Commerce Can't Allow AD Respondent's Hedging Gains to Offset COP, Trade Group Tells CIT

The Commerce Department was wrong to allow an antidumping duty respondent's net hedging-related gains to offset its cost of manufacturing in an AD investigation, the Aluminum Association Trade Enforcement Working Group told the Court of International Trade in its Jan. 7 complaint. Commerce's finding that the respondent's hedging gains are "associated" with its purchases of aluminum is insufficient because the record also shows that the hedging contracts are associated with its sales of finished goods, the complaint said (The Aluminum Association Trade Enforcement Working Group, et al. v. U.S., CIT #21-00618).

The case concerns the antidumping duty investigation into aluminum foil from Turkey in which Assan Aluminyum Sanayi ve Ticaret served as the sole mandatory respondent. In the investigation, Commerce said that Assan entered into commodity contracts to mitigate the risk on the price fluctuations for the key input of aluminum. The agency said that "Assan's hedging activities and associated net hedging gains are related to Assan's aluminum purchases."

The working group took issue with this finding, arguing that this determination is not backed by substantial evidence. Commerce's finding that Assan's hedging gains are associated with its aluminum purchases is insufficient because the contracts are associated with its sales of finished goods, the complaint said. "In fact, the hedging contracts analyzed by Commerce concern the London Metal Exchange ('LME') or metal premium portion of Assan's purchases and sales, not the input materials or finished goods themselves," the trade group said.

Further, there is even evidence that detracts from Commerce's position that the agency failed to address, the complaint said. "The purpose of a hedging contract is to manage the risk of an uncertain future event (e.g., future movements in LME aluminum prices)," the brief explained. "Assan enters into hedging contracts after purchasing raw materials. Thus, at the time Assan enters into its hedging contracts, the purchase of raw materials is a past event, with no uncertainty left for Assan to manage."