69 FR 59885, October 6, 2004

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-854]

Notice of Affirmative Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination: Certain 
Circular Welded Carbon-Quality Line Pipe From the Republic of Korea

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: October 6, 2004.

FOR FURTHER INFORMATION CONTACT: Patrick Edwards or Brandon Farlander, 
at (202) 482-8029 or (202) 482-0182, respectively, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

Preliminary Determination

    We preliminarily determine that certain circular welded carbon 
quality line pipe (``LP'') from the Republic of Korea (``Korea'') is 
being sold, or are likely to be sold, in the United States at less than 
fair value (``LTFV''), as provided in section 733 of the Tariff Act of 
1930, as amended (``the Act''), with regard to sales made by Hyundai 
HYSCO (``HYSCO''). We also preliminarily determine that LP from Korea, 
produced and sold by SeAH Steel Corporation (``SeAH''), is not being 
sold, or is not likely to be sold, in the United States at LTFV. The 
estimated margins of sales at LTFV are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    On March 24, 2004, the Department initiated antidumping 
investigations of LP from Mexico, the Republic of Korea, and the 
People's Republic of China. See Initiation of Antidumping Duty 
Investigations: Certain Circular Welded Carbon Quality Line Pipe From 
Mexico, The Republic of Korea, and the People's Republic of China, 69 
FR 16521 (March 30, 2004) (``Initiation Notice''). The petitioners in 
this investigation are American Steel Pipe Division of American Cast 
Iron Pipe Company, IPSCO Tubulars Inc., Lone Star Steel Company, 
Maverick Tube Corporation, Northwest Pipe Company, and Stupp 
Corporation (collectively ``petitioners''). Since the initiation of 
this investigation the following events have occurred.
    In accordance with the preamble to our regulations, the Department 
set aside a period of time for parties to raise

[[Page 59886]]

issues regarding product coverage and encouraged all parties to submit 
comments within 20 calendar days of publication of the Initiation 
Notice. (See Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296, 27323 (May 19, 1997) and Initiation Notice at 69 FR 16521).
    On April 19, 2004, Central Plastics Company (``CPC''), an 
interested party, submitted comments on the scope of this and the 
concurrent investigations of LP. Specifically, CPC requested an 
exclusion for line pipe having a nominal diameter of less than or equal 
to 1\1/4\ inches (1.660 inch actual outside diameter), regardless of 
grade, from this investigation for various reasons. On April 21, 2004, 
petitioners submitted comments on the scope of this investigation in 
response to CPC's comments. Petitioners concurred with CPC, that line 
pipe of nominal diameter of 1\1/4\ inch and smaller be excluded from 
the scope of this investigation, and that the scope be amended to state 
``excluded from the scope of the investigation are line pipe in nominal 
size with outer diameters of 1\1/4\ inch or less.'' No other party 
submitted further comments on this request and no other party submitted 
scope comments. On May 4, 2004, the Department amended the scope of the 
investigation to include line pipe having an outside diameter greater 
than 32 mm (1\1/4\ inches) in nominal diameter (1.660 inch actual 
outside diameter) and not more than 406.4 mm (16 inches) in outside 
diameter. See Memorandum to Joseph A. Spetrini, Deputy Assistant 
Secretary, Group III, from Richard O. Weible, Office Director, Office 
8, regarding Antidumping Duty Investigations on Certain Circular Welded 
Carbon Quality Line Pipe from China, Korea and Mexico; Scope Issues, 
dated May 4, 2004.
    On April 19, 2004, The United States International Trade Commission 
preliminarily determined that there is reasonable indication that 
imports of LP from Mexico, South Korea, and the People's Republic of 
China are materially injuring the United States industry. See ITC 
Investigation Nos. 731-TA-1073-1075 (Publication No. 3687).
    On April 29, 2004, the Department selected the producers accounting 
for the largest volume of the exports of subject merchandise from Korea 
during the period of investigation (POI) as the mandatory respondents 
in this proceeding. See Memorandum to Joseph A. Spetrini, Deputy 
Assistant Secretary, Group III, from Richard O. Weible, Office 
Director, Office 8, regarding Selection of Respondents for the 
Antidumping Investigation of Certain Circular Welded Carbon Quality 
Line Pipe from Korea, dated April 29, 2004. The Department subsequently 
issued the antidumping questionnaire to SeAH and Hyundai Corporation 
(``Hyundai'') on May 4, 2004. The Department revised its respondent 
selection in this investigation on June 4, 2004. See the ``Amended 
Respondent Selection'' section of this notice for further discussion.
    On June 3, 2004, we issued a supplemental questionnaire on issues 
relating to affiliation to Hyundai and HYSCO. On June 9, 2004, and June 
14, 2004, we received the Section A questionnaire responses from SeAH 
and HYSCO, the revised mandatory respondent following the Department's 
amendment to the respondent selection, respectively. On June 18, 2004, 
and June 24, 2004, petitioners filed comments on the Section A 
responses of SeAH and HYSCO, respectively. On June 23, 2004, the 
Department issued a supplemental questionnaire for deficiencies in 
SeAH's Section A response, to which SeAH subsequently submitted its 
response on July 9, 2004. The Department received HYSCO's response to 
the affiliation supplemental questionnaire on June 16, 2004.
    On June 25, 2004, and June 28, 2004, the Department received 
Section B and C questionnaire responses from SeAH and HYSCO, 
respectively. On July 8, 2004, petitioners submitted comments on 
deficiencies in both companies' Section B and C questionnaire 
responses. The Department issued a supplemental Section B and C 
questionnaire to SeAH on July 12, 2004, and a Section A, B and C 
supplemental questionnaire to HYSCO on July 14, 2004. The Department 
received the supplemental questionnaire responses from SeAH on August 
2, 2004, and from HYSCO on August 4, 2004. Petitioner submitted 
deficiency comments on these questionnaire responses on August 16, 
2004.
    On August 18, 2004, the Department issued a supplemental 
questionnaire for deficiencies remaining in any of the aforementioned 
responses from SeAH. On August 30, 2004, the Department issued a 
supplemental questionnaire for deficiencies remaining in any of the 
aforementioned responses from HYSCO. SeAH submitted its response to the 
Department's supplemental questionnaire on August 31, 2004. HYSCO 
submitted its response to the Department's supplemental questionnaire 
on September 8, 2004. On September 13, 2004, the Department issued a 
final supplemental questionnaire to SeAH. On September 14, 2004, the 
Department issued a supplemental questionnaire to HYSCO. On September 
20, 2004, the Department issued its final supplemental questionnaire to 
HYSCO. SeAH submitted its response to the Department's final 
supplemental questionnaire on September 20, 2004. HYSCO submitted its 
response to the Department's September 14, 2004, supplemental 
questionnaire on September 24, 2004. HYSCO submitted its response to 
the Department's final supplemental questionnaire on September 24, 
2004.
    On July 9, 2004, petitioners submitted allegations of sales below 
cost of production (``COP'') against HYSCO and SeAH. On July 20, 2004, 
the Department requested petitioners to submit further information 
supporting their sales below cost allegation. On July 22, 2004, 
petitioners submitted their response to Department's request for more 
information on the sales below COP allegation. Upon a thorough review 
of petitioners' allegations, the Department initiated a sales-below-
cost investigation on July 30, 2004. See ``Cost of Production 
Analysis'' section of this notice below.
    On July 21, 2004, due to the complicacy of the case and pursuant to 
section 733(c)(1)(B) of the Tariff Act of 1930, the Department 
postponed the preliminary determinations in the antidumping duty 
investigations of certain circular welded carbon quality line pipe from 
Mexico and the Republic of Korea until no later than September 29, 
2004. See Postponement of Preliminary Determinations of Antidumping 
Duty Investigations: Certain Circular Welded Carbon Quality Line Pipe 
from Mexico and the Republic of Korea, 69 FR 44641 (July 27, 2004).

Amended Respondent Selection

    On April 29, 2004, the Department selected SeAH and Hyundai as the 
two companies accounting for the largest volume of the exports of 
subject merchandise from Korea during the POI as the mandatory 
respondents in this proceeding. See Memorandum to Joseph A. Spetrini, 
Deputy Assistant Secretary, Group III, from Richard O. Weible, Office 
Director, Office 8, regarding Selection of Respondents for the 
Antidumping Investigation of Certain Circular Welded Carbon Quality 
Line Pipe from Korea, dated April 29, 2004 (``Respondent Selection 
Memo'').
    On May 19, 2004, the Department received a request from HYSCO to 
rescind the investigation of Hyundai and name HYSCO as the mandatory 
respondent. HYSCO stated that it believed the Department had

[[Page 59887]]

erroneously selected Hyundai as the mandatory respondent, as Hyundai is 
merely a reseller of subject merchandise, a substantial proportion of 
which was supplied by HYSCO. Furthermore, HYSCO claimed that it had 
knowledge of the merchandise's U.S. destination at the time of sale to 
Hyundai. In accordance with 19 U.S.C. 1677m(a), HYSCO entered a request 
on May 24, 2004, to be included as a voluntary respondent in the 
investigation to receive the same additional time to complete the 
Section A response to the Department's antidumping questionnaire of May 
4, 2004, as the other mandatory respondent, SeAH. See Letter from 
Hyundai HYSCO to the Secretary of Commerce, dated May 24, 2004.
    On May 25, 2004, the Department issued a memorandum to the File, 
explaining that it would grant an identical length of time to HYSCO to 
respond to the Department's questionnaire, but that pursuant to the 
Respondent Selection Memo of April 29, 2004, Hyundai would remain the 
mandatory respondent in this investigation, not HYSCO. On May 27, 2004, 
the Department received a further request from Hyundai and HYSCO, that 
HYSCO be made a mandatory respondent in this investigation. See Letter 
from Hyundai Corporation and Hyundai HYSCO to the Secretary of 
Commerce, dated May 27, 2004. Department officials contacted counsel to 
Hyundai and HYSCO on the same day to request that both companies submit 
more detailed information on the official record before any decision 
could be made regarding the issue of amending the respondents selected, 
specifically requesting quantity of sales and quantity purchased for 
both Hyundai and HYSCO. See Memorandum to the File from Patrick 
Edwards, dated May 27, 2004. Hyundai and HYSCO subsequently submitted 
this information to the Department on June 2, 2004, and an analysis 
confirmed that Hyundai resells subject line pipe, which it purchased 
from HYSCO and SeAH. See Letter from Hyundai Corporation and Hyundai 
HYSCO to the Secretary of Commerce, dated June 2, 2004. SeAH also 
placed comments on the record, supporting the selection of HYSCO as a 
mandatory respondent in this investigation rather than Hyundai. See 
Letter from SeAH to the Department regarding Selection of Mandatory 
Respondents, dated May 28, 2004. SeAH also stated that, as a supplier 
to Hyundai, it too had knowledge that subject line pipe sold to Hyundai 
is destined for the United States. We note that petitioners did not 
submit any comments on this issue.
    In Antifriction Bearings, the Department encountered a similar 
situation where the selected respondent provided information showing 
that all of its suppliers had knowledge at the time of sale that the 
merchandise was destined for the United States. The Department 
subsequently determined that the suppliers were the appropriate party 
to review in this case, as it was their sales that were ``first sold 
before the date of importation by the producer or exporter of the 
subject merchandise outside of the United States * * * to an 
unaffiliated purchaser for exportation to the United States.'' See 
Antifriction Bearings and Parts Thereof from France, Germany, Italy, 
Japan, Singapore and the United Kingdom, 69 FR 5949, 5951 (February 9, 
2004) (Antifriction Bearings).
    Based on the preceding evidence, the Department determined that 
HYSCO's claimed knowledge that its sales to Hyundai were ultimately 
destined for export to the United States would make HYSCO the first 
point of sale for the subject merchandise being shipped to the United 
States, and that, pursuant to section 772(a) of the Act, HYSCO, as the 
supplier of subject merchandise to Hyundai, would be the appropriate 
party to examine in this case. Therefore, the Department determined 
that an amendment to the respondent selection in this investigation as 
pertaining to Korea was appropriate, and revised the selection of 
mandatory respondents to include HYSCO and SeAH. See Memorandum to 
Richard O. Weible, Office 8 Director from Brandon Farlander and Patrick 
Edwards, Case Analysts regarding Amendment to the Selection of 
Respondents for the Antidumping Investigation of Certain Circular 
Welded Carbon Quality Line Pipe from the Republic of Korea, June 4, 
2004.

Postponement of Final Determination and Extension of Provisional 
Measures

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for an extension of the 
provisional measures from a four-month period to not more than six 
months. On August 30, 2004, HYSCO requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination by 60 days. On September 
20, 2004, HYSCO also included a request to extend the provisional 
measures from a four-month period to not more than six-months. On 
September 2, 2004, petitioners requested that, in the event of a 
negative determination or de minimis margins against respondents' 
imports, that the Department postpone the final determination in this 
investigation by 60 days. On September 7, 2004, SeAH requested that the 
Department postpone the date of the final determination by 135 days 
from the date of publication of the preliminary determination in the 
event that the preliminary determination is affirmative. On September 
14, 2004, SeAH requested to extend the provisional measures from a 
four-month period to not more than six months.
    Accordingly, because we have made an affirmative preliminary 
determination, and the requesting parties account for a significant 
proportion of exports of the subject merchandise, we are postponing the 
final determination until not later than 135 days after the date of the 
publication of the preliminary determination.

Period of Investigation

    The POI is January 1, 2003, through December 31, 2003. This period 
corresponds to the four most recent fiscal quarters prior to the month 
of the filing of the petition, i.e., March 2004.

Scope of Investigation

    The scope of this investigation includes certain circular welded 
carbon quality steel line pipe of a kind used in oil and gas pipelines, 
over 32 mm (1\1/4\ inches) in nominal diameter (1.660 inch actual 
outside diameter) and not more than 406.4 mm (16 inches) in outside 
diameter, regardless of wall thickness, surface finish (black, or 
coated with any coatings compatible with line pipe), and regardless of 
end finish (plain end, beveled ends for welding, threaded ends or 
threaded and coupled, as well as any other special end finishes), and 
regardless of stenciling. The merchandise subject to this investigation 
may be classified in the Harmonized Tariff Schedule of the United 
States (``HTSUS'') at heading

[[Page 59888]]

7306 and subheadings 7306.10.10.10, 7306.10.10.50, 7306.10.50.10, and 
7306.10.50.50. The tariff classifications are provided for convenience 
and Customs purposes; however, the written description of the scope of 
the investigation is dispositive.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all LP 
produced and sold by the respondents in Korea during the POI that fit 
the description in the ``Scope of Investigation'' section of this 
notice to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We compared U.S. sales 
to sales made in the home market. Where there were no sales of 
identical merchandise in the home market 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. 
Where there were no sales of identical or similar merchandise made in 
the ordinary course of trade, we made product comparisons using 
constructed value (``CV'').
    In making the product comparisons, we matched foreign like products 
based on the physical characteristics reported by the respondents in 
the following order of importance: Epoxy coating, grade, outside 
diameter, wall thickness, surface finish, and end finish.
    In response to the Department's solicitation of comments on product 
characteristics, petitioners submitted remarks on the draft model match 
characteristics issued on April 30, 2004. In their request, petitioners 
urged the Department to revise the size ranges for the ``outer 
diameter,'' wall thickness characteristics, and the deletion of ``weld 
type'' characteristic. On May 12, 2004, Mexican respondent Hylsa S.A. 
de C.V. (``Hylsa'') submitted its comments, in which it requested that 
the Department revise its product-matching characteristics to give the 
greatest weight to the existence or absence of an epoxy coating. Also 
on May 12, 2004, SeAH submitted comments. SeAH noted that while the 
Department's proposed model match of May 4, 2004 contemplated matching 
to specific sizes of wall thickness and outside diameter, petitioners' 
April 30, 2004 comments suggested matching for outside diameter and 
wall thickness using ranges. SeAH urged the Department not to provide 
arbitrary limitations on ranges.
    Upon careful analysis of comments from all parties, on May 21, 
2004, the Department made appropriate changes to the model match 
criteria and asked both SeAH and Hyundai to use the revised model match 
criteria in answering their Sections B and C of the Department's 
questionnaire. The Department accepted Hylsa's suggestion of giving the 
greatest weight to the existence or absence of an epoxy coating, as 
Hylsa demonstrated that such a coating can add substantially to the 
cost of a product. We accepted petitioners' proposed ranges for outside 
diameter and wall thickness as the Department's examination of industry 
specifications indicated that the ranges were a reasonable reflection 
of the production of the merchandise in question and were not 
arbitrary.

Affiliation

    HYSCO acknowledges, in their June 14, 2004, Section A Questionnaire 
Response at page 6, that they were affiliated to Hyundai and Hyundai 
U.S.A. for the first eight months of the POI (i.e., January 2003-August 
2003). Up until the death of M.H. Jung, HYSCO reported its sales made 
to Hyundai and Hyundai U.S.A. as CEP transactions. HYSCO reported all 
sales to Hyundai and Hyundai U.S.A. following the death of M.H. Jung in 
August 2003 as EP transactions. Because M.H. Jung had died, HYSCO 
claims that it is no longer affiliated with Hyundai and Hyundai U.S.A. 
after his death. In HYSCO's questionnaire response, it stated that at 
the end of August 2003, due to financial difficulties, Hyundai was 
turned over to the control of its creditors and that this further 
demonstrated the end of any potential affiliation between HYSCO and 
Hyundai. See HYSCO's June 14, 2004, Section A Questionnaire Response at 
page 6. On September 24, 2004, HYSCO provided additional information 
demonstrating that Hyundai had declared bankruptcy and that its 
creditors took control of the company. Also, in this same response, 
HYSCO provided a list of Hyundai's major creditors and confirmed that 
Hyundai's creditors were not affiliated with any member of the Hyundai 
Group chaebol (including Hyundai and Hyundai U.S.A.) or any member of 
the Hyundai Motors Group chaebol (including HYSCO). Based on this 
information, the Department preliminarily determines that HYSCO's 
affiliation with Hyundai, Hyundai U.S.A, and all members of the Hyundai 
Group chaebol ended on August 31, 2003, and that, from this date to the 
end of the POI, all of HYSCO's sales to Hyundai and Hyundai U.S.A. 
therefore constitute EP sales.

Fair Value Comparisons

    To determine whether sales of certain circular welded carbon-
quality line pipe from Korea to the United States were made at LTFV, we 
compared the export price (``EP'') or constructed export price 
(``CEP'') to the normal value (``NV''), as described in the ``Export 
Price and Constructed Export Price'' and ``Normal Value'' sections of 
this notice, below. In accordance with section 777A(d)(1)(A)(i) of the 
Act, we compared POI weighted-average EPs or CEPs to NVs, and where 
there were no similar product matches, we compared EP or CEP to CV.
    As discussed below under ``Home Market Viability and Comparison 
Market Selection,'' we determined that SeAH and HYSCO had a viable home 
market during the POI.

Export Price and Constructed Export Price

    In accordance with section 772(a) of the Act, export price is the 
price at which the subject merchandise is first sold (or agreed to be 
sold) before the date of importation by the producer or exporter of the 
subject merchandise outside of the United States to an unaffiliated 
purchaser in the United States or to an unaffiliated purchaser for 
exportation to the United States, as adjusted under subsection (c). In 
accordance with section 772(b) of the Act, CEP is the price at which 
the subject merchandise is first sold (or agreed to be sold) in the 
United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter, as adjusted under subsections (c) and 
(d).
1. HYSCO
    For purposes of this investigation, HYSCO has classified its sales 
as both EP and CEP. Based on the Department's decision on affiliation 
in the ``Affiliation'' section noted above, we determined that 
affiliation between HYSCO and Hyundai and Hyundai U.S.A. ended on 
August 31, 2003, the day Hyundai declared bankruptcy and its creditors 
took control of the company. Hence, on and after August 31, 2003, until 
the end of the POI, the Department has determined that HYSCO's sales to 
Hyundai Corporation and Hyundai U.S.A. are EP sales. We note that this 
decision does not impact the fact that HYSCO is affiliated with Hyundai 
Pipe of America during the entire POI and that these sales through 
Hyundai Pipe of America are classified as CEP sales.
    For HYSCO's EP sales, we made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these included, where

[[Page 59889]]

appropriate, foreign inland freight from the plant to the port of 
export, foreign brokerage and handling expenses, international freight, 
marine insurance, U.S. brokerage, and U.S. customs duty, where 
applicable. Additionally, we added to the U.S. price an amount for duty 
drawback pursuant to section 772(c)(1)(B) of the Act. See Memorandum to 
the File Re: Preliminary Determination Analysis Memorandum for Hyundai 
HYSCO (``HYSCO'') in the Antidumping Investigation of Certain Circular 
Welded Carbon Quality Line Pipe from the Republic of Korea for the 
Period January 1, 2003, through December 31, 2003, dated September 29, 
2004 (``HYSCO Analysis Memo'').
    For HYSCO's CEP sales transactions, we calculated price in 
conformity with section 772(b) of the Act. We based CEP on the packed 
duty paid prices to an unaffiliated purchaser in the United States. We 
also made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included foreign inland freight from the 
plant to the port of export, foreign brokerage and handling expenses, 
international freight, marine insurance, U.S. brokerage, and U.S. 
customs duty, where applicable. Additionally, we added to the U.S. 
price an amount for duty drawback pursuant to section 772(c)(1)(B) of 
the Act. We also deducted commissions, where applicable. In accordance 
with section 772(d)(1) of the Act, we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including imputed credit expenses, warranty expenses, and indirect 
selling expenses. We also made an adjustment for CEP profit in 
accordance with section 772(d)(3) of the Act. See HYSCO Analysis Memo.
2. SeAH
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold (or agreed to be sold) in the United 
States before or after the date of importation by, or for the account 
of, the producer or exporter of such merchandise, or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter, as adjusted under sections 772(c) and 
(d).
    In the instant investigation, SeAH sold subject merchandise through 
two affiliated companies, Pusan Pipe America, Inc. (``PPA'') and State 
Pipe & Supply, Inc. (``State Pipe''), an affiliated reseller of PPA, 
both of Santa Fe Springs, California. SeAH reported all of its U.S. 
sales of subject merchandise as CEP transactions. After reviewing the 
evidence on the record of this investigation, we have preliminarily 
determined that SeAH's transactions are classified properly as CEP 
sales because these sales occurred in the United States and were made 
through its U.S. affiliate(s) to an unaffiliated buyer. Such a 
determination is consistent with section 772(b) of the Act and the U.S. 
Court of Appeals for the Federal Circuit's decision in AK Steel Corp., 
et al. v. United States, 226 F.3d 1361, 1374 (Fed. Cir. 2000) (``AK 
Steel'').
    For these CEP sales transactions, we calculated price in conformity 
with section 772(b) of the Act. We based CEP on the packed, delivered 
duty paid prices to an unaffiliated purchaser in the United States. We 
also made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included foreign inland freight, foreign 
brokerage and handling and port charges, international freight, marine 
insurance, U.S. inland freight, U.S. brokerage and handling, U.S. 
warehousing, and U.S. wharfage. In accordance with section 772(d)(1) of 
the Act, we deducted those selling expenses associated with economic 
activities occurring in the United States, including imputed credit 
expenses and indirect selling expenses. We also made an adjustment for 
CEP profit in accordance with section 772(d)(3) of the Act. See 
Memorandum to the File Re: Preliminary Determination Analysis 
Memorandum for SeAH Steel Corporation (``SeAH'') in the Antidumping 
Investigation of Certain Circular Welded Carbon Quality Line Pipe from 
the Republic of Korea for the Period January 1, 2003, through December 
31, 2003, dated September 29, 2004.

Normal Value

A. Home Market Viability and Comparison Market Selection

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared respondent's volume of home market sales of 
the foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act.
    In this investigation, we determined that both HYSCO's and SeAH's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of the aggregate volume of U.S. sales of the 
subject merchandise. Therefore, we used home market sales as the basis 
for NV in accordance with section 773(a)(1)(B) of the Act. We also used 
CV as the basis for calculating NV, in accordance with section 
773(a)(4) of the Act, for those sales that did not have identical or 
similar product matches.

B. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the export transaction. The NV LOT 
is that of the starting-price sales in the comparison market. For CEP, 
it is the level of the constructed sale from the exporter to the 
importer. We consider only the selling activities reflected in the U.S. 
price after the deduction of expenses incurred in the United States and 
CEP profit under section 772(d) of the Act. See Micron Technology Inc. 
v. United States, 243 F.3d 1301, 1314-15 (Fed. Cir. 2001).
    To determine whether NV sales are at a different LOT than CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the differences in the levels between NV and 
CEP affect price comparability, we adjust NV under section 773(a)(7)(B) 
of the Act (the CEP Offset provision). See, e.g., Certain Carbon Steel 
Plate from South Africa, Final Determination of Sales at Less Than Fair 
Value, 62 FR 61731, 61733 (November 19, 1997).
    In analyzing differences in selling functions, we determine whether 
the LOTs identified by the respondent are meaningful. See Antidumping 
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19, 
1997). If the claimed LOTs are the same, we expect that the functions 
and activities of the seller should be similar. Conversely, if a party 
claims that LOTs are different for different groups of sales, the 
functions and activities of the seller should be dissimilar. See 
Porcelain-on-Steel Cookware from Mexico: Final

[[Page 59890]]

Results of Administrative Review, 65 FR 30068 (May 10, 2000).
1. SeAH
    In this investigation, we obtained information from SeAH regarding 
the marketing stages involved in making the reported home market and 
U.S. sales. In order to determine whether the comparison sales were at 
different stages in the marketing process than the U.S. sales, we 
reviewed the distribution system in each market (i.e., the ``chain of 
distribution''),\1\ including selling functions, class of customer 
(``customer category''), and the level of selling expenses for each 
type of sale. SeAH reported that it sells to distributors and end users 
in the home market, and to its U.S. affiliates, PPA and State Pipe, for 
sale to the United States. We examined the information reported by SeAH 
and found that home market sales to both customer categories were 
identical with respect to selling functions and stages of marketing. 
Accordingly, we preliminarily find that SeAH had only one LOT for its 
home market sales.
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    \1\ The marketing process in the United States and home market 
begins with the producer and extends to the sale to the final user 
or customer. The chain of distribution between the two may have many 
or few links, and the respondents' sales occur somewhere along this 
chain. In performing this evaluation, we considered each 
respondent's narrative response to properly determine where in the 
chain of distribution the sale occurs.
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    SeAH states that it is not claiming a LOT adjustment because it has 
no home market sales that are at the same LOT as that of its CEP sales, 
and therefore, it cannot quantify an LOT adjustment. SeAH claims that a 
CEP offset is warranted. See SeAH's Section A Questionnaire Response of 
December 8, 2003, at page 21 and Exhibit A-15. For its CEP sales, SeAH 
reported a single level of trade and three channels of distribution. We 
examined the selling functions provided across these channels and find 
that they are essentially identical, differing only with respect to 
inventory maintenance and freight. Therefore, we preliminarily agree 
that there is only one LOT with regard to SeAH's CEP sales in the 
United States.
    According to section 773(a)(7)(B) of the Act, a CEP offset is 
appropriate when the LOT in the home market is at a more advanced stage 
than the LOT of the CEP sales. To determine whether a CEP offset 
adjustment is warranted, we compared SeAH's selling functions in the 
home market with the selling functions for U.S. sales to its 
affiliates, PPA and State Pipe. We note that SeAH claimed several 
common selling activities in both the home and U.S. market, but after 
an analysis of these functions, the Department has determined the 
following activities are not ``selling functions'' within the meaning 
of section 773(a)(7) of the Act, and are not relevant to the level of 
trade analysis. These functions include: computer, legal, accounting, 
audit, and/or business-systems development, engineering services, 
research and development and technical programs. SeAH also claimed 
packing as a selling function performed for all customers. However, we 
did not consider this to be a selling function relevant to LOT, as 
packing is a separate circumstance of sale (``COS'') adjustment.
    SeAH reported that the selling activities associated with its CEP 
sales differ from the home market selling activities in that sales 
forecasting, strategic and economic planning, arranging import 
documentation, serving as importer of record, paying U.S. customs 
duties and wharfage, cash discounts, and warranty service are exclusive 
to the U.S. market. After analyzing these functions in the context of a 
more advanced or less advanced LOT, the Department has determined the 
following. Serving as importer of record and paying U.S. customs duties 
and wharfage are not considered selling functions in the analysis of 
LOT because neither is distinguishable as a function that requires 
further personnel or monetary expense during the pre-sale process; the 
Department furthermore does not consider cash discounts to be a selling 
function. Further, we make a separate COS adjustment for discounts (as 
well as for U.S. customs duties and wharfage) and, thus, do not 
consider these activities as selling functions for our LOT analysis.
    A final analysis of SeAH's claimed home market and U.S. CEP selling 
functions indicates that the selling functions provided by SeAH in both 
markets only differ by two selling functions (i.e., forecasting and 
planning, and arranging import documentation). Based on the above 
analysis, we preliminarily find that the selling functions provided for 
sales in the home market and sales in the U.S. market do not 
substantially differ and do not constitute a different LOT. Therefore, 
we preliminarily find that the CEP LOT is similar to the home market 
LOT and a CEP offset is not necessary, in accordance with Section 
773(a)(7)(B) of the Act.
2. HYSCO
    In this investigation, we obtained information from HYSCO regarding 
the marketing stages involved in making the reported home market and 
U.S. sales. In order to determine whether the comparison sales were at 
different stages in the marketing process than the U.S. sales, we 
reviewed the distribution system in each market (i.e., the ``chain of 
distribution''), including selling functions, class of customer 
(``customer category''), and the level of selling expenses for each 
type of sale. HYSCO reported that it sells to distributors and end 
users in the home market, and to its U.S. affiliates, Hyundai U.S.A. 
(for a portion of the POI), and Hyundai Pipe of America, for sale to 
the United States. We examined the information reported by HYSCO and 
found that home market sales to both customer categories were identical 
with respect to selling functions and stages of marketing. Accordingly, 
we preliminarily find that HYSCO had only one LOT for its home market 
sales.
    HYSCO states that it is not claiming an LOT adjustment because the 
starting prices of sales to the United States are at the same level of 
trade as the starting prices of home market sales. Also, HYSCO is not 
claiming a CEP offset. We note that HYSCO had EP and CEP sales. Based 
on an analysis of HYSCO's selling functions for EP sales, we determine 
that these selling functions are essentially the same, with the 
exception that HYSCO performs inventory maintenance to a small degree 
in the home market but does not provide inventory maintenance in the 
U.S. market for its EP sales. Also, we note that HYSCO claimed several 
common selling activities in both the home and U.S. market, but that 
after an analysis of these functions, the Department has determined 
that a portion of these functions are not relevant to the LOT analysis 
as ``selling functions.'' These functions include: (1) Legal, 
accounting, audit, and/or business-systems development; (2) engineering 
services; and (3) research and development and technical programs. 
HYSCO also claimed packing as a selling function performed for all 
customers. However, we did not consider this to be a selling function 
relevant to LOT as packing is a separate COS adjustment. Hence, we 
determine that HYSCO's EP sales and home market sales are at the same 
LOT.
    Regarding HYSCO's CEP sales, as it did not request an LOT 
adjustment, HYSCO did not provide information on the record pertaining 
to the selling functions and marketing stages for sales through its 
U.S. affiliates. Hence, there is not sufficient evidence to determine 
the degree of performance or number of selling functions provided in 
HSYCO's U.S. CEP sales.
    Therefore, we preliminarily determine that there is no basis for 
determining

[[Page 59891]]

that there is a distinct, less advanced LOT for U.S. sales than for 
home market sales. Therefore, no LOT adjustment or CEP offset is 
warranted.

C. Cost of Production Analysis

    Based on a cost allegation submitted by the petitioners pursuant to 
19 CFR 351.301(d)(2)(ii), we found reasonable grounds to believe or 
suspect that HYSCO and SeAH made sales of the foreign like product at 
prices below the COP, as provided by section 773(b)(2)(A)(ii) of the 
Act. Therefore, pursuant to section 773(b)(1) of the Act, we initiated 
a COP investigation of sales by both HYSCO and SeAH. See Memorandum 
from Brandon Farlander and Patrick Edwards, Case Analysts, and Trinette 
Ruffin and Michael Martin, Case Accountants, to Richard O. Weible, 
Office Director, regarding Petitioner's Allegation of Sales Below the 
Cost of Production for Hyundai HYSCO, July 30, 2004, and Memorandum 
from Brandon Farlander and Patrick Edwards, Case Analysts, and Trinette 
Ruffin and Michael Martin, Case Accountants, to Richard O. Weible, 
Office Director, regarding Petitioner's Allegation of Sales Below the 
Cost of Production for SeAH Steel Corporation, July 30, 2004, on file 
in the Central Records Unit. The Department has conducted an 
investigation to determine whether HYSCO and SeAH made home market 
sales at prices below their respective COPs during the POI within the 
meaning of section 773(b) of the Act. We conducted the COP analysis 
described below.
    Pursuant to the Department's decision to initiate a sales-below-
cost investigation with regard to both companies, we instructed HYSCO 
and SeAH to submit its responses to Section D of the Department's 
antidumping questionnaire. SeAH submitted its response to the Section D 
questionnaire on August 23, 2004, and its response to the Department's 
Section D supplemental questionnaire of September 2, 2004, on September 
20, 2004. HYSCO submitted its response to the Section D questionnaire 
on September 8, 2004. The Department issued a final supplemental for 
Section D to HYSCO on September 24, 2004, the response to which will be 
submitted after these preliminary determinations.
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for the home 
market G&A expenses, interest expenses, and packing expenses. For 
HYSCO, we relied on the COP data submitted by HYSCO except that we 
adjusted the financial expense ratio to include HYSCO's gains and 
losses on currency forward transactions as presented in their financial 
statements. We also excluded the short-term interest income offset 
because there was not enough information on the record to substantiate 
the split of interest income presented in their financial statements 
between short and long-term interest income. As a result of these 
changes, the financial expense ratio increased. See Memorandum 
regarding Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Determination--Hyundai HYSCO Co., Ltd. 
from Margaret M. Pusey, Accountant, through Michael P. Martin, Program 
Manager, to Neal M. Halper, Director, Office of Accounting, dated 
September 29, 2004. For SeAH, we relied on the COP data submitted by 
SeAH except that we adjusted the financial expense ratio to include 
SeAH's donation expense that it had excluded from the calculation of 
the GNA expense rate. Thus, we included the donation expense in the GNA 
expense rate calculation. As a result of this change, the financial 
expense ratio increased. See Memorandum regarding Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Determination--SeAH Steel Corporation from Ji Young Oh, Accountant, 
through Michael P. Martin, Program Manager, to Neal M. Halper, 
Director, Office of Accounting, dated September 29, 2004.
2. Test of Home Market Sales Prices
    We compared the weighted-average COP for HYSCO and SeAH to their 
home-market sales prices of the foreign like product, as required under 
section 773(b) of the Act, to determine whether these sales had been 
made at prices below the COP within an extended period of time (i.e., a 
period of one year) in substantial quantities and whether such prices 
were sufficient to permit the recovery of all costs within a reasonable 
period of time.
    On a model-specific basis, we compared the revised COP to the home 
market prices, less any applicable movement charges, discounts, 
rebates, and direct and indirect selling expenses.
 3. Results of the COP Test
    We disregarded below-cost sales where (1) 20 percent or more of 
HYSCO's and SeAH's sales of a given product during the POI were made at 
prices below the COP, and thus such sales were made within an extended 
period of time in substantial quantities in accordance with sections 
773(b)(2)(B) and (C) of the Act, and (2) based on comparisons of price 
to weighted-average COPs for the POI, we determined that the below-cost 
sales of the product were at prices which would not permit recovery of 
all costs within a reasonable time period, in accordance with section 
773(b)(2)(D) of the Act. We found that both HYSCO and SeAH made sales 
below cost and we disregarded such sales where appropriate.

D. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NVs based on delivered prices to unaffiliated 
customers. For HYSCO, we made deductions for movement expenses, 
including inland freight and warehousing under section 773(a)(6)(B)(ii) 
of the Act, by deducting the actual costs incurred by HYSCO, where 
applicable. In addition, we made adjustments under section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences in 
circumstances of sale for warranty and imputed credit, where 
applicable. For SeAH, we made deductions for movement expenses, 
including inland freight and brokerage and handling under section 
773(a)(6)(B)(ii) of the Act, by deducting the actual costs incurred by 
SeAH and adding the revenue earned, where applicable. In addition, we 
made adjustments under section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410 for differences in circumstances of sale for discounts, rebates 
and other direct selling expenses, where applicable. For SeAH and 
HYSCO, we also added U.S. packing costs and deducted home market 
packing in accordance with section 773(a)6(A) and (B) of the Act.

E. Calculation of Normal Value Based on Constructed Value

    In accordance with section 773(a)(4) of the Act, we based HYSCO's 
and SeAH's NV on CV where there were no comparable sales in the home 
market made in the ordinary course of trade.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of HYSCO's and SeAH's cost of materials and 
fabrication for the foreign like product, plus amounts for SG&A, 
interest, profit, and U.S. packing costs. We calculated the cost of 
materials and fabrication, G&A and interest based on the methodology 
described in the ``Calculation of COP'' section of this notice.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the

[[Page 59892]]

exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank.

Verification

    As provided in section 782(i) of the Act, we will verify the 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
U.S. Customs and Border Protection (CBP) to suspend liquidation of all 
imports of subject merchandise that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. We will instruct CBP to require a cash 
deposit or the posting of a bond equal to the weighted-average amount 
by which NV exceeds EP or CEP, 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:

------------------------------------------------------------------------
                                                             Weighted-
                                                              average
                  Exporter/manufacturer                       margin
                                                           (percentage)
------------------------------------------------------------------------
Hyundai HYSCO...........................................            6.49
SeAH Steel Corporation Ltd..............................        \1\ 1.19
All Others..............................................            6.49
------------------------------------------------------------------------
 \1\De minimis.

    The All Others rate is derived exclusive of all zero and de minimis 
margins and margins based entirely on adverse facts available.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination of sales at LTFV. Section 735(b)(2) requires 
that the ITC make a final determination before the later of 120 days 
after the date of the Department's preliminary determination or 45 days 
after the Department's final determination whether the domestic 
industry in the United States is materially injured, or threatened with 
material injury, by reason of imports, or sales (or the likelihood of 
sales) for importation, of the subject merchandise. Because we have 
postponed the deadline for our final determination to 135 days from the 
date of the publication of this preliminary determination, the ITC will 
make its final determination within 45 days of our final determination.

Disclosure

    We will disclose the calculations used in our analysis, within five 
days of publication of this notice, to parties in this proceeding in 
accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than seven days after the date of the final 
verification report issued in this proceeding. Rebuttal briefs must be 
filed five days from the deadline date for case briefs. A list of 
authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes. Section 774 of the Act provides that the Department will 
hold a public hearing to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs, provided that 
such a hearing is requested by an interested party. If a request for a 
hearing is made in this investigation, the hearing will tentatively be 
held two days after the rebuttal brief deadline date at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. Parties should confirm by telephone the time, 
date, and place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    We will make our final determination no later than 135 days after 
the publication of this notice in the Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: September 29, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
 [FR Doc. E4-2522 Filed 10-5-04; 8:45 am]