Commerce Flips PMS Finding, Stands by Other Rulings After CIT Remand in Korean Oil Tubes AD Case

A particular market situation will no longer be part of the dumping margin calculation for oil country tubular goods from Korea after the Commerce Department submitted its remand results to the Court of International Trade on June 30. Commerce dropped the PMS finding after the court said that there was not enough evidence to support the agency's finding that the Korean steel market was heavily subsidized (SeAH Steel Co. v. United States, CIT #19-00086).

However, Commerce stuck to its guns on three other determinations that the court remanded. Providing further explanation, the agency backed its decision to allocate production line suspension costs to one of the mandatory respondents' general and administrative (G&A) expenses, apply one of the mandatory respondents' U.S. affiliate's reported general expense ratio to further manufacturing costs and include a reviewed company's valuation losses related to raw materials and work-in-process to its G&A expense ratio calculation.

Commerce's remand results came in a case over the 2016-17 antidumping administrative review of OCTG from Korea. On April 14, Judge Jennifer Choe-Groves sent multiple aspects of the review's final results back for further consideration in her decision. She recently rejected the Department of Justice's bid to stay the proceedings (see 2105190022). DOJ wanted to halt the case until the U.S. Court of Appeals for the Federal Circuit considered the Korean steel market PMS issue. The mandatory respondents in the review are two of the plaintiffs -- SeAH Steel Corp. and Nexteel Co.

When finding that there was a PMS in the Korean steel market, Commerce relied on four different factors. Among them, Commerce tried to show that overcapacity of Chinese steel inputs -- a global phenomenon -- uniquely affected the Korean steel market as one of the four factors leading to a PMS. Choe-Groves found all four factors unconvincing. Commerce reversal comes under protest.

"To be clear, we disagree with the Court’s approach to considering the evidence on the record of this review," Commerce said. "We believe that each document should be evaluated as it relates to the period of review at issue and the specific analysis that the agency employed in its determination regarding that specific review period. Accordingly, in future proceedings involving steel products from Korea, we intend to continue to evaluate all evidence on the record of each specific segment of a proceeding in light of the analysis adopted in that specific administrative segment and, if appropriate, we may continue to consider and/or rely on identical or similar pieces of evidence as part of our PMS analysis."

Commerce also flipped its findings on one other element of the review -- the decision to adjust Nexteel's reported costs for the value of non-prime products at their sales price and allocate the difference between the full production cost and market value of the non-prime products to the production costs of the prime OCTG.

Commerce did not reverse its decision to reclassify Nexteel's losses related to production line suspensions to its G&A expenses and exclude from the cost of goods sold denominator the reclassified suspended losses. Choe-Groves sent this back to Commerce, saying it didn't explain its deviation from simply relying on Nexteel's records.

During the review, Nexteel suspended slitting and threading lines for limited periods but didn't account for the costs of keeping the lines idle in the costs of producing OCTG. Nexteel didn't do so since they were unrelated to the goods' production activities, Commerce said. "It is Commerce’s normal practice to include routine shutdown expenses (i.e., maintenance shutdowns) in a respondent’s reported costs and to associate them with the products produced on those lines," the remand results said. Nexteel didn't put the labor and overhead costs related to the suspended lines into its cost of sold goods, thus, Commerce did it for the respondent.

Commerce subsequently recalculated the weighted average dumping margins for SeAH, Nexteel and the "non-examined companies' and arrived at changes of "16.73 percent to 5.28 percent for SeAH, 32.24 percent to 9.77 percent for NEXTEEL, and 24.49 percent to 7.53 percent for the non-examined companies."