Commerce Drops Dumping Margin for Hyundai Steel OCTG on Remand

The Commerce Department is set to lower Hyundai Steel Co.'s dumping margin from 19.54% to 9.63% in the 2019-2020 antidumping duty administrative review on certain oil country tubular goods from South Korea, in remand results released Aug. 16. Commerce said that it reconsidered and changed the methodology by which it calculated the constructed export price (CEP) profit for Hyundai but did not change the calculation of the constructed value (CV) profit and selling expenses and CV profit cap (Hyundai Steel Co., et al. v. U.S., CIT # 22-00138).

Using Hyundai’s recalculated margin, the margin for the non-examined companies AJU Besteel, Husteel and NEXTEEL fell from 11.70% 6.74%.

Commerce had requested the remand itself in order to reconsider its calculations of constructed value, CV profit cap and constructed export price profit, and CIT granted the remand in a June order (see 2306090053). Commerce requested remand on the CEP methodology because of the agency’s concern that the finding may have relied on a misunderstanding of facts on the administrative record, which called into question the agency’s selection from among several CEP profit sources on the record. Commerce said that it now based the calculation on the profit reflected in Hyundai's financial statements rather than on third-country sales to Kuwait by SeAH, another respondent.

Commerce then considered several other options for calculating CEP. The agency said that the Tariff Act of 1930 indicates a preference for calculating CEP based on expenses and profits of the foreign producer, exporter and affiliated parties. That left the four profit sources specific to Hyundai Steel. Commerce then looked at “the narrowest category of merchandise sold in the United States and the exporting country which includes the subject merchandise." Finding that none of the profit sources fit within that requirement, Commerce then looked to those that fit within "the narrowest category of merchandise sold in all countries.” The agency ultimately decided that Hyundai Steel’s overall profit ratio for steel-related activities represented the actual profit from Hyundai Steel.

On the constructed value issue, Commerce found that the combined CV profit and selling expenses for SeAH’s third-country market sales of OCTG during the period of review continued to be "the best information available on the record" for valuing Hyundai Steel’s CV profit and selling expenses. "SeAH’s combined selling expense and profit experience reflects the profit of a Korean OCTG producer, on comparison market sales of the merchandise under consideration, in the ordinary course of trade," Commerce said.

There were "numerous" possible alternative sources on the record, Commerce noted, but said that the selection of an alternative is to be made on a case-by-case basis and depends on available data. Commerce's preference is to rely on merchandise that is in the same general category, but the agency couldn't do so here because other steel products produced by Hyundai weren't in the same general category of merchandise as its OCTG. Next, Commerce said that it would have preferred a direct comparison with similar home market sellers, but other respondents for which Commerce had data didn't make sales of OCTG in Korea. Commerce said that it was forced to resort to the "any other reasonable method" standard, selected under its discretion because the other two alternative methods didn't fit.

Commerce ultimately chose SeAH's data because it eliminated inherent flaws when using surrogate financial statements and CIT had concluded that the method was reasonable in previous cases.