Carbon and Certain Alloy Steel Wire Rod From the People's Republic of China: Initiation of Antidumping Duty Investigation

AGENCY:

Enforcement and Compliance, formerly Import Administration, International Trade Administration, Department of Commerce.

DATES:

Effective Date: February 27, 2014.

FOR FURTHER INFORMATION CONTACT:

Brian Smith and Terre Keaton Stefanova, Office II, AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1766 and (202) 482-1280, respectively.

SUPPLEMENTARY INFORMATION:

The Petition

On January 31, 2014, the Department of Commerce (Department) received an antidumping duty (AD) petition concerning imports of carbon and certain alloy steel wire rod (steel wire rod) from the People's Republic of China (PRC), officially filed in proper form on behalf of ArcelorMittal USA LLC, Charter Steel, Evraz Pueblo (formerly Evraz Rocky Mountain Steel), Gerdau Ameristeel US Inc., Keystone Consolidated Industries, Inc., and Nucor Corporation (collectively, “the petitioners”). The petitioners are domestic producers of steel wire rod. The AD Petition was accompanied by a countervailing duty (CVD) petition concerning imports of steel wire rod from the PRC. On February 4, 2014, the Department requested additional information and clarification of certain areas of the Petition, and on February 7 and 10, 2014, the petitioners filed a response to each request, respectively.

In accordance with section 732(b) of the Tariff Act of 1930, as amended (the “Act”), the petitioners allege that imports of steel wire rod from the PRC are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that such imports are materially injuring, or threatening material injury to, an industry in the United States. Also, consistent with section 732(b)(1) of the Act, the Petition is accompanied by information reasonably available to the petitioners in support of their allegations.

The Department finds that the petitioners filed this Petition on behalf of the domestic industry because the petitioners are interested parties as defined in section 771(9)(C) of the Act. The Department also finds that the petitioners demonstrated sufficient industry support with respect to the initiation of the AD investigation that the petitioners are requesting.

Period of Investigation

The period of investigation (POI) is July 1, 2013, through December 31, 2013, in accordance with 19 CFR 351.204(b)(1).

Scope of the Investigation

The product covered by this investigation is steel wire rod from the PRC. For a full description of the scope of the investigation, please see the “Scope of the Investigation” in the appendix to this notice.

Comments on the Scope of the Investigation

During our review of the Petition, we solicited information from the petitioners to ensure that the proposed scope language is an accurate reflection of the product for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations, we are setting aside a period for interested parties to raise issues regarding product coverage. The Department encourages all interested parties to submit such comments by March 12, 2014, which is 20 calendar days from the signature date of this notice. All comments must be filed on the record of the AD investigation, as well as the concurrent CVD investigation.

Comments on the Product Characteristics for the AD Questionnaire

The Department requests comments from interested parties regarding the appropriate physical characteristics of steel wire rod to be reported in response to the Department's AD questionnaire. This information will be used to identify the key physical characteristics of the merchandise under consideration in order to report the relevant factors and costs of production accurately, as well as to develop appropriate product-comparison criteria. Interested parties may provide any information or comments that they believe are relevant to the development of an accurate list of physical characteristics. Specifically, interested parties may provide comments as to which characteristics are appropriate to use as: (1) General product characteristics and (2) product-comparison criteria. We note that it is not always appropriate to use all product characteristics as product-comparison criteria. We base product-comparison criteria on meaningful commercial differences among products. In other words, while there may be some physical product characteristics utilized by manufacturers to describe steel wire rod, it may be that only a select few product characteristics take into account commercially meaningful physical characteristics. In addition, interested parties may comment on the order in which the physical characteristics should be used in matching products. Generally, the Department attempts to list the most important physical characteristics first and the least important characteristics last.

In order to consider the suggestions of interested parties in developing and issuing the AD questionnaire, we must receive comments on product characteristics no later than March 12, 2014. Rebuttal comments must be received no later than March 19, 2014.

Filing Requirements

All comments and submissions to the Department must be filed electronically using Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (IA ACCESS). An electronically filed document must be received successfully in its entirety by IA ACCESS by 5 p.m. on the due date. Documents excepted from the electronic submission requirements must be filed manually (i.e., in paper form) with Enforcement and Compliance's APO/Dockets Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230, and stamped with the date and time of receipt by the deadline established by the Department.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (i) At least 25 percent of the total production of the domestic like product; and (ii) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A); or (ii) if there is a large number of producers in the industry, the Department may determine industry support using a statistically valid sampling method to poll the industry.

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The U.S. International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product, they do so for different purposes and pursuant to a separate and distinct statutory authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to law.

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation” (i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition).

With regard to the domestic like product, the petitioners do not offer a definition of domestic like product distinct from the scope of the investigation. Based on our analysis of the information submitted on the record, we determined that steel wire rod, as defined in the scope of the investigation, constitutes a single domestic like product and we analyzed industry support in terms of that domestic like product.

In determining whether the petitioners have standing under section 732(c)(4)(A) of the Act, we considered the industry support data contained in the Petition with reference to the domestic like product as defined in the “Scope of Investigation” section above. To establish industry support, the petitioners provided the production of the domestic like product in 2013 of all supporters of the Petition, and compared this to the total production of the domestic like product for the entire domestic industry. We relied upon data the petitioners provided for purposes of measuring industry support.

Based on information provided in the Petition, supplemental submission, and other information readily available to the Department, we find that the domestic producers who support the Petition account for at least 25 percent of the total production of the domestic like product, in accordance with section 732(c)(4)(A)(i) of the Act. We further find that the domestic producers who support the Petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the Petition, in accordance with section 732(c)(4)(A)(ii) of the Act. Accordingly, the Department determines that the Petition was filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

The Department finds that the petitioners filed the Petition on behalf of the domestic industry because they are interested parties as defined in section 771(9)(C) of the Act and they demonstrated sufficient industry support with respect to the AD investigation that they are requesting the Department initiate.

Allegations and Evidence of Material Injury and Causation

The petitioners allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the imports of the subject merchandise sold at less than normal value (NV). In addition, the petitioners allege that subject imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.

The petitioners contend that the industry's injured condition is illustrated by reduced market share; underselling and price depression or suppression; lost sales and revenues; reduced production and shipments; anemic capacity utilization; decline in employment variables; and decline in financial performance. We assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation, and we determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation.

Allegation of Sales at Less Than Fair Value

The following is a description of the allegation of sales at less than fair value upon which the Department based its decision to initiate an investigation of imports of steel wire rod from the PRC. The sources of data for the deductions and adjustments relating to U.S. price and normal value are discussed in greater detail in the AD Initiation Checklist.

Export Price

The petitioners based export price (EP) on three U.S. price quotes for steel wire rod produced in the PRC and offered for sale to U.S. customers during the POI. To derive the ex-factory price, the petitioners made deductions to U.S. price, where applicable, for U.S. inland freight and insurance, U.S. brokerage and handling expenses, U.S. customs duties, international freight and insurance, foreign brokerage and handling, and foreign inland freight. The petitioners also made an adjustment to U.S. price for the unrebated portion of the value-added tax charged on steel wire rod in the PRC, consistent with the Department's methodological change concerning treatment of VAT in non-market economy proceedings. The petitioners made no other adjustments.

The petitioners estimated U.S. inland freight (inclusive of insurance) based on industry knowledge supported by a declaration (i.e., barge rates) and/or information obtained from www.freightrateindex.com (i.e., truck rates). The petitioners also estimated U.S. brokerage and handling expenses based on industry knowledge supported by a declaration. The petitioners calculated international freight (inclusive of insurance) based on data obtained from publicly available U.S. import statistics for the average unit value of insurance and freight for imports of steel wire rod from the PRC during the POI. The petitioners calculated U.S. port fees (inclusive of harbor maintenance and merchandise processing fees) by applying the port fee percentage to the U.S. price (net of all freight and insurance charges). The petitioners calculated foreign brokerage and handling and foreign inland freight using average charges (inclusive of document fees, terminal handling and port charges, and customs clearance charges) for exports from the surrogate country Indonesia, as published in Doing Business 2014: Indonesia by the World Bank.

Normal Value

The petitioners state that the Department has treated the PRC as a non-market economy (NME) country in every proceeding in which the PRC has been involved. The presumption of NME status for the PRC has not been revoked by the Department and, therefore, in accordance with section 771(18)(C)(i) of the Act, remains in effect for purposes of the initiation of this investigation. Accordingly, the NV of the product for the investigation is appropriately based on factors of production valued in a surrogate market-economy country in accordance with section 773(c) of the Act. In the course of this investigation, all parties will have the opportunity to provide relevant information related to the issues of the PRC's NME status and granting of separate rates to individual exporters.

The petitioners contend that Indonesia is the appropriate surrogate country for the PRC because: (1) It is at a level of economic development comparable to that of the PRC; and (2) it is a significant producer of comparable merchandise. Based on the information provided by the petitioners, we conclude that it is appropriate to use Indonesia as a surrogate country for initiation purposes. After initiation of this investigation, interested parties will have the opportunity to submit comments regarding surrogate country selection and, pursuant to 19 CFR 351.301(c)(3)(i), will be provided an opportunity to submit publicly available information to value factors of production (FOPs) within 30 days before the scheduled date of the preliminary determination.

The petitioners calculated NV using the Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C) and 19 CFR 351.408. The petitioners based NV on the production experience of a major U.S. producer, adjusted for known differences, during the time period July-December 2013. The petitioners assert that, to the best of their knowledge, their consumption rates are similar to the consumption of PRC producers.

The petitioners valued the factors of production using reasonably available, public surrogate country data, specifically, Indonesian import data from the Global Trade Atlas (GTA) for the period April 2013 through September 2013, the most recent six months of data available for Indonesia at the time of filing the Petition. The petitioners excluded from these GTA import statistics imports from NME countries, countries that maintain broadly available export subsidies, and any imports from “unspecified” countries. The petitioners added to the Indonesian import values an average inland freight charge reported for importing goods into Indonesia, as reported in Doing Business 2014: Indonesia published by the World Bank. The Department determines that the surrogate values used by the petitioners are reasonably available and, thus, are acceptable for purposes of initiation.

The petitioners determined direct and packing materials costs from Indonesian import data from the GTA. The petitioners applied certain conversion factors to align the units of measure with its own FOPs.

The petitioners calculated labor using a 2008 Indonesian wage rate from LABORSTA, a labor database compiled by the International Labor Organization, and adjusted this rate for inflation using the consumer price index (CPI) data for Indonesia published by the International Monetary Fund (IMF).

The petitioners valued electricity using a 2011 Indonesian industry electricity rate from the 2012 Handbook of Energy & Economic Statistics of Indonesia, and adjusted the rate for inflation using the wholesale price index (WPI) data for Indonesia published by the IMF.

The petitioners valued natural gas using a 2012 value from LNG World News and used data from www.chemlink.com to convert the value and adjusted the value to the POI using CPI data from the IMF.

The petitioners did not include water in their cost calculations because they were unable to determine the quantity usage amount.

The petitioners calculated financial ratios (i.e., factory overhead expenses, selling, general, and administrative expenses, and profit) based on the financial statements of Betonjaya Manunggal Tbk. (Betonjaya), an Indonesian manufacturer of steel round bar (a product that the petitioners claim is comparable to steel wire rod), for the year ending December 31, 2012.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to believe that imports of steel wire rod from the PRC are being, or are likely to be, sold in the United States at less than fair value. Based on comparisons of EP to NV in accordance with section 773(c) of the Act, the petitioners calculated the estimated dumping margins to be 99.32 to 110.25 percent with respect to imports of steel wire rod from the PRC.

Initiation of AD Investigation

Based on our examination of the Petition on steel wire rod from the PRC, the Department finds that the Petition meets the requirements of section 732 of the Act. Therefore, we are initiating an AD investigation to determine whether imports of steel wire rod from the PRC are being, or likely to be, sold in the United States at less than fair value. In accordance with section 733(b)(1)(A) of the Act and 19 CFR 351.205(b)(1), unless postponed, we will issue our preliminary determination no later than 140 days after the publication date of this initiation. For a discussion of evidence supporting our initiation determination, see the AD Initiation Checklist which accompanies this notice.

Respondent Selection and Quantity and Value Questionnaire

In accordance with our standard practice for respondent selection in AD investigations involving NME countries, we intend to issue quantity and value questionnaires to each potential respondent named in the Petition, and will base respondent selection on the responses received. In addition, the Department will post the quantity and value questionnaire along with the filing instructions on the Enforcement and Compliance Web site ( http://trade.gov/enforcement/news.asp ). Exporters and producers of steel wire rod from the PRC that do not receive quantity and value questionnaires via mail may still submit a quantity and value response, and can obtain a copy from the Enforcement and Compliance Web site. The quantity and value questionnaire must be submitted by all PRC exporters/producers no later than March 13, 2014. All quantity and value questionnaires must be filed electronically using IA ACCESS.

Separate Rates

In order to obtain separate rate status in an NME AD investigation, exporters and producers must submit a separate rate application. The specific requirements for submitting the separate rate application in the PRC investigation are outlined in detail in the application itself, which will be available on the Department's Web site at http://trade.gov/enforcement/news.asp on the date of publication of this initiation notice in the Federal Register. The separate rate application will be due 60 days after the publication of this initiation notice. For exporters and producers who submit a separate rate status application and have been selected as mandatory respondents, these exporters and producers will no longer be eligible for consideration for separate rate status unless they respond to all parts of the Department's AD questionnaire as mandatory respondents. The Department requires that the PRC respondents submit a response to the separate rate application by the deadline referenced above in order to receive consideration for separate rate status.

Use of Combination Rates

The Department will calculate combination rates for certain respondents that are eligible for a separate rate in an NME investigation. The Separate Rates and Combination Rates Bulletin states:

{w}hile continuing the practice of assigning separate rates only to exporters, all separate rates that the Department will now assign in its NME investigations will be specific to those producers that supplied the exporter during the period of investigation. Note, however, that one rate is calculated for the exporter and all of the producers which supplied subject merchandise to it during the period of investigation. This practice applies both to mandatory respondents receiving an individually calculated separate rate as well as the pool of non-investigated firms receiving the weighted-average of the individually calculated rates. This practice is referred to as the application of “combination rates” because such rates apply to specific combinations of exporters and one or more producers. The cash-deposit rate assigned to an exporter will apply only to merchandise both exported by the firm in question and produced by a firm that supplied the exporter during the period of investigation.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, and 19 CFR 351.202(f), copies of the public version of the Petition have been provided to the Government of the PRC. Because of the particularly large number of producers/exporters identified in the Petition, the Department considers the service of the public version of the Petition to the foreign producers/exporters to be satisfied by the provision of the public version of the Petition to the Government of the PRC, consistent with 19 CFR 351.203(c)(2).

ITC Notification

We notified the ITC of our initiation, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

The ITC will preliminarily determine, within 45 days after the date on which the Petition was filed, whether there is a reasonable indication that imports of steel wire rod from the PRC materially injure, or threaten material injury to, a U.S. industry. A negative ITC determination will result in the investigation being terminated. Otherwise, this investigation will proceed according to statutory and regulatory time limits.

Submission of Factual Information

On April 10, 2013, the Department published Definition of Factual Information and Time Limits for Submission of Factual Information: Final Rule, 78 FR 21246 (April 10, 2013), which modified two regulations related to AD and CVD proceedings: (1) The definition of factual information (19 CFR 351.102(b)(21)), and (2) the time limits for the submission of factual information (19 CFR 351.301). The final rule identifies five categories of factual information in 19 CFR 351.102(b)(21), which are summarized as follows: (i) Evidence submitted in response to questionnaires; (ii) evidence submitted in support of allegations; (iii) publicly available information to value factors under 19 CFR 351.408(c) or to measure the adequacy of remuneration under 19 CFR 351.511(a)(2); (iv) evidence placed on the record by the Department; and (v) evidence other than factual information described in (i)-(iv). The final rule requires any party, when submitting factual information, to specify under which subsection of 19 CFR 351.102(b)(21) the information is being submitted and, if the information is submitted to rebut, clarify, or correct factual information already on the record, to provide an explanation identifying the information already on the record that the factual information seeks to rebut, clarify, or correct. The final rule also modified 19 CFR 351.301 so that, rather than providing general time limits, there are specific time limits based on the type of factual information being submitted. These modifications are effective for all proceeding segments initiated on or after May 10, 2013, and thus are applicable to this investigation. Please review the final rule, available at http://enforcement.trade.gov/frn/2013/1304frn/2013-08227.txt,, prior to submitting factual information for this investigation.

Revised Extension of Time Limits Regulation

On September 20, 2013, the Department modified its regulation concerning the extension of time limits for submissions in AD and CVD proceedings. The modification clarifies that parties may request an extension of time limits before a time limit established under Part 351 expires, or as otherwise specified by the Secretary. In general, an extension request will be considered untimely if it is filed after the time limit established under Part 351 expires. For submissions which are due from multiple parties simultaneously, an extension request will be considered untimely if it is filed after 10:00 a.m. on the due date. Examples include, but are not limited to: (1) Case and rebuttal briefs, filed pursuant to 19 CFR 351.309; (2) factual information to value factors under section 19 CFR 351.408(c), or to measure the adequacy of remuneration under section 19 CFR 351.511(a)(2), filed pursuant to 19 CFR 351.301(c)(3) and rebuttal, clarification and correction filed pursuant to 19 CFR 351.301(c)(3)(iv); (3) comments concerning the selection of a surrogate country and surrogate values and rebuttal; (4) comments concerning U.S. Customs & Border Protection (CBP) data; and (5) quantity and value questionnaires. Under certain circumstances, the Department may elect to specify a different time limit by which extension requests will be considered untimely for submissions which are due from multiple parties simultaneously. In such a case, the Department will inform parties in the letter or memorandum setting forth the deadline (including a specified time) by which extension requests must be filed to be considered timely. This modification also requires that an extension request must be made in a separate, stand-alone submission, and clarifies the circumstances under which the Department will grant untimely-filed requests for the extension of time limits. These modifications are effective for all segments initiated on or after October 21, 2013. Please review Extension of Time Limits; Final Rule, available at http://www.gpo.gov/fdsys/pkg/FR-2013-09-20/html/2013-22853.htm,, prior to submitting factual information in this segment.

Certification Requirements

Any party submitting factual information in an AD or CVD proceeding must certify to the accuracy and completeness of that information. Parties are hereby reminded that revised certification requirements are in effect for company/government officials as well as their representatives in all AD or CVD investigations or proceedings initiated on or after August 16, 2013, including this investigation. The formats for the revised certifications are provided at the end of the Final Rule. The Department intends to reject factual submissions if the submitting party does not comply with the revised certification requirements.

Notification to Interested Parties

Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305(b). Instructions for filing such applications may be found on the Department's Web site at http://enforcement.trade.gov/apo/index.html .

This notice is issued and published pursuant to section 777(i) of the Act.

Appendix I

Scope of the Investigation

The merchandise covered by this investigation is certain hot-rolled products of carbon steel and alloy steel, in coils, of approximately circular cross section, less than 19.00 mm in actual solid cross-sectional diameter. Specifically excluded are steel products possessing the above-noted physical characteristics and meeting the Harmonized Tariff Schedule of the United States (HTSUS) definitions for (a) stainless steel; (b) tool steel; (c) high nickel steel; (d) ball bearing steel; or (e) concrete reinforcing bars and rods. Also excluded are free cutting steel (also known as free machining steel) products (i.e., products that contain by weight one or more of the following elements: 0.1 percent or more of lead, 0.05 percent or more of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of phosphorus, more than 0.05 percent of selenium, or more than 0.01 percent of tellurium). All products meeting the physical description of subject merchandise that are not specifically excluded are included in this scope.

The products under investigation are currently classifiable under subheadings 7213.91.3011, 7213.91.3015, 7213.91.3020, 7213.91.3093; 7213.91.4500, 7213.91.6000, 7213.99.0030, 7227.20.0030, 7227.20.0080, 7227.90.6010, 7227.90.6020, 7227.90.6030, and 7227.90.6035 of the HTSUS. Products entered under subheadings 7213.99.0090 and 7227.90.6090 of the HTSUS also may be included in this scope if they meet the physical description of subject merchandise above. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this proceeding is dispositive.