&A Expense Rate.

The petitioners assert that, as in the

preliminary determination, the

Department should continue to use

Daido’s unconsolidated cost of sales to

calculate the G&A expense rate.

According to the petitioners, Daido’s

reliance on consolidated cost of sales is

inappropriate because its consolidated

financial statements include

information for Daido’s affiliated

companies that are not involved in the

production and sale of the subject

merchandise.

Daido contends that the functions

performed at the head office benefit all

of its subsidiaries; thus, it is appropriate

to use consolidated cost of sales as the

denominator for calculating the G&A

expense rate.

DOC Position

We disagree with Daido. It’s the

Department’s normal practice to

calculate the G&A expense rate based on

the respondent company’s

unconsolidated operations plus a

portion of G&A expenses incurred by

affiliated companies on behalf of the
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40441

respondent. See Carbon Steel Flat

Products from Japan, 58 FR 37154 (July

9, 1993). At verification, the only

specific example Daido could provide in

support of its contention that it incurred

G&A costs on behalf of its subsidiaries

related to salaries paid to its directors.

Thus, for the final determination, we

allocated a portion of the directors

salaries to Daido’s consolidated

subsidiaries. However, in computing

Daido’s G&A expense rate, we have

continued to use Daido’s

unconsolidated cost of sales as the

denominator.

Comment 9: Bonus adjustment.

The petitioners argue that the

Department should include bonuses

paid by Daido to its board of directors

and auditors in its G&A expenses.

Referencing Notice of Final

Determination of Sales at Less than Fair

Value: Static Random Access Memory

Semiconductors from Taiwan, 63 FR

8909, 8922 (February 23, 1998) (SRAMs

from Taiwan), the petitioners assert that

bonuses paid by Daido to its board of

directors and auditors represents

compensation to these individuals for

the services they rendered to the

company and, accordingly, the expenses

should be included in the calculation of

Daido’s G&A expense rate.

Daido contends that its G&A expense

rate calculation is consistent with its

audited income statement, which

records bonuses paid to directors and

auditors on its statement of retained

earnings. Because this adjustment is

consistent with Daido’s books and

records in the normal course of

business, the Department should not

recalculate the G&A expense rate.

Further, Daido argues that if the

Department does intend to include

bonuses in the G&A expense rate

calculation, it should allocate the

amount over Daido’s consolidated cost

of sales as the amounts benefit all of its

consolidated companies.

DOC Position

In accordance with section

773(f)(1)(A) of the Act, we rely on the

respondent’s normal books and records,

provided that they comply with the

foreign country’s Generally Accepted

Accounting Principles (GAAP) and

reasonably reflect the company’s costs

of producing the subject merchandise.

In this instance, we agree with the

petitioners that the bonuses paid to

Daido’s board of directors and auditors,

which Daido distributed through its

retained earnings, represent

compensation for services provided to

the company. Therefore, we believe that

it is appropriate to include these

amounts in the calculation of COP and

CV because they reasonably reflect the

company’s cost of producing the subject

merchandise, pursuant to section

773(f)(1)(A) of the Act. Moreover,

including this type of bonus payment in

COP and CV is consistent with our

treatment of this type of retained

earnings bonus distribution. See,

SRAMs from Taiwan at 8921. In that

proceeding, we determined that the

amounts distributed by the respondents

represented compensation for services

which the individuals had provided the

companies. Accordingly, for the final

determination, we have included an

allocated portion of the bonus payments

that Daido distributed from its retained

earnings to its board of directors and

auditors in the calculation of COP and

CV.

Comment 10: Exchange Gains.

The petitioners argue that, consistent

with the preliminary determination, the

Department should continue to disallow

Daido’s net exchange gains offset to

G&A expenses. According to the

petitioners, the Department’s practice is

not to include exchange gains or losses

in the calculation of COP if such gains

and losses were related to accounts

receivables (Notice of Final

Determination of Sales at Less than Fair

Value: Certain Pasta from Italy, 61 FR

30,326, 30363 (June 14, 1996)). The

petitioners claim that, because Daido

did not provide a schedule which

indicates the types of transactions

generating the company’s exchange

gains and losses, the Department is not

able to make a determination of the

source which generated the exchange

gain or loss. Therefore, the net exchange

gains should be disallowed as an offset

to Daido’s G&A expenses.

Daido did not comment on this issue.

DOC Position

We agree with the petitioners. Daido

provided a schedule indicating that the

foreign exchange gains relate to its

accounts receivables. Because our

normal practice is to exclude exchange

gains and losses related to accounts

receivable, we disallowed these gains as

an offset to G&A expenses.

Hitachi Metals, Ltd.

Comment 11: Viability of Home

Market.

The petitioners argue that the

Department erred in finding that

Hitachi’s home market was not viable.

The petitioners state that the Statement

of Administrative Action (SAA) makes

it clear that the five percent benchmark

for viability may not be appropriate in

all instances. See SAA at 821.

Accordingly, the petitioners argue that

the Department should have obtained

Hitachi’s home market sales information

and, based on that information,

determined whether the home market

was, in fact, viable.

Hitachi argues that the Department

properly concluded that its home

market was not viable because the

quantity of SSWR sold in Japan

constituted less than five percent of the

quantity sold to the United States.

Hitachi argues that the Department fully

verified its quantity and value

information as accurate and its

determination of non-viability is

supported by the statute and the

regulations. Hitachi notes that the

petitioners have not presented any

reason why the Department should

ignore the verified information

contained in the record in this

investigation and disregard its normal

practice regarding viability.

DOC Position

We agree with Hitachi. The

Department will consider a home

market ‘‘viable’’ if the aggregate quantity

of sales of the foreign like product is

five percent or more of the aggregate

quantity of sales of subject merchandise

to unaffiliated buyers in the United

States. See section 773(a)(1)(B) of the

Act and section 351.404(b)(2) of the

Department’s regulations. In this case,

the Department has verified that the

quantity of SSWR Hitachi sold in Japan

constituted less than five percent of the

quantity of SSWR sold to the United

States. See Verification of the

Questionnaire Responses of Hitachi

Metals, Ltd., Memorandum to File from

Barbara Wojcik-Betancourt and Sunkyu

Kim through James Maeder dated May

6, 1998, at pages 6–8; and Verification

of the Questionnaire Responses of

Hitachi Metals America, Ltd.,

Memorandum to File from Barbara

Wojcik-Betancourt through James

Maeder dated march 30, 1998, at pages

4–6.

Furthermore, the petitioners’

argument that the SAA ‘‘makes clear

that the five percent benchmark for

viability may not be appropriate in all

instances’’ does not apply to the facts of

this case. We note that the SAA states

that ‘‘[t]he volume of sales in the home

market normally will be deemed

insufficient, i.e., the home market will

not be considered usable if the quantity

of sales by the exporter in the home

market is less than five percent.

. . .’’ SAA at 821 (Emphasis added).

The exception to this rule, on which the

petitioners mistakenly rely, pertains to

‘‘some unusual situation’’ that would

render the above application

inappropriate. Id. In this case, the

Department verified that the quantity of
40442 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

Hitachi’s sales of the foreign like

product in the home market was below

the five percent threshold. See the

Department’s May 6, 1998, Sales

Verification Report for Hitachi at pages

6–8. Moreover, the petitioners did not

point to any evidence contained in the

administrative record which would

demonstrate some unusual

circumstances that would render the

application of the usual five percent test

in any way inappropriate. Accordingly,

for the final determination, we continue

to find that Hitachi’s home market is not

viable and, therefore, we based the NV

on the CV of the subject merchandise.

Comment 12: Errors Concerning

Recalculated Further Manufacturing

Cost.

Hitachi alleges that the Department

made a ministerial error with respect to

the recalculated further processing cost.

Specifically, Hitachi alleges that the

Department included U.S. repacking

expenses and the cost of U.S. inland

freight in the further manufacturing

field subsequently deducted from the

U.S. price. Hitachi argues that, because

U.S. repacking expenses and U.S. inland

freight expenses are deducted elsewhere

in the Department’s margin calculation,

the Department’s inclusion of these

expenses in the further manufacturing

variable results in these expenses being

deducted twice from the gross unit

price.

DOC Position

We agree with Hitachi and have

corrected this error.

Comment 13: Calculation of CEP

Selling Expenses.

The petitioners argue that, for

purposes of the preliminary

determination, the Department failed to

include repacking expenses as part of

the selling expenses for Hitachi’s CEP

sales. The petitioners contend that

repacking incurred by Hitachi for its

U.S. sales is an expense associated with

the further manufacture of the

merchandise and, as such, is among the

expenses deducted from the starting

price under section 772(d)(2) and for

purposes of the allocation of profit

under 772(d)(3). Accordingly, the

petitioners argue that, for purposes of

the final determination, the Department

should include repacking expense in the

calculation of CEP selling expenses.

Hitachi asserts that, contrary to the

petitioners’ claim, repackaging expenses

were included in the calculation of

Hitachi/HMA’s CEP selling expenses as

part of the further manufacturing

variable and, therefore, no adjustment is

necessary.

DOC Position

We agree with the petitioners that

repacking expenses should be included

in the calculation of CEP selling

expenses. Hitachi does not take

exception with this argument, arguing

instead that repacking expenses are

already included in CEP selling

expenses as part of the further

manufacturing variable that is used in

the calculation of CEP selling expenses.

However, Hitachi argues in Comment

12, and the Department agrees, that

repacking expenses should be deducted

from the calculation of the further

manufacturing variable in order to avoid

deducting repacking expenses twice

from the U.S. price. Once repacking

expense is deducted from the further

manufacturing variable, the petitioners’

argument that it is not included in the

calculation of CEP selling expenses is a

valid one. Accordingly, for the final

determination, the Department has

deducted repacking expense from the

calculation of the further manufacturing

expenses (as explained in Comment 12)

and added repacking expense to the

calculation of CEP selling expenses.

Comment 14: Scope of the

Investigation.

Hitachi requests that the Department

exclude grades 440 C SSWR and

proprietary grade X from this

investigation. Hitachi asserts that grade

440 C SSWR should be excluded from

this investigation because Hitachi has

not sold it in the United States during

the POI or at any other time. Moreover,

according to Hitachi, the factors set

forth in 19 CFR 351.225(k) clearly

establish that grade 440 C SSWR should

not be included within the scope of this

investigation. Hitachi notes that,

pursuant to section 351.225(k)(2), in

determining whether merchandise falls

within the scope of an order, the

Department will consider: (1) the

physical characteristics of the product;

(2) the expectations of the ultimate

purchasers; (3) the ultimate use of the

product; (4) the channels of trade in

which the product is sold; and (5) the

manner in which the product is

advertised and displayed. Hitachi

argues that the different production

process for grade 440 C SSWR, as

compared to standard SSWR, results in

a very different product with distinct

physical and technical characteristics.

Because of these distinct physical and

technical characteristics, Hitachi argues

that the ultimate expectations of the

end-user are different than the

expectations for standard SSWR. In

addition, Hitachi argues that, because

grade 440 C SSWR is captively

consumed (i.e., 100 percent consumed

by Hitachi’s U.S. affiliate), it is

distributed only to affiliated companies

or consumed by the producer and, thus,

is not advertised or displayed. Based on

the foregoing, Hitachi contends that the

Department should determine that grade

440 C SSWR is outside the scope of the

investigation.

Hitachi next asserts that the other

grade subject to its exclusion request,

proprietary grade X, should be excluded

from the scope of the investigation

because it allegedly is not, and cannot

be, manufactured in the United States.

In addition, Hitachi declares that it does

not intend to license production of this

product to any U.S. company. Hitachi

further contends that, because there is

no domestic industry that produces

grade X, the petition could not have

been filed on behalf of the domestic

grade X industry within the provisions

of the antidumping law.

DOC Position

We disagree with Hitachi. Hitachi’s

reliance on the factors set forth in 19

CFR 351.222(k)(2) is misplaced. As the

regulation indicates, those criteria are

used to clarify the scope of an existing

order where there is some ambiguity in

the scope language, not to determine the

scope of an investigation. The scope of

an investigation is determined, in

general, by the petition. The scope of

this investigation, as established in the

petition, includes SSWR that is:

. . . made of alloy steels containing, by

weight, 1.2 percent or less of carbon and 10.5

percent or more of chromium, with or

without other elements. These products are

manufactured only by hot-rolling or hotrolling, annealing, and/or pickling and/or

descaling, and are normally sold in coiled

form, and are of solid cross-section.

See Petition at page I–11. The

information submitted on grades 440 C

SSWR and grade X establish that these

products are hot-rolled SSWR with less

than 1.2 percent carbon and more than

10.5 percent chromium, and that these

products otherwise meet the

manufacturing specifications outlined

in the above-referenced scope language.

Furthermore, it is evident from the

scope language that the only exclusions

of SSWR products intended by the

petitioners pertained to SSWR grades

SF20T and K–M35FL. Hitachi has

submitted no information to show that

grade X does not meet the specifications

contained in the scope language and, in

fact, Hitachi concedes that grade 440 C

SSWR meets the specifications outlined

in the petition. See Hitachi’s September

15, 1997, submission at page 1. The fact

that a specific grade of SSWR is not

currently produced in the United States

does not constitute grounds for
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40443

exclusion from the scope of the

investigation. Therefore, there is no

basis to exclude grades 400 C and X

from the scope of this investigation.

Comment 15: CEP Profit Rate for

Hitachi.

The petitioners argue that the

Department’s use of Hitachi Metals

America, Ltd.’’s (HMA) financial

statements and Yasugi Works’ internal

financial statements to calculate

Hitachi’s CEP profit for purposes of the

preliminary determination resulted in a

profit margin that was not

representative of the profit earned on

sales of the subject merchandise. The

petitioners claim that, in accordance

with section 772(f) of the Act, CEP profit

for the U.S. sales should be based on the

‘‘total actual profit’’ which is defined as

‘‘profit earned by the foreign producers

. . . with respect to the sales of the

same merchandise for which total

expenses are determined.’’ Further,

referencing the SAA at 824, the

petitioners maintain that the profit

calculation must be based on the

‘‘subject merchandise sold in the United

States and the foreign like product sold

in the exporting country.’’ In order for

the Department to comply with these

requirements, the petitioners contend

that the Department should calculate

CEP profit based on the sum of Nippon’s

and Daido’s weighted average profit and

the profit earned by Hitachi on its sales

of subject merchandise.

Hitachi claims that the Department

correctly calculated CEP profit and

should rely on the methodology used in

the preliminary determination. Hitachi

states that sections 772(f)(2)(C) and

(f)(2)(D) of the Act, which outlines the

methods for calculating CEP profit,

provides no guidance or support for the

use of other producers’ profits when

calculating CEP profit. Further, Hitachi

contends that the financial statements

the Department used to calculate CEP

profit contain expenses incurred by the

foreign manufacturer and exporter and

the affiliated U.S. company to the

narrowest category of merchandise sold

in all countries, which includes the

subject merchandise.

DOC Position

We disagree with the petitioners that

the Department should deviate from the

methodology used in the preliminary

determination and, instead, use Nippon

and Daido’s profit rates, as well as the

CV data, to calculate CEP profit. Section

772 (f)(2)(C) of the Act prescribes three

alternative methods for determining

total expenses for purposes of

calculating CEP profit. The use of any of

the methods depends on the data

available to the Department. See Policy

Bulletin No. 97 (Sep. 4, 1997). The first

alternative, section 772(f)(2)(C)(i), is not

applicable because Hitachi does not

have a viable home market and the

statute does not require the company to

submit cost data for the home market

solely for purposes of calculating CEP

profit. The Department is precluded

from using the second alternative,

section 772(f)(2)(C)(ii), to calculate CEP

profit because Hitachi does not prepare

financial reports that would include

only merchandise sold in the United

States and the exporting country. By

relying on both the Yasugi Works

income statement and the HMA income

statement, the Department was able to

compute CEP profit in accordance with

the third alternative under section

772(f)(2)(C)(iii), which relies on sales

prices and expenses incurred with

respect to the narrowest category of

merchandise sold in all countries which

includes subject merchandise. See, e.g.,

Notice of Final Results of Antidumping

Administrative Review: Furfuryl Alcohol

From the Republic of South Africa, 62

FR 61084, 61090 (Nov. 14, 1997);

Preliminary Results of Administrative

Review: Roller Chain, Other than

Bicycles from Japan, 62 FR 25165,

25170 (May 8, 1997). Accordingly, for

the final determination, we have

continued to rely on Yasugi Works’ and

HMA’s income statements when

calculating CEP profit.

Comment 16: Weight Averaging of

Further Manufacturing Costs.

The petitioners argue that, with regard

to Hitachi’s further manufacturing costs,

a single weighted average cost should be

calculated for each product. The

petitioners point out that Hitachi

reported specific further manufacturing

costs for each sale made in the United

States. According to the petitioners,

consistent with the Department’s

established practice, COP and CV

should be reported as a single weighted

average cost for each product.

Hitachi contends that it appropriately

reported its further manufacturing costs.

However, it does not object to the

Department’s weight averaging of

Hitachi’s further manufacturing costs by

product code.

DOC Position

We agree with the petitioners. Our

practice is to calculate a single

weighted-average cost using production

quantity as the weighting factor for each

product sold in the United States, as

described in the Department’s section E

questionnaire. See the Department’s

Questionnaire at page E–2; see also,

Notice of Final Determination of Sales

at Less Than Fair Value; Open-End

Spun Rayon Singles Yarn From

Australia, 62 FR 43701, 43703 (Aug. 15,

1997). Accordingly, for the final

determination, we have adjusted

Hitachi’s further manufacturing costs to

calculate one weighted-average cost for

each product.

Nippon Steel Corp.

Comment 17: Ultra Fine Rod.

In its questionnaire response, Nippon

reported home market sales of a

particular type of SSWR which it terms

ultra fine (UF) SSWR. The Department

used these sales in our analysis for

purposes of the preliminary

determination. Nippon argues that, for

the final determination, the Department

should exclude UF SSWR from the

scope of this investigation, claiming

now that it is a unique product

produced by a manufacturing process

distinct from that of other types of

SSWR. According to Nippon, the

manufacture of UF SSWR includes

expensive processes (i.e., electron beam

remelting and secondary forging) not

required for the production of other

types of SSWR within this investigation.

Nippon asserts that these additional

processes occur after the billet is

conditioned. In addition, Nippon points

out that the manufacturing costs for UF

SSWR are significantly higher than its

other SSWR products. Therefore,

Nippon contends that UF SSWR is not

subject merchandise.

Nippon further asserts that the

definition of subject merchandise in the

petition and the Department’s

preliminary determination excludes UF

SSWR. Nippon states that subject

merchandise has been defined as SSWR

that is ’’. . . manufactured only by hotrolling or hot-rolling, annealing, and/or

pickling and/or descaling. . . .’’ See

Preliminary Determination, 63 FR

10854, 10856 (March 5, 1998) (emphasis

added by Nippon). According to

Nippon, UF SSWR is not manufactured

only by hot-rolling or hot-rolling,

annealing, and/or pickling and/or

descaling, but is, in fact, manufactured

by numerous processes beyond those

listed in the Department’s initiation

notice (see Initiation of Antidumping

Investigations: Stainless Steel Wire Rod

From Germany, Italy, Japan, Korea,

Spain, Sweden, and Taiwan, 62 FR

45224 (August 26, 1997)) and

preliminary determination. Therefore,

Nippon asserts that UF SSWR is not

within the scope and, thus, should be

excluded from this investigation.

Additionally, Nippon contends that

the Department’s regulatory criteria for

determining whether a product

constitutes the subject merchandise

support excluding UF SSWR from this

investigation. Nippon states that,
40444 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

although this regulatory provision

applies to post-order scope inquiries,

the criteria within the regulatory

provision are instructive to the

Department’s analysis and show that UF

SSWR is different from standard rod

because its physical characteristics,

purchasers’ expectations, ultimate use,

channels of trade, and manner of

advertisement and display apply only to

UF SSWR. Accordingly, Nippon urges

the Department to find that UF SSWR is

outside the scope of this investigation.

Alternatively, if the Department finds

that UF SSWR is subject merchandise,

Nippon argues that UF SSWR cannot be

used in any product matches if the

Department accepts the unique further

processing codes for UF SSWR that

were reported by Nippon. Nippon urges

the Department to accept the unique

further processing codes Nippon

assigned UF SSWR in its databases

because of the differences in the

production process between UF SSWR

and standard SSWR and because the

Department’s questionnaire asked

Nippon to report ‘‘any and all further

processing’’ without limiting ‘‘further

processing’’ to post-production or

finishing operations. Nippon argues that

accepting its distinct further processing

codes will, in turn, result in the

Department assigning separate product

control numbers to UF SSWR.

According to Nippon, this will result in

removing UF SSWR from all product

matches because no products with the

distinct UF SSWR product control

numbers were sold in the U.S. market

and the Department’s matching

operation should show that UF SSWR

cannot be most similar to any imported

SSWR product. To support its argument

that UF SSWR is a unique product and,

thus, should be assigned its own

product control number, Nippon cites

Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products From the United

Kingdom: Final Results of Antidumping

Duty Administrative Review, 63 FR

18879, 18881 (April 16, 1998), where

the Department allowed for the use of

separate product control numbers,

where there were differences in the

chemical compositions of the products

in question, if such differences were

important to the respondent and its

customers. In addition, Nippon asserts

that the Department considers whether

product differences are purposeful and

commercially significant in determining

whether an assigned product control

number is warranted. See Certain HotRolled Lead and Bismuth Carbon Steel

Products From the United Kingdom:

Final Results of Antidumping

Administrative Review, 60 FR 44009,

44011 (August 24, 1995).

Finally, Nippon argues that UF SSWR

cannot be used for any match with

standard SSWR because the resulting

DIFMER adjustment would exceed that

allowed by the Department. See 19 CFR

351.411. According to Nippon, any

comparison between UF SSWR and

standard SSWR sold in the United

States would exceed the DIFMER

adjustment limit because of the cost

differences that result from the

differences in the physical

characteristics of UF and standard

SSWR. Accordingly, Nippon urges the

Department to exclude home market

sales of UF SSWR from the final

antidumping margin calculations.

The petitioners assert that UF SSWR

is within the scope of this investigation

because, as established by the petition

and by the Department, it is a stainless

steel product that is produced from a

billet and is hot-rolled. In response to

Nippon’s contention that UF SSWR is

outside the scope because it is subject

to special processing in addition to

being hot-rolled, the petitioners argue

that the significance of the phrase ‘‘hotrolled only’’ in the scope language is to

distinguish SSWR from products that

are subject to a cold-drawing or coldfinishing process after the billet is

produced. The petitioners argue that

they never intended to exclude products

based on any particular production

steps taken when producing the billet.

Therefore, the petitioners assert that UF

SSWR is within the scope because it is

stainless steel that is made into a billet

and is eventually hot-rolled into wire

rod, regardless of the type or types of

billet processing.

If the Department accepts Nippon’s

data on UF SSWR, the petitioners argue

that the Department should reject

Nippon’s efforts to create a new

matching criterion in this investigation.

According to the petitioners, Nippon

characterizes a process used in the

production of the billet, the raw

material used to manufacture wire rod,

as ‘‘further processing’’ of hot-rolled

wire rod. The petitioners contend that

the processes used to refine the billet

were not included as part of the

matching criteria in this investigation

and that billet processing is not a

‘‘further processing’’ step performed on

wire rod. The petitioners assert that

‘‘further processing,’’ included as part of

the matching criteria in this

investigation, was intended to cover

finishing steps (i.e., annealing or

pickling) conducted after the wire rod

had been hot-rolled. Therefore,

according to the petitioners, since billet

processing is conducted before the wire

rod is hot-rolled and is not a finishing

step, the Department should deny

Nippon’s submission of unique further

processing codes and separate costs to

distinguish UF SSWR.

DOC Position

We disagree with Nippon that UF

SSWR is not within the scope of the

investigation. As discussed in response

to Comment 14, when the Department

considers whether a product is within

the scope of an investigation, the

analysis focuses on the language of the

scope contained in the petition. The

purpose of this analysis is to determine

the petitioner’s intent with respect to

the scope coverage. Minebea Co., Ltd. v.

United States, 782 F. Supp. 117, 120

(CIT 1992) (the Department uses its

‘‘broad discretion to define and clarify

the scope of an antidumping

investigation in a manner which reflects

the intent of the petition’’). If the scope

language in the petition is ambiguous,

the Department examines additional

evidence. Torrington Co. v. United

States, 786 F. Supp. 1021, 1026 (CIT

1992). In this case, the petitioners

proposed a definition of the scope of the

investigation that included wire rod

products that are defined within the

industry as:

hot-rolled or hot-rolled annealed and pickled

or descaled rounds, squares, octagons,

hexagons and shapes, in coils, for subsequent

cold-drawing or cold-rolling. Since stainless

steel wire rod is only manufactured by hotrolling and is primarily sold in coiled form,

Petitioners believe that only HTS heading

7221 is applicable to stainless steel wire rod.

In addition, while stainless steel bar is

manufactured by both hot-rolling and coldrolling processes, it is always produced in

straight lengths.

See Petition at page I–7 (quotation and

footnotes omitted). The abovereferenced language was adopted by the

Department in the scope definition

contained in the preliminary

determination:

For purposes of this investigation, SSWR

comprises products that are hot-rolled or hotrolled annealed and/or pickled and/or

descaled rounds, squares, octagons, hexagons

or other shapes, in coils, that may also be

coated with a lubricant containing copper,

lime or oxalate. SSWR is made of alloy steels

containing, by weight, 1.2 percent or less of

carbon and 10.5 percent or more of

chromium, with or without other elements.

These products are manufactured only by

hot-rolling or hot-rolling, annealing, and/or

pickling and/or descaling, are normally sold

in coiled form, and are of solid cross-section.

The majority of SSWR sold in the United

States is round in cross-sectional shape,

annealed and pickled, and later cold-finished

into stainless steel wire or small-diameter

bar.
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40445

See Preliminary Determination at

10,856.

As the petitioners have stated on the

record, their use of the phrase ‘‘only by

hot rolling’’ is meant to distinguish

stainless steel bar, a product that is

manufactured both by hot-rolling and

cold-rolling processes, from SSWR,

described as only manufactured by hot

rolling. Thus, the petitioners did not

intend to exclude any SSWR product in

which the billet used to produce the

product undergoes additional processes

prior to being hot rolled. The only

express exclusions of SSWR products

contained in the petitions pertained to

SSWR grades SF20T and K-M35FL.

Thus, contrary to Nippon’s assertion,

because UF SSWR is stainless steel that

is hot-rolled, annealed, pickled and

super finished, or hot-rolled, pickled

and super-finished, and otherwise meets

the specifications in the scope language,

it is within the scope of the

investigation.

We also disagree with Nippon that the

special processing of the billet used in

the production of UF SSWR should be

considered a separate, distinct, further

processing operation. Contrary to

Nippon’s assertion, the phrase ‘‘further

processing,’’ as used by the Department

in its questionnaire, was not meant to

include processing of the billet prior to

hot-rolling but, rather, was limited to

the hot-rolling process and subsequent

finishing operations. The Department’s

questionnaire, under the description of

further processing, states the following:

Report any and all further processing.

Show ‘‘1’’ for hot-rolled

Show ‘‘2’’ for hot-rolled, annealed

Show ‘‘3’’ for hot-rolled, annealed and

pickled

Show ‘‘4’’ for other method (indicate

method)

See the Department’s September 19,

1998, antidumping questionnaire at

page C–7. In its response, Nippon

reported eight different further

processing codes, all beginning with the

hot-rolling process and including one or

more additional finishing processes (i.e.,

annealed and/or picked, and/or super

finished), which indicates that Nippon

understood the information requested

by the Department. See Nippon’s

December 15, 1998, Sections B and C

questionnaire response at Appendix 26.

This conclusion is supported by the fact

that Nippon briefly described the UF

SSWR production process in its Section

A questionnaire response, but did not

then include these additional processes

in its response to the request for

information on further processing. See

Nippon’s December 15, 1998, Section A

questionnaire response at page A–38

(‘‘One kind of NSC’s stainless steel wire

rod, Ultra Fiber (‘‘UF’’), undergoes a

remelting or reheating process. By

remelting twice, non-metallic inclusion

is reduced to the minimum, which

enables the UF to be drawn to extremely

small diameters.’’). It was only after the

preliminary determination that Nippon

presented the argument that the

processing operations specific to UF

SSWR should be included in the further

processing codes.

For the final determination, the

Department has continued to limit

‘‘further processing’’ operations to the

hot-rolling and subsequent finishing

processes performed on the rod itself.

With regard to Nippon’s argument

that the Department’s practice justifies

assigning separate control numbers to

UF SSWR and non-UF SSWR, for the

sole reason that UF SSWR undergoes

additional processing resulting in

differences in chemical composition, we

note that, from the outset of this

investigation, the Department has

consistently held that it would consider

four criteria when designating control

numbers: grade, diameter, further

processing, and coating. As in past

investigations involving steel products,

we selected ‘‘grade’’ as a matching

criterion, in place of actual chemical

content, because we determined that

grade sufficiently defines the chemical

content of the merchandise. See, e.g.,

Final Determination of Sales at Less

Than Fair Value: Certain Stainless Steel

Wire Rods from France, 58 FR 68865

(Dec. 29, 1993). In fact, Nippon

supported this decision and argued

strongly against the petitioners’ request

that the respondents report the actual

chemical content of each production

heat. See Nippon’s October 21, 1997,

submission. The information on the

record, and verified by the Department,

indicates that the chemical content of

Nippon’s UF SSWR falls within the

ranges of established standard AISI steel

grades. The fact that the billet used to

produce UF SSWR undergoes certain

production processes that allegedly

impart to it some particular properties is

irrelevant. The process does not alter

the steel chemically to the extent that it

results in a unique grade of steel: it

continues to fall within standard AISI

grade designations. Thus, for purposes

of the final determination, we continued

to use the four matching criteria,

including grade, as outlined in our

questionnaire, when assigning control

numbers to both UF and non-UF SSWR.

We disagree with the petitioners,

however, that we should reject Nippon’s

cost allocation methodology (i.e., that

we should continue to allocate UF

SSWR costs over all products). It is the

Department’s longstanding practice to

use a single-weighted average cost for

all products falling within a particular

control number. See, e.g., Notice of

Final Determination of Sales at Less

Than Fair Value; Open-End Spun Rayon

Singles Yarn From Australia, 62 FR

43701, 43703 (Aug. 15, 1997).

Specifically, the Department’s

questionnaire directed Nippon to report

‘‘a single weighted-average cost for each

unique product as represented by a

specific control number.’’ See the

Department’s September 19, 1997,

Questionnaire at page D–1. For the

preliminary determination, Nippon

failed to allocate the cost of UF SSWR

to the specific control number that

included UF SSWR. Following the

preliminary determination, Nippon

submitted revised sales and cost data

which assigned UF SSWR separate

control numbers depending on what

Nippon defined as the further

processing of the billet. This revised

cost data was subsequently verified by

the Department. In light of our

determination that UF SSWR should not

be assigned a separate control number,

and in accordance with our practice of

allocating costs on a control numberspecific basis, for the final

determination, we have calculated a

single-weighted average cost for all

products (UF SSWR and non-UF SSWR)

falling within a specific control number.

Comment 18: Timeliness of Nippon’s

UF SSWR Submissions.

The petitioners contend that Nippon’s

submitted information on its UF SSWR

should be rejected by the Department as

untimely. According to the petitioners,

Nippon first claimed that its UF SSWR

sales were outside the scope of this

investigation in its March 4, 1998,

supplemental questionnaire response.

The petitioners assert that Nippon did

not submit special product code

designations for UF SSWR in the March

4, 1998, submission. The petitioners

contend that Nippon did not submit

revised cost data to reflect the unique

status of UF SSWR until March 23,

1998. According to the petitioners,

Nippon did not revise its further

processing codes to reflect UF SSWR

until its March 25, 1998, clerical errors

submission. Finally, the petitioners

point out that Nippon submitted

corrections to its March 23, 1998,

revised cost data submission on May 29,

1998. The petitioners argue that

Nippon’s submissions, subsequent to

the preliminary determination, violate

the Department’s regulations (see 19

CFR section 353.301(b)(1)) and have

denied the petitioners an opportunity to

adequately comment on the new data.

Accordingly, the petitioners urge the
40446 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

Department to reject Nippon’s data as

untimely and, instead, rely on facts

available.

Nippon argues that it is permitted to

submit information at any time in

response to the Department’s request.

See 19 CFR 351.301(c)(2). Nippon states

that it initially provided information on

its UF SSWR on March 4, 1998, in

response to the Department’s February

25, 1998, supplemental questionnaire,

which included a request for

information on appropriate model

matches. Nippon asserts that its cost

data for UF SSWR sales was provided to

the Department on March 23, 1998, and

was referenced in its March 4, 1998,

submission. Nippon further argues that

its subsequent submissions relating to

UF SSWR (i.e., the March 25, 1998, and

May 28, 1998, submissions referenced

by the petitioners) were merely

corrections to clerical errors. Thus,

according to Nippon, its information on

UF SSWR was not untimely under the

Department’s regulations, providing the

petitioners an opportunity to comment

on this issue since March 1998.

DOC Position

We agree with Nippon that its

information placed on the record

regarding UF SSWR was requested by

the Department pursuant to 19 CFR

351.301(c)(2) and was not untimely

filed. In its February 25, 1998,

supplemental questionnaire, the

Department requested certain new

information on the method for model

matching, which included a due date of

March 4, 1998. In responding to that

supplemental questionnaire on March 4,

1998, and providing the requested data,

Nippon included a request that its UF

SSWR product be excluded from the

investigation, based on its analysis of

the new information the Department

requested. Because Nippon’s exclusion

request was tied to the new information

it submitted at the request of the

Department, we find that the

submission was received by the due

date and, thus, was not untimely filed.

See 19 CFR 351.301(c)(2). Subsequently,

Nippon submitted cost data and revised

further processing codes to support its

March 4, 1998, contention that UF

SSWR is outside the scope of this

investigation. Because this information

was filed in response to the

Department’s request, we did not reject

it as untimely for purposes of the final

determination.

Comment 19: Appropriate Matching

Hierarchy for Further Processing Codes.

Nippon argues that, in the

preliminary determination, the

Department failed to take into account

the similarity of different types of

further processing conducted on SSWR

when determining the most similar

match for U.S. sales of SSWR. Nippon

contends that the Department selected

the further processing code numerically

closest to that of the U.S. product as the

most similar type of further processing

code, rather than the further processing

code most similar in terms of the actual

process that is performed on the

product. Nippon states that, as a

consequence of the methodology used,

the Department’s preliminary

determination program rejected, as

matches, products with further

processing more similar to the U.S.

product than those used in the margin

calculation.

The petitioners argue that the

Department properly matched further

processing codes for purposes of its

preliminary determination and should

continue to use the same methodology

in its final determination. The

petitioners contend that, if Nippon

believed the Department should change

its methodology, Nippon should have

submitted detailed cost data supporting

its argument (i.e., showing that the cost

of annealed products is not substantially

greater than the cost of products that

were not annealed). The petitioners

argue that, because Nippon failed to do

so, the Department’s model match

methodology properly compared U.S.

products that have been annealed to

home market products that have been

both annealed and super finished. The

petitioners state that the annealing

process is a critical and costly finishing

operation that significantly alters the

merchandise; in contrast, the super

finishing operation is not typically as

important as annealing. Thus, according

to the petitioners, products that are

annealed and super-finished are more

similar to products that have been

annealed than are products that have

not been annealed. The petitioners thus

contend that the Department’s matching

hierarchy for further processing was not

simply based on selecting the closest

numerical code; rather, it properly

selected the next most similar product

and, therefore, should not be changed.

DOC Position

We agree with the petitioners. Nippon

has provided no support for its claim

that the Department rejected, as

matches, products with further

processing operations more similar to

the U.S. product than those used in the

margin calculation. For example,

Nippon states that a home market

product that has been hot-rolled and

pickled is a more appropriate match to

a U.S. product that has been hot-rolled,

annealed, and pickled than a home

market product that has been hot-rolled,

annealed, pickled and super finished.

However, Nippon does not explain why

hot-rolled and pickled is, in fact, a more

similar further processing match to hotrolled, annealed and pickled than the

Department’s selection of hot-rolled,

annealed, pickled and super-finished.

Without a justification for a change in

the methodology, the Department is

unable to make a determination as to the

merits of Nippon’s argument. While

Nippon has not provided an argument

as to why one methodology is more

appropriate than another, the petitioners

have argued that the annealing process

is a critical and costly finishing

operation that significantly alters the

merchandise, while the super-finishing

operation is not typically as important

a finishing operation as annealing.

Accordingly, for the final determination,

the Department has not altered its

model matching methodology.

Comment 20: Denomination of U.S.

Sales Prices and the Proper Borrowing

Rate to Calculate U.S. Credit Expense.

The petitioners argue that Nippon

should have reported its U.S. sales to

Japanese trading companies in yen, not

dollars, because Nippon conducted its

transactions with these customers

exclusively in yen. Given that Nippon

did not follow the Department’s original

instructions to report the prices in the

currency in which the payment was

made, the petitioners argue that the

Department should reject Nippon’s data.

At a minimum, the petitioners urge the

Department to make a downward

adjustment to Nippon’s U.S. prices

based on facts available.

The petitioners also assert that, given

that Nippon chose to report its prices in

U.S. dollars, it should not be permitted

to benefit from this misreporting by

using a yen-based interest rate. Rather,

the petitioners argue that the

Department should use the dollar-based

interest rate to calculate Nippon’s U.S.

credit expense.

Nippon argues that, because it

reported its net sales prices (i.e., gross

unit price minus trading company

discount) in yen, as well as the gross

price and trading company discount in

U.S. dollars, the petitioners’ claim that

Nippon did not report sales data in yen

is inaccurate. Accordingly, Nippon

argues that, even if the Department

decides to use U.S. sales data in yen, the

Department should use the reported

sales price, and not apply facts

available. Further, if the Department

uses U.S. sales data in yen, Nippon

asserts that the petitioners’

recommended methodology of using the

yen-based U.S. price and then

converting it back into U.S. dollars
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40447

would require two currency exchanges

using two different exchange rates.

Nippon explains that the Department

uses the Federal Reserve daily exchange

rates, adjusted for fluctuations on the

date of the U.S. sale, and that Nippon

uses forward exchange rate contracts set

a number of days after the shipment

date. Accordingly, Nippon asserts that

the Department would need to

incorporate both of these exchange rates

into any conversion of yen-based U.S.

price back into U.S. dollars. Nippon

observes that this process would be

distortive because of the differences in

exchange rates. Accordingly, the

Department should continue to use the

dollar-based U.S. price because it does

not require a currency conversion that

would distort the U.S. price. Nippon

concludes that, regardless of the

Department’s determination, the

Department should use the reported

sales price in U.S. dollars for sales made

by Nittetsu Shoji because Nittetsu

Shoji’s sales to its U.S. customers were

transacted and billed in U.S. dollars.

Nippon also argues that, while the

amount reported on the invoice was

denominated in U.S. dollars, the

amount it charged to the unaffiliated

trading company (i.e., the gross price

less a standard discount) was

denominated in yen and, therefore, the

Department should use Nippon’s yenbased borrowing rate when calculating

its U.S. credit expense, in accordance

with its established practice. See Final

determination of Sales at Less Than Fair

Value: Oil Country Tubular Goods from

Austria, 60 FR 33551, 33555 (June 28,

1995) and Policy Bulletin No. 98.2

(February 23, 1998).

DOC Position

We agree with Nippon. In the

questionnaire sent to Nippon, the

Department instructed Nippon to report

the gross unit price recorded on the

invoice. In this case, the gross unit price

recorded on the invoice is recorded in

U.S. dollars. Also recorded on the

invoice is the percent discount

applicable to the sale and the net price

in yen charged to the unaffiliated

Japanese trading company. There is no

gross price in yen reported on the

invoice. Rather, Nippon took the dollar

amount, subtracted a 2.5 percent trading

company discount, and then multiplied

this amount by an exchange rate

provided in the invoice. Accordingly,

since Nippon reported its sales in

accordance with the Department’s

instructions (i.e., it reported the gross

unit price recorded on the invoice), we

have continued to use the information

provided by Nippon in the final

determination.

Additionally, Nippon provided a

separate field in which it reported the

net unit price charged to the trading

company, which it defined as the gross

price less the standard trading company

discount converted to yen using the

exchange rate reflected on the invoice.

We confirmed at verification that

Nippon received the yen-denominated

amount from the trading company.

Therefore, in accordance with the

Department’s practice, as outlined in

Policy Bulletin No. 98.2 (February 23,

1998), for the final determination, we

used Nippon’s yen-based borrowing rate

when calculating U.S. credit expenses.

However, because sales by Nittetsu

Shoji to unaffiliated customers in the

United States were denominated in U.S.

dollars, for the final determination, we

continued to use the dollar-based

interest rate when calculating U.S.

credit expense for Nittetsu Shoji’s U.S.

sales.

Comment 21: Time Period for

Calculating Credit Expense.

Nippon points out that, in the

preliminary determination, in

calculating credit expense for Nittetsu

Shoji, the Department used, as the date

of payment, the maximum number of

days that Nittetsu Shoji waited to

exchange the letter of credit for such

sales for cash, rather than the average

number of days. Nippon notes that the

Department did not use the average

number of days reported by Nittetsu

Shoji because this number was

unsubstantiated in the questionnaire

responses. Nippon now argues that,

because actual payment dates were not

readily accessible in its accounting

system, it followed the Department’s

instructions and reported the average

age of accounts receivables. Nippon

asserts that, at verification, the

Department verified Nittetsu Shoji’s use

of the average number of days in its

reporting and calculations. Nippon also

notes that the Department specifically

reviewed the payment dates and found

no discrepancies in Nittetsu Shoji’s

calculation of the short-term interest

rates. Accordingly, for purposes of the

final determination, Nippon urges the

Department to use the average number

of days, rather than the maximum

number of days that a letter of credit

was outstanding, when calculating

Nittetsu Shoji’s U.S. credit expense.

The petitioners counter that, while

the Department found no discrepancies

in the interest rates, the Department did

not verify the accuracy of the payment

periods reported by Nittetsu Shoji. In

fact, the petitioners argue that the

Department found at verification that,

for at least one U.S. sale, Nittetsu Shoji

had not reported the payment dates

accurately (i.e., Nittetsu Shoji

understated the actual payment period).

Accordingly, given that Nippon failed to

demonstrate at verification that the

payment periods were accurate, the

petitioners urge the Department to reject

the payment periods reported by

Nippon and, instead, rely on the longest

payment period reported for Nippon’s

U.S. sales as facts available.

DOC Position

We agree with Nippon. The payment

period reported by Nittetsu Shoji is an

average payment period. As an

‘‘average,’’ this payment period may be

longer for some sales, as in the example

cited by the petitioners, while it may be

shorter for other sales. Our

questionnaire permits the use of an

average payment period where a

respondent asserts, and the Department

verifies, that the actual payment dates

are not readily accessible in the

respondent’s accounting system. See

Questionnaire at page C–23. Moreover,

at verification, while the Department

verified the payment dates of individual

sales, it did not verify the average

number of days used in the credit

calculation. Because the range of

payment dates analyzed at verification

is comparable with the range of

payment dates reported by Nittetsu

Shoji, we have determined that, for the

final determination, it is appropriate to

use the average number of payment days

reported by Nittetsu Shoji when

calculating credit expense.

Comment 22: Home Market Credit

Expenses.

The petitioners argue that Nippon’s

Verification Report at page 6 indicates

that the payment terms reported by both

Nippon and Nittetsu Shoji do not

properly reflect the actual credit

expenses incurred. Specifically, the

petitioners note that the Department

found at verification that, for one of the

home market sales traces, Nittetsu Shoji

received advance payment and, as a

result, paid the customer interest on that

payment amount until the originally

agreed upon payment due date. The

petitioners argue that credit expenses

must be reported based on the expenses

actually incurred, not on Nippon’s

estimation of what its credit expenses

were. The petitioners contend that,

assuming that Nittetsu Shoji or Nippon

actually paid their customers interest on

prepayments, Nippon should have

reported the actual payment dates and

the amount of interest paid for all sales.

The petitioners state that, because

Nippon failed to provide the

information requested by the

Department, and did not demonstrate at

verification that the information
40448 Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices

contained in its questionnaire response

was correct, the Department should

reject Nippon’s home market credit

expense adjustment.

Nippon counters that, because its

reporting and calculation of home

market imputed credit expense was

consistent with the Department’s

instructions, and was subsequently

verified, it should be used in the final

determination. First, Nippon argues that

it would be unreasonable for the

Department to reject all of Nippon’s

credit expenses when the alleged error

related only to sales by Nittetsu Shoji,

not Nippon. Second, the petitioners’

complaint that Nippon did not report

actual credit expenses should be

disregarded because imputed expenses

by their nature are not actual expenses.

Nippon explains that the imputed credit

expense requested from a respondent

and used by the Department in its

margin calculations represents the

theoretical opportunity cost to the

respondent for extending credit to its

customers until the payment date and,

as such, is not an actual amount. In

addition, Nippon states that the sales

trace noted by the petitioners represents

an anomalous payment of interest by

Nittetsu Shoji to a customer who paid

the invoice before the due date. As such,

while imputed credit expense is the

theoretical cost to Nittetsu Shoji of

lending money to its customer through

extended payment terms, the sale noted

by the petitioners involves the opposite,

a loan by the customer to Nittetsu Shoji

with the payment by Nittetsu Shoji to

the customer representing a payment of

interest on the short-term loan.

Therefore, Nippon contends that

Nittetsu Shoji’s payment of interest to

this one customer should have no

bearing on Nippon’s imputed credit

expense adjustment.

Third, Nippon notes that, because the

interest amount Nittetsu Shoji paid to

the customer on the prepayment was

greater than the average short-term

interest rate used by Nittetsu Shoji to

calculate imputed credit expense,

Nittetsu Shoji’s methodology did not

result in a benefit to Nittetsu Shoji, but

rather was a conservative methodology

for calculating imputed credit expense

which followed the Department’s

standard practice.

Finally, Nippon argues that its

reporting of home market imputed

credit expense was consistent with the

Department’s instructions. Citing the

Department’s verification report for

Nittetsu Shoji, Nippon notes that the

Department found no significant

discrepancies or inconsistencies with

the questionnaire responses.

Accordingly, Nippon contends that the

petitioners’ argument that Nittetsu Shoji

failed to demonstrate at verification that

the information contained in its

questionnaire response was correct is in

direct conflict with the Department’s

verification report.

DOC Position

As noted by Nippon, imputed credit

expenses represent the opportunity cost

to the respondent of extending credit to

its customers until the payment due

date. As such, they are not actual

expenses incurred and recorded by a

respondent. See, e.g., Certain Fresh Cut

Flowers from Colombia: Final Results of

Antidumping Duty Administrative

Review, 63 FR 31724, 31727 (June 10,

1998). We use such opportunity costs

when there is no actual credit expense

recorded on the books of the

respondent. When a customer pays a

respondent for merchandise after

shipment of the merchandise, the

opportunity cost to that respondent is

the number of days between shipment

and payment times the respondent’s

short-term borrowing rate applied to the

gross unit price less any discounts. See

Policy Bulletin No. 98.2 (Feb. 23, 1998).

However, when a customer prepays for

the merchandise, and then is paid

interest on that prepayment, the actual

cost to a respondent for offering

extended payment terms is the amount

of interest paid to the customer between

the date of payment and the agreed

upon payment due date and there is no

need to calculate an opportunity cost.

Accordingly, this is the amount that

should have been reported to the

Department, along with the date the

customer paid for the merchandise and

the agreed upon payment due date. The

methodology employed by Nittetsu

Shoji in calculating imputed credit

expenses for the particular sale in

question did not accurately reflect its

costs of extending credit to this

customer.

However, we note that this was the

only verified instance in which Nittetsu

Shoji received prepayment and then

paid interest to the customer. See the

Department’s May 5, 1998, Sales

Verification Report for Nittetsu Shoji at

pages 5–6. Moreover, we did not note

any instances in which Nippon received

prepayment and then paid interest.

Therefore, we disagree with the

petitioners that Nippon and Nittetsu

failed to demonstrate at verification that

the information contained in Nippon’s

questionnaire response was correct and

that, therefore, the Department should

reject the home market credit expense

claimed by Nippon and Nittetsu Shoji.

Moreover, Nippon stated that this

prepayment to Nittetsu Shoji was

anomalous (i.e., not in accordance with

its usual practice), demonstrating that it

would have been beneficial to Nittetsu

Shoji to report the interest it had paid

in lieu of the imputed credit expense it

incurred.

Accordingly, for the final

determination, we have continued to

use the credit information provided by

Nippon and Nittetsu Shoji.

Continuation of Suspension of

Liquidation

In accordance with section 733(d) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of SSWR from

Japan—except for merchandise

produced and sold by Hitachi Metals

Ltd., which received a zero margin—

that are entered, or withdrawn from

warehouse, for consumption on or after

the date of publication of this notice in

the Federal Register. The Customs

Service shall continue to require a cash

deposit or the posting of a bond equal

to the weighted-average amount by

which the normal value exceeds the

U.S. price, as indicated in the chart

below. These suspension-of-liquidation

instructions will remain in effect until

further notice. The weighted-average

dumping margins are as follows:

Exporter/manufacturer

Weighted-average margin percentage

Daido Steel Co. Ltd. ..................... 34.21

Nippon Steel Corporation ............. 21.18

Hitachi Metals Ltd. ........................ 0.00

Sanyo Special Steel Co., Ltd. ...... 34.21

Sumitomo Electric Industries, Ltd. 34.21

All Others ...................................... 25.26

Pursuant to section 735(c)(5)(A) of the

Act, the Department has excluded any

zero and de minimis margins, and any

margins determined entirely under

section 776 of the Act, from the

calculation of the ‘‘All Others Rate.’’

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. As our final

determination is affirmative, the ITC

will, within 45 days, determine whether

these imports are materially injuring, or

threaten material injury to, the U.S.

industry. 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

Customs officials to assess antidumping
Federal Register / Vol. 63, No. 145 /Wednesday, July 29, 1998 / Notices 40449

duties on all imports of the subject

merchandise entered for consumption

on or after the effective date of the

suspension of liquidation.

This determination is published

pursuant to section 777(i) of the Act.

Dated: July 20, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 98–20020 Filed 7–28–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–401–806]

Notice of Final Determination of Sales

at Less Than Fair Value: Stainless

Steel Wire Rod From Sweden

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1998.

FOR FURTHER INFORMATION CONTACT:

Everett Kelly or Brian Smith, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482–4194 or (202) 482–

1766, respectively.

The Applicable Statute

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (‘‘the Act’’), are references to

the provisions effective January 1, 1995,

the effective date of the amendments

made to the Act by the Uruguay Round

Agreements Act (‘‘URAA’’). In addition,

unless otherwise indicated, all citations

to the Department’s regulations are to

the regulations at 19 CFR part 351, 62

FR 27296 (May 19, 1997).

Final Determination

We determine that stainless steel wire

rod (‘‘SSWR’’) from Sweden is being

sold in the United States at less than fair

value (‘‘LTFV’’), as provided in section

735 of the Act. The estimated margins

are shown in the ‘‘Suspension of

Liquidation’’ section of this notice.

Case History

Since the preliminary determination

(i.e., Notice of Preliminary

Determination of Sales at Less Than

Fair Value: Stainless Steel Wire from

Sweden, 63 FR 10841 (March 5, 1998)),

the following events have occurred:

In February 1998, we requested

additional information from Fagersta

Stainless AB (‘‘Fagersta’’) concerning

grade specifications and corresponding

matching control numbers. In March

1998, we received responses to these

questionnaires, as well as supplemental

responses to Sections D and E of the

Department’s antidumping

questionnaire. Also, Fagersta submitted

revised sales and cost databases.

From March to May 1998, we

conducted verification of Fagersta’s

responses to the antidumping

questionnaire. In May 1998, we issued

our verification reports for Fagersta,

Fagersta’s home market affiliates AB

Sandvik Steel (‘‘Sandvik’’) and Avesta

Welding, and Fagersta’s U.S. affiliates

Sandvik Steel Company (‘‘SSUS’’),

Avesta Sheffield Inc. (‘‘ASI’’), Amstek

Metal (‘‘Amstek’’) and the Kanthal

Corporation.

Also in May 1998, AL Tech Specialty

Steel Corp., Carpenter Technology

Corp., Republic Engineered Steels,

Talley Metals Technology, Inc., and

United Steelworkers of America (‘‘the

petitioners’’) withdrew their request for

a hearing. The petitioners and Fagersta

submitted case briefs on June 2, 1998,

and rebuttal briefs on June 9, 1998. On

June 12 and 15, 1998, we held separate

meetings with Fagersta and the

petitioners, respectively, concerning the

level of trade issue raised in their case

briefs and rebuttal briefs.

On June 23, 1998, Fagersta requested

that certain alloy metal wire rod and

wire for electric resistance heating

material and heating elements be

excluded from the scope of the

investigation. On July 6, 1998, the

petitioners stated that they agreed that

the scope of this investigation should

exclude the products in question. On

July 8, 10 and 14, Fagersta provided

detailed scope descriptions and

clarifications for the products it

requested be excluded from the scope of

this investigation (see ‘‘Scope of

Investigation’’ section of this notice for

further details).

Scope of Investigation

For purposes of this investigation,

SSWR comprises products that are hotrolled or hot-rolled annealed and/or

pickled and/or descaled rounds,

squares, octagons, hexagons or other

shapes, in coils, that may also be coated

with a lubricant containing copper, lime

or oxalate. SSWR is made of alloy steels

containing, by weight, 1.2 percent or

less of carbon and 10.5 percent or more

of chromium, with or without other

elements. These products are

manufactured only by hot-rolling or hotrolling annealing, and/or pickling and/

or descaling, are normally sold in coiled

form, and are of solid cross-section. The

majority of SSWR sold in the United

States is round in cross-sectional shape,

annealed and pickled, and later coldfinished into stainless steel wire or

small-diameter bar.

The most common size for such

products is 5.5 millimeters or 0.217

inches in diameter, which represents

the smallest size that normally is

produced on a rolling mill and is the

size that most wire-drawing machines

are set up to draw. The range of SSWR

sizes normally sold in the United States

is between 0.20 inches and 1.312 inches

in diameter. Certain stainless steel

grades are excluded from the scope of

the investigation. SF20T and K-M35FL

are excluded. The following proprietary

grades of Kanthal AB are also excluded:

Kanthal A–1, Kanthal AF, Kanthal A,

Kanthal D, Kanthal DT, Alkrothal 14,

Alkrothal 720, and Nikrothal 40. The

chemical makeup for the excluded

grades is as follows:

SF20T

Carbon ....................... 0.05 max.

Manganese ................ 2.00 max.

Phosphorous ............. 0.05 max.

Sulfur ......................... 0.15 max.

Silicon ........................ 1.00 max.

Chromium .................. 19.00/21.00.

Molybdenum .............. 1.50/2.50.

Lead .......................... Added (0.10/0.30).

Tellurium .................... Added (0.03 min).

K–M35FL

Carbon ....................... 0.015 max.

Silicon ........................ 0.70/1.00.

Manganese ................ 0.40 max.

Phosphorous ............. 0.04 max.

Sulfur ......................... 0.03 max.

Nickel ......................... 0.30 max.

Chromium .................. 12.50/14.00.

Lead .......................... 0.10/0.30.

Aluminum .................. 0.20/0.35.

KANTHAL A–1

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.

Manganese ................ 0.40 max.

Chromium .................. 20.50 min, 23.50

max.

Aluminum .................. 5.30 min, 6.30 max.

Iron ............................ Balance.

KANTHAL AF

Carbon ....................... 0.08 max.

Silicon ........................ 0.70 max.