Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices 27957

1 Shieldalloy is the petitioner in this

investigation and is related to GfE as both are

wholly-owned subsidiaries of Metallurg, Inc.

Dated: May 22, 1995.

Dennis Puccinelli,

Acting Executive Secretary.

[FR Doc. 95–13012 Filed 5–25–95; 8:45 am]

BILLING CODE 3510–DS–P

International Trade Administration

[A–821–807]

Notice of Final Determination of Sales

at Less Than Fair Value:

Ferrovanadium and Nitrided Vanadium

From the Russian Federation

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 26,1995.

FOR FURTHER INFORMATION CONTACT:

David J. Goldberger or Louis Apple,

Office of Antidumping Investigations,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C., 20230; telephone:

(202) 482–4136 or (202) 482–1769,

respectively.

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute and to the

Department of Commerce (the

Department) regulations are in reference

to the provisions as they existed on

December 31, 1994.

Final Determination: We determine

that imports of ferrovanadium and

nitrided vanadium from the Russian

Federation (Russia) are being, or are

likely to be, sold in the United States at

less-than-fair-value (LTFV), as provided

in section 735 of the Tariff Act of 1930,

as amended (the Act). The estimated

margins are shown in the ‘‘Continuation

of Suspension of Liquidation’’ section of

this notice.

Case History

Since the Department announced its

preliminary determination on December

27, 1994, (60 FR 438, January 4, 1995)

the following events have occurred:

In response to our request, on

February 27, 1995, we received

additional surrogate valuation data from

Odermet Limited (Odermet), Galt

Alloys, Inc. (Galt), SC VanadiumTulachermet (Tulachermet), and

Chusavoy Metallurgical Works

(Chusavoy).

On February 17, 1995, we amended

our preliminary determination to correct

a significant ministerial error (60 FR

10563, February 27, 1995).

From January through March , 1995,

we conducted verifications at Galt,

Tulachermet, Chusavoy, Odermet,

Shieldalloy Metallurgical Corporation

(Shieldalloy), and Gesellschaft fur

Elektrometallurgie m.b.H. (GfE).1

Verification reports were issued in

February, March, and April, 1995.

On April 17, 1995, the petitioner,

Shieldalloy, and respondents Odermet,

Chusavoy, Galt, and Tulachermet filed

case briefs. Rebuttal briefs were

submitted by these parties on April 24,

1995. A public hearing was held on

April 26, 1995.

Scope of Investigation

The products covered by this

investigation are ferrovanadium and

nitrided vanadium, regardless of grade,

chemistry, form or size, unless expressly

excluded from the scope of this

investigation. Ferrovanadium includes

alloys containing ferrovanadium as the

predominant element by weight (i.e.,

more weight than any other element,

except iron in some instances) and at

least 4 percent by weight of iron.

Nitrided vanadium includes compounds

containing vanadium as the

predominant element, by weight, and at

least 5 percent, by weight, of nitrogen.

Excluded from the scope of this

investigation are the vanadium

additives other than ferrovanadium and

nitrided vanadium, such as vanadiumaluminum master alloys, vanadium

chemicals, vanadium waste and scrap,

vanadium-bearing raw materials, such

as slag, boiler residues, fly ash, and

vanadium oxides.

The products subject to this

investigation are currently classifiable

under subheadings 2850.00.20,

7202.92.00, 7202.99.5040, 8112.40.3000,

and 8112.40.6000 of the Harmonized

Tariff Schedule of the United States

(HTSUS). Although the HTSUS

subheadings are provided for

convenience and customs purposes, our

written description of the scope is

dispositive.

Period of Investigation

The period of investigation (POI) is

December 1, 1993, through May 31,

1994.

Non-Market Economy Country Status

Russia has been treated as a nonmarket economy (NME) for the purpose

of determining foreign market value

(FMV) in all past antidumping

investigations (see, e.g., Final

Determinations of Sales at Less Than

Fair Value: Pure Magnesium and Alloy

Magnesium from Russia, 60 FR 16432

(March 30, 1995)) (Magnesium from

Russia). No information has been

provided in this proceeding that would

lead us to consider changing this

designation. Therefore, in accordance

with section 771(18)(c) of the Act, we

continue to treat Russia as a NME for

purposes of this investigation.

Best Information Available (BIA)

In this investigation, three companies

failed to respond to the Department’s

questionnaire, and we were unable to

verify the sales response of a fourth

company, Tulachermet (discussed

below under Comment 1). Consistent

with the Department’s two-tiered

methodology for assigning BIA, we have

based the BIA margin on the highest

margin in the petition (see, Final

Determination of Sales at Less Than Fair

Value: Antifriction Bearings (other than

Tapered Roller Bearings) and Parts

Thereof from the Federal Republic of

Germany, 54 FR 1892, 19033 (1989))

and (Allied Signal v. United States, 996

F.2d 1185 (Fed. Cir. 1993) (June 22,

1993)).

Fair Value Comparisons

In cases involving imports from

NMEs, we calculate a single

antidumping duty margin for companies

that do not demonstrate that they are

entitled to separate rates. The Russiawide margin in this case, which applies

to all exporters other than Galt, GfE, and

Odermet, is the BIA rate. Galt, GfE, and

Odermet have received separate rates.

To determine whether sales to the

United States of ferrovanadium and

nitrided vanadium by Galt, GfE, and

Odermet, were made at less than fair

value, we compared the United States

price (USP) to FMV, as specified in the

‘‘United States Price’’ and ‘‘Foreign

Market Value’’ sections of this notice.

United States Price (USP)

Pursuant to section 772 of the Act,

USP was calculated on the basis of

purchase price for Odermet, and

exporter’s sales price (ESP) for Galt and

GfE, as described in the preliminary

determination notice. Pursuant to

findings at verification, we made the

following adjustments to our margin

calculations:

• For GfE, we deducted handling and

repacking expenses incurred in

Germany on certain sales. We revised

the inland freight to customer expense

incurred on certain sales to reflect

verification findings. Finally, we revised

the general and administrative expenses

allocated to further manufacturing

expenses to include environmental

cleanup expenses omitted by GfE’s U.S.
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affiliate, Shieldalloy, as derived from

verification information.

• For Odermet, we revised ocean

freight, brokerage, and containerization

per-unit expenses on a contained

vanadium weight basis, rather than

gross weight basis (see Comment 12).

We also revised inland insurance and

marine insurance expenses, which

Odermet had allocated on the basis of

weight, to a value basis, reflecting the

manner in which these expenses were

incurred. Finally, we recalculated

foreign inland freight using surrogate

values, based on our verification finding

that the actual freight services were

provided by NME subcontractors (see

Comment 10).

Foreign Market Value

In accordance with section 773(c) of

the Act, we based FMV for

ferrovanadium and nitrided vanadium

on the factors of production reported by

the two factories in Russia,(i.e.,

Chusovoy and Tulachermet), which

produced the subject merchandise for

export to the United States. We

calculated FMV based on factors of

production as cited in the preliminary

determination, making the following

adjustments:

• We applied this methodology to

Odermet’s sales as well as to Galt’s and

GfE’s sales as we have rejected

Odermet’s intermediate reseller claim

(see Comment 5).

• We recalculated inland freight

distances between each factory and

various input suppliers, based on

verified distances.

• We made minor revisions to many

of Chusovoy’s material and energy

consumption factors, based on corrected

verified data.

• We applied Chusovoy’s public

version reported vanadium pentoxide

and ferrovanadium production labor

factors for the corresponding labor

inputs for Tulachermet, as discussed

below in Comment 9. In addition,

Odermet sold the subject merchandise

produced by Tulachermet. Even though

significant portions of Tulachermet’s

responses failed verification,

Tulachermet’s factors of production,

with exception of labor, fully verified.

Therefore, we continued to use

Tulachermet’s factors to calculate FMV

for sales by Odermet.

To calculate FMV, the verified factor

amounts for each company were

multiplied by the appropriate surrogate

values for the different inputs. In

accordance with section 773(c)(4) of the

Act, the Department must, to the extent

possible, determine FMV by valuing the

factors of production in one or more

market economy countries that: (1) Are

at a level of economic development

comparable to that of the NME economy

country, and (2) are significant

producers of comparable merchandise.

As discussed in the preliminary

determination, the Department has

determined that South Africa is the

country that best meets the statutory

criteria for purposes of this

investigation. Accordingly, we have

based FMV on the appropriate factors of

production as valued in South Africa,

except for those factors for which we

were unable to obtain a suitable value

from South Africa. In these instances, as

discussed below, and in our preliminary

determination, we used values from

publicly-available, published

information pertaining to Poland,

Thailand, and Turkey, or values

pertaining to Brazil and Germany as

included in the petition. The selection

of surrogate countries and certain

surrogate values is discussed further

below at Comment 6. We have obtained

and relied upon published, publiclyavailable information, wherever

possible, to value the factors of

production. Following the surrogate

value selection methodology outlined in

our preliminary determination, we have

used the same surrogate values used in

the preliminary, with the following

exceptions:

• For vanadium slag, we adjusted the

surrogate value to account for

differences between the grade of the

surrogate and Russian materials, as

discussed below in Comment 7.

• For additional raw materials

identified subsequent to our preliminary

determination, we used published price

quotes for the South African material

(fluorspar), or, in the absence of any

available value from South Africa, unit

values derived from Thai import

statistics (fly ash, aluminum alloy, and

cold-rolled steel sheet) or Thai export

statistics (paint, thinner).

• For natural gas, we used the Polish

natural gas rate published by the

International Energy Agency.

As noted above, we relied on

surrogate values from Thailand and

Poland, countries identified as potential

surrogates for Russia in the July 29,

1994, Memorandum from the Office of

Policy to Gary Taverman, when no

appropriate South African value was

available for a particular factor. When

no value was available from any

potential surrogate country, we used

values from Brazil and Germany, as

described in our preliminary

determination. The selection of the

surrogate values for this determination

is discussed further in the Valuation

Memorandum dated May 19, 1995.

Currency Conversion

We made currency conversions based

on the official exchange rates in effect

on the dates of the U.S. sales as certified

by the Federal Reserve Bank or, when

unavailable, at the rates published by

the International Monetary Fund in

International Financial Statistics.

Verification

As provided in section 776(b) of the

Act, we verified or attempted to verify

all information submitted by

respondents for use in our final

determination. We used standard

verification procedures, including

examination of relevant accounting

records and original source documents

provided by respondents.

Interested Party Comments

Comment 1: Rejection of Tulachermet

Sales Response

GfE and Shieldalloy argue that the

Department should reject Tulachermet’s

sales response and apply BIA for the

final determination because

Tulachermet failed verification. The

major reasons for the alleged

verification failure cited by GfE and

Shieldalloy are: (a) The Department’s

discovery at verification of an

unreported sale accounting for a

significant portion of the merchandise

sold during the POI; (b) Tulachermet’s

refusal to allow the Department timely

access to essential information at

verification; (c) Tulachermet’s inability

to support or substantiate the

questionnaire responses; and (d)

inaccurate and omitted data. According

to GfE and Shieldalloy, these

verification failures establish the

inaccuracy and unreliability of

Tulachermet’s response. Thus, BIA

should be used for Tulachermet’s

margin.

Tulachermet claims that the sale in

question was omitted inadvertently

from the response and was not an

attempt to impede the investigation. On

the contrary, Tulachermet claims that

reporting the sale would have been in

its interest as the selling price was

substantially higher than the prices of

the reported sales. Tulachermet states

that the initial refusal to allow the

Department to view certain information

at verification, which was subsequently

permitted, was due to the staff involved

with verification not having been given

explicit authorization from the chief

company official. Tulachermet states

that, until recently, all factory output

information was considered a state

secret, with severe penalties for

disclosure to outsiders. Nevertheless,

Tulachermet asserts that the Department
Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices 27959

subsequently was able to review the

information in question and confirm

that there were no other discrepancies

in Tulachermet’s sales response.

Accordingly, Tulachermet contends that

BIA is unjustified under these

circumstances.

Odermet adds that there is no basis to

reject Tulachermet’s factors of

production response since there were no

problems with that portion of the

response except for labor factors and

distances to input suppliers.

DOC Position

During verification, Tulachermet

withheld access to a customer contract

and correspondence file. Under 19 CFR

353.36(c)(1994), all parties are on notice

that ‘‘[a]s part of the verification,

employees of the Department will

request access to all files, records, and

personnel of the producers, resellers,

importers, or unrelated purchasers

which the [Department] considers

relevant to factual information

submitted.’’ The verification outline

presented to Tulachermet prior to

verification specifically advised

Tulachermet that complete sales

records, contracts, and customer

correspondence files would be reviewed

at verification and should be made

available for inspection at verification.

While the verifiers were eventually

granted access to the file in question,

the delay in providing access

compromised this critical component of

verification. More importantly, the

Department had no way to determine

whether the file, when finally seen, was

complete. As a result, the Department

was unable to conclude that no further

discrepancies exist. Section 776(b) of

the Act provides that if the Department

‘‘is unable to verify the accuracy of the

information submitted, it shall use the

best information available to it as the

basis for its action * * *.’’ Section

776(c) of the Act further states that the

Department shall use BIA ‘‘whenever a

party or any other person refuses or is

unable to produce information

requested in a timely manner and in the

form required, or otherwise significantly

impedes an investigation.’’

While we recognize the attempt of

Tulachermet to be responsive, the

Department cannot consider a response

to be verified when the respondent

significantly impedes the investigation

in the manner described above. The

verifiers’ discovery of a substantial

quantity of unreported POI sales further

undermined the integrity of

Tulachermet’s sales response. Under

such circumstances, we were unable to

verify Tulachermet’s responses.

Accordingly, we must reject its sales

response and rely on BIA. Further,

because Tulachermet’s actions at

verification significantly impeded the

Department’s investigation, as to

Tulachermet, we have treated the

company as an uncooperative

respondent warranting the application

of adverse BIA.

Comment 2: Sales Responses from Other

Russian Companies

GfE and Shieldalloy claim that

Chusovoy and a Russian trading

company should have submitted sales

responses because, pursuant to

information GfE provided for the record,

they knew at the time of invoice

preparation, if not at the time of sale,

that the ultimate destination of the

merchandise sold was the United States.

GfE and Shieldalloy cite an internal GfE

memorandum as evidence that, at the

time of sale, Chusovoy knew the

ultimate destination of its nitrided

vanadium shipment. Since Chusovoy

and the trading company each failed to

provide a sales questionnaire response

for these sales transactions, GfE and

Shieldalloy argue that these entities

should be assigned a margin based on

BIA.

Chusovoy states that knowledge of the

ultimate destination at the time of sale

is the determinant factor and that, at the

time of the sale, Chusovoy did not know

this information. Chusovoy asserts that

none of the sales documentation

between GfE and Chusovoy, including

the nitrided vanadium agreement, give

any indication as to the ultimate

destination of the merchandise.

According to Chusovoy, GfE’s internal

memorandum is a self-serving

document, not signed by Chusovoy,

which, moreover, indicates the

merchandise could be sold to another

market as well as the United States.

DOC Position

We agree with Chusovoy. Our

verification confirmed that neither

Chusovoy nor the Russian trading

company had knowledge at the time of

sale as to the ultimate destination of its

merchandise. It is knowledge at the time

of the sale, and not the date of

shipment, that is relevant in

determining the proper respondent for

such sales (see, Magnesium from

Russia). In this situation, GfE was the

first party in the distribution channel to

know the ultimate destination of the

merchandise and is, therefore, the

proper exporter respondent for these

sales.

Comment 3: Rejection of GfE/

Shieldalloy response

Chusovoy, Galt, and Tulachermet

argue that the Department should reject

GfE/Shieldalloy’s sales response

because sales reporting of Russiansourced merchandise was based on

quantity estimates drawn from

inventory turnover records, rather than

actual sales data. These respondents

claim that this averaging approach

methodology is counter to the

Department’s specific questionnaire

instructions and creates the potential for

minimizing margins from large quantity

product sales at lower prices.

Accordingly, these respondents contend

that the Department should assign GfE/

Shieldalloy a margin based on BIA.

GfE and Shieldalloy contend that

their reporting methodology is

reasonable and sound, given the manner

in which the sales were conducted.

These sales were not reported using

averaged prices, according to GfE and

Shieldalloy, but rather at the per-unit

price of each sale. GfE and Shieldalloy

add that the verification showed the

methodology was consistent with the

information presented throughout the

proceeding.

DOC Position

We have used GfE’s and Shieldalloy’s

questionnaire response in our final

determination. Their methodology did

not affect the prices reported but rather

the quantity of subject merchandise

reported. We verified that the sales

reporting was complete and that the

inventory turnover methodology

provided a reasonable basis for

determining the quantity of subject

merchandise sold during the POI.

Further, we found no indication of any

sale-specific distortions deriving from

the application of this methodology.

Comment 4: Proper Respondent for Galt

Sales

GfE and Shieldalloy claim that the

exporter for Galt’s sales was Hascor BV,

or the ‘‘Galt/Hascor’’ joint venture, not

Galt, since according to GfE and

Shieldalloy, the former was the first

exporter with knowledge that the

merchandise was destined for the

United States. Since neither entity filed

a questionnaire response, GfE and

Shieldalloy contend that a BIA rate

should be assigned to these entities, and

that Galt should receive the ‘‘all others’’

rate. Alternatively, GfE and Shieldalloy

claim that the Galt response should be

rejected because of the number of

revisions submitted seven days prior to

verification and response errors

identified at verification.
27960 Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices

Galt responds that the record,

including the verification results,

demonstrates that Galt is the exporter in

this investigation and is entitled to its

own rate. Galt points to a variety of

shipment documents, as examined at

verification, which specifically identify

it as the exporter of the merchandise.

Further, Galt adds that, at verification,

the Department was able to determine

that Galt was the first party in the

distribution chain to have knowledge of

the destination of the merchandise and,

in fact, was the party that determined

that the merchandise was to be sent to

the United States.

DOC Position

We agree with Galt. Our verification

confirmed that Galt is the proper

exporter-respondent for its sales because

it determines that the merchandise is

destined for sale in the United States.

The Galt/Hascor joint venture was

responsible for garnering the

merchandise from Russia and shipping

it to a bonded warehouse in the

Netherlands. At that point Galt obtained

the merchandise, sold it and shipped it

to the United States. Revisions to its

response were timely and verification

discrepancies were relatively minor,

affecting only its movement expenses.

Comment 5: Odermet’s Intermediate

Country Reseller Claim

Odermet claims that, in accordance

with Section 773(f) of the Act, its U.S.

sales should be compared to its sales to

Germany for the following reasons: (1)

Odermet was a reseller of the subject

merchandise; (2) the Russian

manufacturer, Tulachermet, did not

know at the time of the sale to Odermet

the country to which Odermet intended

to export the merchandise; (3) the

merchandise was exported by Odermet

to a country other than the United

States; (4) the merchandise entered the

commerce of an intermediate country

(Germany) but was not substantially

transformed there; and (5) the

merchandise was subsequently exported

to the United States. Odermet states that

verification corroborated its claim,

demonstrating that it met all of the

above statutory criteria to support its

claim. In particular, Odermet states that

it demonstrated that the merchandise

entered the commerce of Germany and

was not warehoused in bond, and that

the merchandise could then be resold to

customers in Germany and elsewhere,

including the United States.

GfE and Shieldalloy contend that

Odermet’s intermediate reseller claim

should be rejected because Odermet

failed to establish at verification that the

merchandise entered the commerce of

Germany. GfE and Shieldalloy’s

contention rests on its assertion that

Odermet failed to demonstrate that the

warehouses used to store the

merchandise were non-bonded and that,

in nearly every case, merchandise

ultimately shipped to the United States

was stored in one warehouse in one

city, while merchandise ultimately sold

to German customers was stored in a

different warehouse in a different city.

Even if the warehouses were not

bonded, GfE and Shieldalloy claim that,

as established in Final Determination of

Sales At Less Than Fair Value: Sulfur

Dyes, Including Sulfur Vat Dyes, from

the People’s Republic of China, (58 FR

7537, February 8, 1993) (Sulfur Dyes),

storage in a non-bonded warehouse in a

third country alone does not

demonstrate, in and of itself, that the

merchandise enters the commerce of

that country. The channel of

distribution in this case, they continue,

does not support a finding that the

merchandise entered the commerce of

Germany.

DOC Position

For the Department to accept

Odermet’s claim, Odermet must

demonstrate that it satisfies each of the

five statutory criteria under Section

773(f) of the Act, cited above. The

Department agrees with Odermet that it

has met four of these five criteria.

However, we do not agree that Odermet

has satisfied the criterion that the

merchandise enter the commerce of the

intermediate country. Verification

revealed that Odermet maintains two

distinct distribution channels: (a)

Transportation of merchandise from

Tulachermet to a warehouse in

Duisburg, Germany, for prospective sale

to German customers in that region; and

(b) transportation of merchandise from

Tulachermet to a warehouse in

Bremerhaven, Germany, for prospective

sale and ocean shipment from the port

of Bremerhaven to customers in the

United States and other countries

outside of Germany. In each case, the

sales agreement with the customer was

made prior to shipment of the

merchandise into Germany. Moreover,

the shipment quantity and delivery

dates correspond with the specifications

in the sales agreements. While for each

distribution channel we noted one

exception to the pattern, in that one

shipment to Duisburg was destined for

delivery to overseas customers, and one

shipment to Bremerhaven was destined

to a German customer, all other

shipments followed the above stated

pattern. Furthermore, although the

Bremerhaven warehouse may not have

been a bonded warehouse (we have no

evidence that it was or was not), we

found no customs duties or German

value-added taxes (VAT) were assessed

on U.S. sales through the Bremerhaven

warehouse—expenses that would

support a finding that such merchandise

entered Germany for commercial

consumption—while duties and VAT

were imposed on sales withdrawn from

a bonded warehouse in Duisburg.

The sum of these facts indicates two

very different and distinct patterns of

distribution, with merchandise shipped

to Bremerhaven normally not entering

the commerce of Germany, as this

merchandise is not intended to be made

available to German customers. Under

similar circumstances in Sulfur Dyes,

where sales intended for U.S. export

followed a different sales and

distribution pattern from sales intended

for domestic consumption in Hong

Kong, we found the pattern for U.S.

sales to be ‘‘most accurately

characterized as transshipment.’’ In this

investigation, we reach the same

conclusion for Odermet’s sales. These

transshipments do not enter the

commerce of Germany and, accordingly,

do not merit consideration under

Section 773(f) of the Act.

Comment 6: Surrogate Country

Selection

Odermet contends that South Africa is

not appropriate for use as the surrogate

country for Russia in this investigation

because current economic data offered

by Odermet indicates that South Africa

is not economically comparable to

Russia in terms of gross domestic

product (GDP). Odermet argues that the

Department should first attempt to value

the factors of production from the ‘‘first

tier’’ of comparable economies

identified in the Department’s surrogate

country selection memorandum dated

July 29, 1994,—Algeria, Poland,

Thailand, Tunisia, and Turkey.

Specifically, Odermet proposes the use

of a surrogate value for natural gas from

Poland. For values that could not be

obtained from the above-mentioned

countries, such as vanadium slag,

Odermet suggests that then the

Department would turn to allegedly

noncomparable economies such as

South Africa, following the

methodology applied in Final

Determination of Sales at Less Than Fair

Value: Cased Pencils from the PRC (59

FR 55625, November 8, 1994) (Pencils).

Chusovoy, Galt, and Tulachermet

agree with Odermet that South Africa is

not economically comparable to Russia,

but acknowledge that vanadium slag has

to be valued in South Africa because of

the lack of alternatives. However, they

contend that values from the first tier
Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices 27961

countries should be used for the other

factors. Specifically, they propose the

use of a Polish labor rate and an

Algerian value for natural gas.

GfE and Shieldalloy support the

selection of South Africa as the

appropriate surrogate country. This

selection, they state, is consistent with

the statutory requirement of Section

773(c)(4) of the Act that the surrogate

country be economically comparable

and a significant producer of

comparable merchandise. They note

that the Department, in its December 22,

1994, Office of Policy Memorandum,

has recognized that South Africa is the

only producer of comparable

merchandise whose level of economic

development is reasonably close to that

of Russia. GfE and Shieldalloy further

assert that none of the first tier countries

should be considered as acceptable

surrogates for Russia in valuing factors

for this investigation because these

countries produce neither the subject

merchandise nor comparable

merchandise. For those instances where

values from these countries were used

in the preliminary determination or may

be considered for the final

determination, GfE and Shieldalloy

contend that the Brazilian data from the

petition should be used. Brazil has been

accepted as an appropriate surrogate

country for purposes of the initiation of

this investigation, and has also been

used as the surrogate country in the

Magnesium from Russia investigation.

The methodology employed in Pencils,

they say, is not appropriate here because

in Pencils the other countries used as

surrogates were producers of

comparable merchandise, while in this

case the other countries do not produce

comparable merchandise.

DOC Position

Section 773 (c)(4) of the Act requires

that, to the extent possible, the factors

be valued in one or more market

economy countries that are: (a) At a

comparable level of economic

development, and (b) significant

producers of comparable merchandise.

In this investigation, none of the

countries initially identified as potential

surrogate countries because of

comparable levels of economic

development produces comparable

merchandise. Of those countries that

produce comparable merchandise, only

South Africa, which produces the

subject merchandise, is the most

comparable in terms of economic

development, as stated in the December

22, 1994, Memorandum. We

acknowledge that economic growth

trends in South Africa and Russia are

dissimilar, but these differences

notwithstanding, the Department’s

selection of South Africa satifies both

statutory criteria set forth above.

As for the specific factors cited by the

parties, the respondents’ claims that

Russian wage levels are among the

lowest in the world, are not relevant

because information regarding specific

NME prices or wage rates cannot be

relied upon. Thus, the argument based

on a comparison of purported Russian

wage rates with South African wage

rates is inappropriate.

We disagree with GfE and

Shieldalloy’s proposal to use Brazilian

values from the petition where there are

no South African values available

because Brazil is not a producer of

comparable merchandise—there is no

information on the record that Brazil

has been a significant producer of

ferrovanadium or comparable

merchandise since 1986.

Comment 7: Valuation of Vanadium

Slag

Respondents contend that the

Department should adjust the vanadium

slag value, based on a price quote

submitted in the petition for South

African Highveld slag containing 24%

vanadium pentoxide, to reflect the

lower purity of the Russian slag in

addition to the lower vanadium

pentoxide content of 12 to 20%. Simply

adjusting the value for vanadium

pentoxide content (‘‘straight-line

proportionality’’ method) is not

sufficient, respondents claim, because

the additional impurities contained in

the Russian slag add to the cost of

extracting vanadium pentoxide from the

raw material. They argue that this

renders the Russian slag less valuable

than the prime grade South African

Highveld slag, even after adjusting for

the different concentration levels of

vanadium pentoxide. Chusovoy, Galt,

and Tulachermet propose an adjustment

to the Highveld slag value based on the

price differential for processed

vanadium pentoxide of Highveld 98%

merchandise to 90% merchandise,

according to price information

published in the Metal Bulletin. These

respondents claim that basing the price

differential on this data is appropriate

given the strong market linkage between

vanadium pentoxide, the intermediate

product, and ferrovanadium, the final

product. Moreover, they contend it is

appropriate to base the adjustment on

the difference between Highveld

vanadium pentoxide and other

vanadium pentoxide prices because the

surrogate value for slag is based on the

Highveld slag value.

Odermet adds that the Metal Bulletin

price-based adjustment methodology is

the only reasonably sound basis for

valuing vanadium slag, given that there

is no source of publicly available

published information for vanadium

slag prices and that, as vanadium slag is

the major input for processed vanadium

pentoxide, the pricing of vanadium

pentoxide is relevant to valuing

vanadium slag. Finally, Odermet states

that this case differs from the Final

Determination of Sales at Less Than Fair

Value: Refined Antimony Trioxide from

the PRC (57 FR 6801, February 28, 1992)

(Antimony) situation, where the

Department used the straight-line

proportionality method because it had

no prices for different concentrate

levels. Here, Odermet contends, the

Department does have the information

to make the appropriate adjustment.

GfE and Shieldalloy state that the

adjustments, proposed by respondents,

are not supported economically. GfE

and Shieldalloy argue that respondents

have failed to demonstrate the

relationship between selected European

transaction prices for processed

vanadium pentoxide and any value

differential between the South African

and Russian raw materials. They cite a

similar situation in Antimony where the

Department made no adjustment to the

raw material value because, without

actual prices, the data was inconclusive

as to the adjustment to be made. In

addition, GfE and Shieldalloy contend

that the respondents’ price adjustment

methodology is flawed because it

utilizes price comparisons between an

ultra-refined product manufactured

from Highveld slag that is not likely to

be used in ferrovanadium production, to

the lowest prices published. After

discounting those comparisons, GfE and

Shieldalloy assert that the price

differentials between processed grades

are significantly less than those claimed

by respondents.

DOC Position

Based on the submitted information,

verification findings, and the

Department’s own research, we agree

with the respondents that the South

African vanadium slag value should be

adjusted to reflect the lower purity of

Russian vanadium slag. Our analysis

and research suggest a strong

relationship between vanadium

pentoxide prices and vanadium slag

value, particularly as vanadium slag is

the principal raw material for vanadium

pentoxide production and there are few,

if any, other markets for vanadium slag.

We have confirmed, through a South

African publication, South Africa’s

Mineral Industry 1993/94, that the

Highveld prices cited by Chusovoy,

Galt, Odermet, and Tulachermet reflect
27962 Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices

the typical Highveld product, while the

prices for the other 98% products reflect

Chinese origin, and the 90% products

are of Russian slag. Based on this

information, we have adjusted the

vanadium slag surrogate value

according to the Metal Bulletin

vanadium pentoxide price differentials.

Our methodology for adjusting both

Tulachermet’s and Chusovoy’s slag

values is detailed in the Valuation

Memorandum.

Comment 8: Adjustment to Factory

Overhead Percentage

Chusovoy, Galt, and Tulachermet

claim that the surrogate value for factory

overhead, which was derived from GfE’s

experience at its German facility and

submitted in the petition, should be

adjusted for the known differences

between the GfE production plant and

the Russian plants. These respondents

contend that the Department verified

that the Russian plants are fully

depreciated and lack special

environmental equipment. The

respondents claim further that

depreciation, including depreciation for

environmental control equipment,

accounts for the majority of the GfE

factory overhead percentage.

Accordingly, the respondents argue that

the Department should reduce the

factory overhead percentages by at least

half to reflect the absence of any

depreciation element in the Russian

producers’ factory overhead.

GfE and Shieldalloy state that factory

overhead was properly calculated using

the petition information derived from

GfE experience, and this value remains

the best available information. They

assert that GfE’s depreciation experience

is likely to be the same as the Russian

companies. Moreover, as there is no

evidence of any known differences

between the GfE’s experience and the

Russian producers’, the respondents’

claim for a factory overhead adjustment

is unsubstantiated and the suggested

adjustment methodology is arbitrary.

DOC Position

The Department has been unable to

locate other, publicly available, data for

the factory overhead surrogate value.

(The Department’s attempts to find

factory overhead data is described in the

Valuation Memorandum.) Thus, the

only available data is the percentages

stated in the petition. The respondents’

assertions provide an insufficient basis

for us to make any adjustments to these

percentages.

Comment 9: BIA Labor Factors

GfE, Shieldalloy, and Odermet assert

that the Department should use the

labor factors reported by Chusovoy as

BIA for the unreported Tulachermet

labor factors. GfE and Shieldalloy state

that Chusovoy’s factors should be used

because they are the highest available

labor factors and, given Tulachermet’s

refusal to provide this information, the

most adverse data should be applied.

Odermet favors the use of Chusovoy

labor factors because it believes these

factors reflect more accurately the

Russian approach to production of the

subject merchandise.

DOC Position

Tulachermet failed to submit its

production labor factors. Accordingly, it

is appropriate to make adverse

assumptions about its labor factors in

assigning BIA. Thus, consistent with

Department practice, we have applied

the data from the public version of

Chusovoy’s response, because these

factors are higher than that reported in

the petition.

Comment 10: Freight Valuation for

Odermet Exports

Odermet argues that its freight

expenses from the Russian factory to

German warehouses were paid in a

market-economy currency to a marketeconomy freight forwarder and, thus,

should be accepted as reported, even

though the freight forwarder contracted

with NME trucking companies to

perform the actual service. Odermet

claims that the subcontracting

arrangement is irrelevant; all that is

required for establishing the market

price for the freight service is the

convertible currency transaction to the

market economy freight forwarder. To

do otherwise and value the freight

service using a surrogate value would

lead, according to Odermet, to such

‘‘absurd’’ situations as finding surrogate

values for PRC-origin inputs when

calculating the cost of production for a

Japanese producer.

DOC Position

We disagree with Odermet. In NME

proceedings, our consistent

methodology has been to determine

whether a good or service obtained

through a market economy transaction

is, in fact, sourced from a market

economy rather than merely purchased

in it. For example, in Final

Determination of Sales at Less Than Fair

Value: Coumarin from the People’s

Republic of China (59 FR 66895,

December 28, 1994), we did not value

Chinese port charges according to the

U.S. dollar price quote obtained from a

market economy freight forwarder

because of our assumption that such

services were actually provided by

Chinese sources. Instead, we valued

port charges according to the

information obtained from the surrogate

country. Since such goods and services

are produced in a NME, we cannot rely

on the market economy payment

transaction as the basis for valuing these

charges because the costs upon which

these expenses are based are not

themselves market-based. Although

Odermet arranges the freight

transportation through its market

economy freight forwarder, the

forwarder’s costs for contracting to NME

trucking companies cannot be relied on

and, thus, the price charged to Odermet

cannot be relied upon.

Comment 11: Input Freight for

Tulachermet’s Vanadium Slag Factor

GfE and Shieldalloy allege that the

Department erred in not including

surrogate freight charges for the expense

of transporting vanadium slag from the

source to Tulachermet. Although the

surrogate value is based on an FOB

South African port price, which

includes inland freight expenses, GfE

and Shieldalloy claim that an additional

amount for the freight expense should

be added to Tulachermet’s FMV

calculation because the distance

between Tulachermet’s supplier and

Tulachermet is four to five times greater

than the distance from the South

African supplier to the South African

port.

Odermet states there is no support for

GfE and Shieldalloy’s contention

regarding the source of the raw material

and distance to it from the port.

DOC Position

When relying on a surrogate value

that is freight-inclusive, the

Department’s consistent practice has

been to accept that value as the

surrogate value for the good as delivered

to the NME consumer, without any

attempt to adjust for alleged differences

in freight costs (see, e.g., Final

Determination of Sales at Less Than Fair

Value: Saccharin from the People’s

Republic of China, 59 FR 588818

(November 15, 1994). In most cases, we

do not have sufficient information

regarding the freight expense included

in the surrogate value in order to make

the adjustment. Moreover, a value

inclusive of freight represents the level

of the surrogate value we intend to

reflect—the surrogate price of the good

available to the producer at its factory

gate. We add an additional value for

freight from the supplier to the producer

only when such freight is not included

in the surrogate value. Since the

surrogate value for vanadium slag is

freight-inclusive, we have made no
Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices 27963

adjustment to the vanadium slag value

for purported differences in freight

expenses.

Comment 12: Odermet’s Export

Shipment Expenses

Odermet claims it correctly reported

its per-unit freight expenses based on

gross weight, rather than contained

vanadium weight, because this

methodology reflects the manner in

which it is billed for freight services.

GfE and Shieldalloy contend that, as

USP is reported in terms of contained

vanadium weight, the freight expenses

should be reported on the same basis

and thus must be corrected.

DOC Position

We agree with GfE and Shieldalloy

and have adjusted these expenses

accordingly. Price adjustments are

always made on the same basis upon

which price is reported. Although

Odermet is correct that expenses should

be reported on the same basis on which

they are incurred, since Odermet

reported its sales prices on a contained

vanadium weight basis, the proper basis

for allocating movement expenses on a

per-unit basis is contained vanadium

weight. To allocate these expenses on a

gross weight basis would understate the

expense to Odermet, not overstate it as

Odermet claims.

Comment 13: Inflation Adjustments and

Exchange Rate Conversions for

Surrogate Values

GfE and Shieldalloy contend that the

Department erred by not properly

inflating pre-POI surrogate values to the

POI for raw materials where the value

was based on 1993 data. These parties

contend that the pre-POI surrogate

values must be converted to U.S. dollar

values using contemporaneous

exchange rates in order to accurately

reflect costs and market conditions

during the time these costs were

incurred. Thus, according to GfE and

Shieldalloy, to value these factors

properly, the Department should first

convert the value to U.S. dollars using

the average exchange rate for 1993, and

then inflate the value to the POI using

the ratio between the average price

index for 1993 and the average price

index for the POI.

Chusovoy, Galt, and Tulachermet

contend that the exchange rate

methodology used in preliminary

determination was proper, and that GfE

and Shieldalloy’s methodology is

internally inconsistent. If

contemporaneous exchange rates must

be used, they say, then

contemporaneous prices must also be

used. However, Chusovoy, Galt, and

Tulachermet add that there is no reason

to inflate these 1993 prices because the

period during which the subject

merchandise was produced includes

months in 1993, and there is no basis to

conclude that average prices for 1993

went up or down relative to average

prices during the POI.

DOC Position

The Department’s consistent practice

has been to first inflate noncontemporaneous surrogate values to

the POI, to reflect the economic trends

in the surrogate country, and then

convert the POI value to U.S. dollars

according to the POI exchange rate (see,

e.g., Pencils). Converting to U.S. dollars

first and then inflating the U.S. dollardenominated prices risks pulling into

the valuation equation variables that

have no bearing on factor prices in the

surrogate country. Moreover, our

practice is not to inflate values when the

time period of the value—in this case

1993—overlaps with any part of the

POI—in this case December 1993. GfE

and Shieldalloy offer no compelling

arguments to change our practice; thus

we have made no changes to our

inflation rate and exchange rate

adjustment methodologies.

Continuation of Suspension of

Liquidation

In accordance with section 733(d)(1)

of the Act, we directed the Customs

Service to suspend liquidation of all

entries of ferrovanadium and nitrided

vanadium from the Russian Federation

entered, or withdrawn from warehouse,

for consumption on or after January 4,

1995, which is the date of publication

of our notice of preliminary

determination in the Federal Register.

We shall instruct the Customs Service to

require a cash deposit or posting of a

bond equal to the estimated amount by

which the FMV exceeds the USP as

shown below, as of the effective date of

this notice. The suspension of

liquidation instructions will remain in

effect until further notice.

The weighted-average margins are as

follows:

Manufacturer/producer/exporter

Weightedaverage

margin

Galt Alloys, Inc. ........................ 3.75

Gesellschaft far

Elektrometallurgie m.b.H.

(and its related companies

Shieldalloy Metallurgical Corporation, and Metallurg, Inc.) 11.72

Odermet .................................... 10.10

Russia-wide Rate ..................... 108.00

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 determine whether these imports

are causing material injury, or threat of

material injury, to the industry in the

United States, within 45 days. 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

cancelled. 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.

Dated: May 19, 1995.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 95–13011 Filed 5–25–95; 8:45 am]

BILLING CODE 3510–DP–P

Countervailing Duty Order;

Opportunity to Request a Section 753

Injury Investigation

AGENCY: Inport Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of Opportunity to

Request a Section 753 Injury

Investigation for Countervailing Duty

Orders.

SUMMARY: The Department of Commerce

(the Department) is notifying domestic

interested parties of their right to

request an injury investigation under

section 753 of the Tariff Act of 1930, as

amended (the Act), for countervailing

duty orders listed in the Appendix that

were issued under former section 303 of

the Act.

EFFECTIVE DATE: May 26, 1995.

FOR FURTHER INFORMATION CONTACT:

Cameron Cardozo, Office of

Countervailing Compliance, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230,

telephone: (202) 482–2786; or Vera

Libeau, Office of Investigations, U.S.

International Trade Commission, 500 E

Street, SW., Washington, DC 20436,

telephone: (202) 205–3176.