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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-909]

Certain Steel Nails From the People's Republic of China: Preliminary Results and Partial Rescission of the Third Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, Department of Commerce.
SUMMARY: The Department of Commerce ("Department") is conducting the third administrative review of the antidumping duty order on certain steel nails from the People's Republic of China ("PRC") for the period August 1, 2010, through July 31, 2011. The Department has preliminarily determined that sales have been made below normal value ("NV") by certain respondents examined in this administrative review. If these preliminary results are adopted in our final results of this review, the Department will instruct U.S. Customs and Border Protection ("CBP") to assess antidumping duties on all appropriate entries of subject merchandise during the period of review.
DATES: Effective Date:September 4, 2012.
FOR FURTHER INFORMATION CONTACT: Alexis Polovina or Jamie Blair-Walker, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-3927 or (202) 482-2615, respectively.
SUPPLEMENTARY INFORMATION: Background

The Department received timely requests from Petitioner1 and other companies, in accordance with 19 CFR 351.213(b), during the anniversary month of August, to conduct reviews of certain companies exporting steel nails from the PRC. On October 3, 2011, the Department initiated this review with respect to all 383 requested companies.2

1Mid Continent Nail Corporation (“Petitioner”).

2 See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocations in Part,76 FR 61076 (October 3, 2011) (“Initiation Notice”).

On December 22, 2011, Qingdao JISCO Co., Ltd., a Chinese producer of subject merchandise and its Korean parent company, ECO System Corporation d/b/a JISCO Corporation (collectively, “JISCO”), withdrew its request for an administrative review.3 On January 3, 2012, the Department received a timely4 letter from Petitioner to withdraw its request for review of numerous companies.5

3 Seesubmission from JISCO Corporation regarding Steel Nails from the People's Republic of China: Withdrawal of Request for Administrative Review, dated December 22, 2011.

4The deadline for submitting requests was January 1, 2012, but due to the federal holiday, the deadline was automatically extended to the following business day.

5 Seesubmission from Petitioner regarding Certain Steel Nails from the People's Republic of China: Withdrawal of Requests for Administrative Review, dated January 3, 2012.

On March 30, 2012, the Department published a notice6 extending the time period for issuing the preliminary results by 120 days to August 30, 2012. From October 11, 2011, to December 5, 2011, the Department received timely separate rate applications, certifications and no shipment letters from many companies. On December 13, 2011, the Department received an untimely no shipment certification from Hebei Minmetals Co., Ltd. (“Hebei”).7 Pursuant to 19 CFR 351.302(d)(1)(i), the Department rejected the untimely no shipment certification from Hebei on July 16, 2012.8

6 See Certain Steel Nails From the People's Republic of China: Extension of Time Limit for the Preliminary Results of the Third Antidumping Duty Administrative Review,77 FR 19190 (March 30, 2012).

7The deadline to submit separate rate applications, certifications and no shipment letters was December 2, 2011, 60 days following the publication of theInitiation Notice.

8 Seeletter to Hebei from Matthew Renkey regarding Certain Steel Nails from the People's Republic of China (“PRC”): Rejection of Untimely Certification of No Shipments, dated July 16, 2012.

Between December 20, 2011, and July 25, 2012, The Stanley Works (Langfang) Fastening Systems Co., Ltd. (“Stanley Langfang”), and Stanley Black & Decker (“SBD”) (collectively “Stanley”) submitted responses to the Department's original and supplemental questionnaires. Between March 8, 2012, and July 20, 2012, the Department received responses to its original and supplemental questionnaires from Tianjin Jinghai County Hongli Industry and Business Co., Ltd. (“Hongli”).

Period of Review

The period of review (“POR”) is August 1, 2010, through July 31, 2011.

Scope of the Order

The merchandise covered by this order includes certain steel nails having a shaft length up to 12 inches. Certain steel nails include, but are not limited to, nails made of round wire and nails that are cut. Certain steel nails may be of one piece construction or constructedof two or more pieces. Certain steel nails may be produced from any type of steel, and have a variety of finishes, heads, shanks, point types, shaft lengths and shaft diameters. Finishes include, but are not limited to, coating in vinyl, zinc (galvanized, whether by electroplating or hot dipping one or more times), phosphate cement, and paint. Head styles include, but are not limited to, flat, projection, cupped, oval, brad, headless, double, countersunk, and sinker. Shank styles include, but are not limited to, smooth, barbed, screw threaded, ring shank and fluted shank styles. Screw-threaded nails subject to this proceeding are driven using direct force and not by turning the fastener using a tool that engages with the head. Point styles include, but are not limited to, diamond, blunt, needle, chisel and no point. Finished nails may be sold in bulk, or they may be collated into strips or coils using materials such as plastic, paper, or wire. Certain steel nails subject to this order are currently classified under the Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 7317.00.55, 7317.00.65 and 7317.00.75.

Excluded from the scope of this order are steel roofing nails of all lengths and diameter, whether collated or in bulk, and whether or not galvanized. Steel roofing nails are specifically enumerated and identified in ASTM Standard F 1667 (2005 revision) as Type I, Style 20 nails. Also excluded from the scope are the following steel nails: (1) Non-collated (i.e.,hand-driven or bulk), two-piece steel nails having plastic or steel washers (caps) already assembled to the nail, having a bright or galvanized finish, a ring, fluted or spiral shank, an actual length of 0.500″ to 8″, inclusive; and an actual shank diameter of 0.1015″ to 0.166″, inclusive; and an actual washer or cap diameter of 0.900″ to 1.10″, inclusive; (2) Non-collated (i.e.,hand-driven or bulk), steel nails having a bright or galvanized finish, a smooth, barbed or ringed shank, an actual length of 0.500″ to 4″, inclusive; an actual shank diameter of 0.1015″ to 0.166″, inclusive; and an actual head diameter of 0.3375″ to 0.500″, inclusive; (3) Wire collated steel nails, in coils, having a galvanized finish, a smooth, barbed or ringed shank, an actual length of 0.500″ to 1.75″, inclusive; an actual shank diameter of 0.116″ to 0.166″, inclusive; and an actual head diameter of 0.3375″ to 0.500″, inclusive; and (4) Non-collated (i.e.,hand-driven or bulk), steel nails having a convex head (commonly known as an umbrella head), a smooth or spiral shank, a galvanized finish, an actual length of 1.75″ to 3″, inclusive; an actual shank diameter of 0.131″ to 0.152″, inclusive; and an actual head diameter of 0.450″ to 0.813″, inclusive.

Also excluded from the scope of this order are corrugated nails. A corrugated nail is made of a small strip of corrugated steel with sharp points on one side. Also excluded from the scope of this order are fasteners suitable for use in powder-actuated hand tools, not threaded and threaded, which are currently classified under HTSUS 7317.00.20 and 7317.00.30. Also excluded from the scope of this order are thumb tacks, which are currently classified under HTSUS 7317.00.10.00.

Also excluded from the scope of this order are certain brads and finish nails that are equal to or less than 0.0720 inches in shank diameter, round or rectangular in cross section, between 0.375 inches and 2.5 inches in length, and that are collated with adhesive or polyester film tape backed with a heat seal adhesive. Also excluded from the scope of this order are fasteners having a case hardness greater than or equal to 50 HRC, a carbon content greater than or equal to 0.5 percent, a round head, a secondary reduced-diameter raised head section, a centered shank, and a smooth symmetrical point, suitable for use in gas-actuated hand tools. While the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this order is dispositive.

Respondent Selection

Section 777A(c)(1) of the Tariff Act of 1930, as amended (“Act”) directs the Department to calculate individual dumping margins for each known exporter or producer of the subject merchandise.9 However, section 777A(c)(2) of the Act gives the Department discretion to limit its examination to a reasonable number of exporters or producers, if the number of companies involved is so large that it is not practicable to individually examine all exporters or producers for which the review is initiated.

9 See also19 CFR 351.204(c) regarding respondent selection, in general.

On October 7, 2011, the Department released CBP data for entries of the subject merchandise during the POR under administrative protective order (“APO”) to all interested parties having access to materials released under APO and invited comments regarding the CBP data and respondent selection.10 The Department received comments from Petitioner, Stanley, and Itochu Building Products Co., Inc. (“Itochu”) regarding respondent selection between October 24, 2011 and October 25, 2011. On October 31, Stanley submitted rebuttal comments regarding respondent selection.

10 SeeMemorandum to the File from Alexis Polovina regarding Certain Steel Nails from the People's Republic of China: U.S. Customs and Border Protection Data, dated October 7, 2011.

On November 28, 2011, the Department issued its respondent selection memorandum.11 The Department determined that with 383 companies involved, it would be impracticable to individually review each company. After determining that the number of companies (i.e.,383) was too large a number for individual reviews, the Department determined that it could reasonably examine the exporters accounting for the largest volume of entries subject to this review. Pursuant to section 777A(c)(2)(B) of the Act, the Department selected Stanley and JISCO as mandatory respondents.12 On November 29, 2011, the Department issued an antidumping duty questionnaire to these two mandatory respondents. On February 6, 2012, after receiving timely requests for withdrawal of review from JISCO and Petitioner, the Department selected Hongli as a mandatory respondent in place of JISCO.13 On February 6, 2012, the Department issued an antidumping duty questionnaire to Hongli.

11 SeeMemorandum to James Doyle through Matthew Renkey from Jamie Blair-Walker regarding: Respondent Selection for the Third Antidumping Duty Administrative Review of Certain Steel Nails from the People's Republic of China, dated November 28, 2011 (“First Respondent Selection Memo”).

12 See id.

13 SeeMemorandum to James Doyle through Matthew Renkey from Jamie Blair-Walker regarding Respondent Selection for the Third Antidumping Duty Administrative Review of Certain Steel Nails from the People's Republic of China: Selection of an Additional Mandatory Respondent, dated February 6, 2012 (“Second Respondent Selection Memo”).

Partial Rescission of Review

Pursuant to 19 CFR 351.213(d)(1), the Secretary will rescind an administrative review, in whole or in part, if a party that requested the review withdraws the request within 90 days of the date of publication of the initiation notice of the requested review. Besides the requests for review submitted by Petitioner as discussed above, several companies requested review of themselves.14 On December 22, 2011, JISCO timely withdrew its request for an administrative review of itself and its affiliates. On January 3, 2012, the Department received a timely letter from Petitioner withdrawing its requests for review of 316 of the 383 companies that were originally under review.

14 SeeAppendix I.

For those companies named in theInitiation Noticefor which all reviews requests have been withdrawn and who previously received separate rate status in prior segments of this case we are rescinding this administrative review, in accordance with 19 CFR 351.213(d)(1). These companies are: (1) Dezhou Hualude Hardware Products Co., Ltd.; (2) JISCO Corporation; (3) Koram Panagene Co., Ltd.; (4) Qingdao Koram Steel Co., Ltd.; (5) Romp (Tianjin) Hardware Co., Ltd.; (6) Shandong Oriental Cherry Hardware Group Co., Ltd.; (7) Shandong Oriental Cherry Hardware Import and Export Co., Ltd.; (8) Shanxi Pioneer Hardware Industrial Co., Ltd.; (9) Tianjin Lianda Group Co., Ltd.; (10) Tianjin Universal Machinery Import & Export Corporation; and (11) Xi'an Metals & Minerals Import & Export Co., Ltd. Petitioner's timely request for an administrative review included a request to conduct an administrative review of multiple companies that do not have separate rates. As described above, Petitioner withdrew its review request covering these companies. While the requests for review of those companies were timely withdrawn,15 those withdrawn companies remain under review as part of the PRC-wide entity and the Department will make a determination with respect to the PRC-wide entity at these preliminary results and the final results.16

15 SeeAppendix II.

16 See, e.g., Narrow Woven Ribbons With Woven Selvedge From the People's Republic of China: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review,77 FR 47363, 47363 (August 8, 2012).

Preliminary Partial Rescission of Administrative Review

Twelve companies (collectively, “No Shipment Respondents”) filed timely no-shipment certifications indicating that they had no shipments of subject merchandise to the United States during the POR.17, 18 Subsequent to receiving no-shipment certifications, the Department examined entry statistics obtained from CBP. The Department also issued no-shipment inquiries to CBP, asking it to respond only if it had information that the above-companies may have shipped entries of subject merchandise during the POR. For nine companies, we did not receive any response from CBP, thus indicating that there were no entries of subject merchandise into the United States exported by these companies. CBP did indicate potential entries of nails during the POR for the three remaining companies and the Department requested CBP entry packages for these. On July 18, 2012, we placed these entry packets on the record and requested comments from interested parties.19 In its response, CPI demonstrated that it was a third country reseller and as its Chinese vendors had knowledge the subject merchandise was destined for the United States, CPI was not the “exporter.”20 China Staple stated that its entries were for non-subject merchandise and provided product descriptions demonstrating its merchandise was non-subject and noted the importer placed the post entry adjustment on the record.21 Hengshui Mingyao explained that due to the Department's changed circumstances review, it entries are no longer subject and its importer has requested refund.22 After reviewing the responses, the corrected entry documents, and the CBP information, pursuant to 19 CFR 351.213(d)(3), we preliminarily determine that these 12 No Shipment Respondents did not have any reviewable transactions during the POR and, as a result, we are preliminarily rescinding the administrative review for these companies.

17 SeeAppendix III.

18As noted above, Hebei submitted an untimely certification, which the Department rejected. Therefore, Hebei is not included in the No Shipment Respondents.

19 SeeThird Antidumping Duty Administrative Review of Certain Steel Nails from the People's Republic of China (“PRC”): No Shipment Supplemental Questionnaire Letters from the Department of Commerce, to CPI, China Staple, and Hengshui Mingyao, dated July 18, 2012.

20 SeeCPI's No Shipment Supplemental Response, dated July 31, 2012.

21 SeeChina Staple's No Shipment Supplemental Response, dated July 27, 2012;see also,SBD's Post Entry Adjustment, dated July 24, 2012. We are also confirming the post entry documents with CBP.

22 SeeHengshui Mingyao's No Shipment Supplemental Response, dated July 31, 2012.

Non-Market Economy Country Status

In accordance with section 771(18)(C)(i) of the Act, the designation of a country as a nonmarket economy (“NME”) country remains in effect until it is revoked by the Department. As such, we continue to treat the PRC as an NME in this proceeding. When the Department investigates imports from an NME country and available information does not permit the Department to determine NV, pursuant to section 773(a) of the Act, then, pursuant to section 773(c)(1) of the Act, the Department determines NV on the basis of the factors of production (“FOP”) utilized in producing the merchandise.

Surrogate Country

Section 773(c)(4) of the Act, directs the Department to value an NME producer's FOPs, to the extent possible, in one or more market-economy (“ME”) countries that (1) are at a level of economic development comparable to that of the NME country, and (2) are significant producers of comparable merchandise. From the countries that are both economically comparable and significant producers, the Department will select a primary surrogate country based upon whether the data for valuing FOPs are both available and reliable.23 In this review, the Department determined that Colombia, Indonesia, the Philippines, Peru, South Africa, Thailand, and Ukraine are countries comparable to the PRC in terms of economic development.24

23 SeeImport Administration Policy Bulletin 04.1: Non-Market Economy Surrogate Country Selection Process (March 1, 2004) (“Policy Bulletin 04.1”), available on the Department's Web site athttp://ia.ita.doc.gov/policy/index.html.

24 SeeMemorandum to Matthew Renkey, Acting Program Manager, AD/CVD Operations, Office 9, Import Administration, from Carole Showers, Director, Office of Policy, Import Administration re: Request for a List of Surrogate Countries for an Administrative Review of the Antidumping Duty Order on Certain Steel Nails from the People's Republic of China (“PRC”), dated December 8, 2011.

On December 12, 2011, the Department sent interested parties a letter inviting comments on surrogate country selection and information regarding valuing FOPs.25 On March 26, 2011, interested parties submitted comments on the selection of a surrogate country.26 Between April 30, 2012, and August 6, 2012, interested parties submitted surrogate value (“SV”) comments and rebuttal comments.27

25 Seethe Department's Letter to All Interested Parties; Third Administrative Review of Certain Steel Nails from the People's Republic of China (“PRC”): Deadlines for Surrogate Country and Surrogate Value Comments, dated December 12, 2011 (“Surrogate Country List”).

26 SeeLetters from Stanley, GDLSK Respondents (Counsel to Hongli), and Petitioner, regarding Surrogate Country Comments dated March 26, 2011.

27 SeeSurrogate Value Submissions from GDLSK Respondents (Counsel to Hongli) and Petitioner, dated April 30, 2012; Surrogate Value Rebuttal Comments, dated May 7, 2012;see alsoPre-Preliminary Results Comments from Stanley, dated August 6, 2012.

Economic Comparability

As explained in our Surrogate Country List, the Department considers Colombia, Indonesia, the Philippines, Peru, South Africa, Thailand, and Ukraine all comparable to the PRC in terms of economic development.28 In its surrogate country comments, Stanley argued that India should also be considered economically comparable to the PRC because a report by the World Bank identifies India, along with threeof the countries identified by Policy as “low middle income countries.”29 We note that inSteel Wheels 30 the Department stated:

28 SeeSurrogate Country List.

29 SeeLetter from Stanley regarding Surrogate Country Comments at 2, dated March 26, 2011.

30 See Certain Steel Wheels From the People's Republic of China: Notice of Preliminary Determination of Sales at Less Than Fair Value, Partial Affirmative Preliminary Determination of Critical Circumstances, and Postponement of Final Determination,76 FR 677703 (November 2, 2011) (“Steel Wheels”).

{U}nless we find that all of the countries determined to be equally economically comparable are not significant producers of comparable merchandise, do not provide a reliable source of publicly available surrogate data or are unsuitable for use for other reasons, we will rely on data from one of these countries.

Therefore, because the Department finds that at least one of the countries included in the Surrogate Country List meet the selection criteria as explained below, the Department is not considering India as the primary surrogate country. Significant Producers of Comparable Merchandise

Section 773(c)(4)(B) of the Act requires the Department to value FOPs in a surrogate country that is a significant producer of comparable merchandise. Neither the statute nor the Department's regulations provide further guidance on what may be considered comparable merchandise. Given the absence of any definition in the statute or regulations, the Department looks to other sources such as thePolicy Bulletin 04.1for guidance on defining comparable merchandise. ThePolicy Bulletin 04.1states that “{t}he terms `comparable level of economic development,' `comparable merchandise,' and `significant producer' are not defined in the statute.”31 ThePolicy Bulletin 04.1further states that “{i}n all cases, if identical merchandise is produced, the country qualifies as a producer of comparable merchandise.”32 Conversely, if identical merchandise is not produced, then a country producing comparable merchandise is sufficient in selecting a surrogate country.33 Further, when selecting a surrogate country, the statute requires the Department to consider the comparability of the merchandise, not the comparability of the industry.34 “In cases where the identical merchandise is not produced, the team must determine if other merchandise that is comparable is produced. How the team does this depends on the subject merchandise.”35 In this regard, the Department recognizes that any analysis of comparable merchandise must be done on a case-by-case basis:

31 See Policy Bulletin 04.1.

32 See id.

33ThePolicy Bulletin 04.1also states that “{i}f considering a producer of identical merchandise leads to data difficulties, the operations team may consider countries that produce a broader category of reasonably comparable merchandise.”See id.,at n. 6.

34 See Sebacic Acid from the People's Republic of China: Final Results of Antidumping Duty Administrative Review,62 FR 65674 (December 15, 1997), and accompanying Issues and Decision Memorandum at Comment 1 (“to impose a requirement that merchandise must be produced by the same process and share the same end uses to be considered comparable would be contrary to the intent of the statute”).

35 See Policy Bulletin 04.1.

In other cases, however, where there are major inputs,i.e.,inputs that are specialized or dedicated or used intensively, in the production of the subject merchandise,e.g.,processed agricultural, aquatic and mineral products, comparable merchandise should be identified narrowly, on the basis of a comparison of the major inputs, including energy, where appropriate.36

36 See id.

Further, the statute grants the Department discretion to examine various data sources for determining the best available information.37

37 Seesection 773(c)(1) of the Act;Nation Ford Chem. Co.v.United States,166 F.3d 1373, 1377 (Fed. Cir. 1999).

In this case, because production data of identical or comparable merchandise was not available, we analyzed which of the seven countries are exporters of comparable merchandise, as a proxy for production data. We obtained export data using the Global Trade Atlas (“GTA”) for Harmonized Tariff Schedule (“HTS”) 7317.00: “Nails, tacks drawing pins, staples (other than in strips), and similar articles of iron or steel excluding such articles with heads of copper.” The Department found that all seven of these countries had exports of comparable merchandise during the POR at the following levels: Colombia 3,339,661 kilograms (“kg”); Indonesia 842,759 kg; the Philippines 27,759 kg; Peru 1,319,276 kg; South Africa 912,572 kg; Thailand 8,784,527 kg; and Ukraine 18,571,880 kg.38 As these levels suggest domestic production in these countries, we considered them as having met this prong of the surrogate country selection criteria because each exported comparable merchandise at volumes from which we can reasonably infer domestic production.

38 SeeMemorandum to the File, from Alexis Polovina regarding Surrogate Country Exports, dated August 30, 2012.

Data Availability

When evaluating SV data, the Department considers several factors including whether the SV is publicly available, contemporaneous with the POR, represents a broad-market average, from an approved surrogate country, tax and duty-exclusive, and specific to the input.39 There is no hierarchy among these criteria.40 It is the Department's practice to carefully consider the available evidence in light of the particular facts of each industry when undertaking its analysis.41

39 See id; see alsosection 773(c)(1) of the Act.

40 See Certain Frozen Fish Fillets From the Socialist Republic of Vietnam: Final Results and Partial Rescission of the Seventh Antidumping Duty Administrative Review,76 FR 15941 (March 14, 2012), and accompanying Issues and Decision Memorandum (“Fish Fillets AR7”) at Comment II.

41 See id.

Parties placed significant SV data on the record for both Thailand and Ukraine.42 Similar to the circumstances inFish Fillets AR6andAR7,the record does not contain any SV data for the remaining countries: Colombia, Indonesia, the Philippines, Peru, and South Africa; thus, these countries will not be considered for primary surrogate country purposes at this time.43 Much of the Thai and Ukrainian data placed on the record are import statistics from GTA, and therefore, satisfy the publicly available, contemporaneous with the POR, broad-market average, from an approved surrogate country, and tax and duty-exclusive, criteria. As such, we will examine specificity of data available for the relevant the inputs.

42 SeeSurrogate Value Submissions from Hongli and Petitioner, dated April 30, 2012.

43 See Fish Fillets AR7at Comment I; see also Certain Frozen Fish Fillets From the Socialist Republic of Vietnam: Final Results of the Sixth Antidumping Duty Administrative Review and Sixth New Shipper Review,76 FR 15941 (March 22, 2011), and accompanying Issues and Decision Memorandum (“Fish Fillets AR6”) at Comment I.

In this case, the wire rod is a significant input because most steel nails made by the respondents are made largely from wire rod. Therefore, we must consider the availability and reliability of the SVs for wire rod on the record. The record contains equally specific Thai and Ukraine HTSs for imports of bars and rods under 14 millimeters (“mm”) in size and of varying carbon contents from GTA.44 Additionally, the record contains monthly price data during the POR for 6.5-8 mm wire rod for Ukraine from Metal Expert, an independent provider of analysis of world steel markets.45 Because respondents consumed wire rod measuring 6.5 mm in diameter, weconsider Metal Expert data a more specific match.

44 SeeSurrogate Value Submissions from Hongli and Petitioner, dated April 30, 2012.

45 See id.

Financial ratios are also an important component of the antidumping duty calculation. The record contains one set of contemporaneous financial statements from both Thailand and Ukraine. However, the financial statements from Thailand are for the year ending 2010, while the Ukrainian financial statements are for the year ending 2011, making them more contemporaneous with the POR (seven months of 2011 overlap with the POR compared to five months of 2010).

Both Thailand and Ukraine are economically comparable to the PRC, significant producers of comparable merchandise, and have viable data options. However, Ukraine offers a more specific option for valuing the main input, wire rod, and a more contemporaneous set of financial statements. Therefore, for the preliminary results we have selected Ukraine as the surrogate country because it represents the best available information.

Separate Rates

In proceedings involving NME countries, it is the Department's practice to begin with a rebuttable presumption that all companies within the country are subject to government control and, thus, should be assessed a single antidumping duty rate.46 In theInitiation Notice,the Department notified parties of the application process by which exporters may obtain separate rate status in NME reviews.47 It is the Department's policy to assign all exporters of merchandise subject to investigation in an NME country this single rate unless an exporter can affirmatively demonstrate that it is sufficiently independent from government control so as to be entitled to a separate rate.48 Exporters can demonstrate this independence through the absence of bothde jureandde factogovernment control over export activities.49 The Department analyzes each entity's export independence under a test first articulated inSparklersand as further developed inSilicon Carbide. 50 However, if the Department determines that a company is wholly foreign-owned or located in an ME, then a separate rate analysis is not necessary to determine whether it is independent from government control.51

46 See, e.g., Small Diameter Graphite Electrodes From the People's Republic of China: Final Results of the Antidumping Duty Administrative Review,77 FR 40854, 40855 (July 11, 2011); see also Notice of Final Determination of Sales at Less Than Fair Value, and Affirmative Critical Circumstances, In Part: Certain Lined Paper Products From the People's Republic of China,71 FR 53079, 53080 (September 8, 2006).

47 See Initiation Notice,76 FR at 61076-77.

48 See id.

49 See id.

50 See Final Determination of Sales at Less Than Fair Value: Sparklers From the People's Republic of China,56 FR 20588 (May 6, 1991) (“Sparklers”);see also Notice of Final Determination of Sales at Less Than Fair Value: Silicon Carbide From the People's Republic of China,59 FR 22585 (May 2, 1994) (“Silicon Carbide”).

51 See, e.g., Final Results of Antidumping Duty Administrative Review: Petroleum Wax Candles from the People's Republic of China,72 FR 52355, 52356 (September 13, 2007).

In addition to the two mandatory respondents, Stanley and Hongli, the Department received separate rate applications (“SRAs”) from 3 companies52 and separate rate certifications (“SRCs”) from 15 companies,53, 54 , (collectively, the “Separate Rate Respondents”).

52These companies include: 1) Cana (Tianjin) Hardware Industrial Co., Ltd.; 2) Shanghai Curvet Hardware Products Co., Ltd.; and 3) Huanghua Jinhai Hardware Products Co., Ltd.

53The 15 other companies include: (1) Shanxi Tianli Industries Co., Ltd.; (2) Shanghai Jade Shuttle Hardware Tools Co., Ltd.; (3) Shandong Dinglong Import & Export Co., Ltd.; (4) Tianjin Jinchi Metal Products Co., Ltd.; (5) Huanghua Xionghua Hardware Products Co., Ltd.; (6) Tianjin Zonglian Metals Ware Co., Ltd.; (7) Shanghai Yueda Nails Industry Co., Ltd.; (8) Hebei Cangzhou New Century Foreign Trade Co., Ltd.; (9) Zhaoqing Harvest Nails Co., Ltd.; (10) Nanjing Yuechang Hardware Co., Ltd.; (11) S-Mart (Tianjin) Technology Development Co. Ltd.; (12) SDC International Australia Pty., Ltd.; (13) Shanxi Hairui Trade Co., Ltd.; (14) Guangdong Foreign Trade Import & Export Corporation; and (15) Qingdao D&L Group Ltd., collectively (“Separate Rate Respondents”).

54One additional company applied for a separate rate, Mingguang Abundant Hardware Products Co., Ltd., however, as explained below we are not considering it as a Separate Rate Respondent at this time.

Separate Rate Respondents 1. Wholly Foreign-Owned

Stanley reported that it is wholly-owned by a company located in an ME country.55 Therefore, there is no PRC ownership of Stanley and, because the Department has no evidence indicating that Stanley is under the control of the PRC, a separate rates analysis is not necessary.56 Additionally, seven other exporters under review not selected for individual review demonstrated in their SRAs or SRCs that they are wholly foreign owned by companies located in ME countries.57 Accordingly, the Department has preliminarily granted separate rate status to Stanley and the other wholly owned companies.

55 SeeStanley's Section A Questionnaire Response, dated December 20, 2011, at 2.

56 See, e.g., Final Results of Antidumping Duty Administrative Review: Petroleum Wax Candles From the People's Republic of China,72 FR 52355, 52356(September 13, 2007);Brake Rotors From the People's Republic of China: Preliminary Results and Partial Rescission of the Fourth New Shipper Review and Rescission of the Third Antidumping Duty Administrative Review,66 FR 1303, 1306 (January 8, 2001), unchanged inBrake Rotors From the People's Republic of China: Final Results and Partial Rescission of Fourth New Shipper Review and Rescission of Third Antidumping Duty Administrative Review,66 FR 27063 (May 16, 2001);Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate From the People's Republic of China,64 FR 71104 (December 20, 1999).

57These companies are: (1) Cana (Tianjin) Hardware Industrial Co., Ltd.; (2) Shanghai Curvet Hardware Products Co., Ltd.; (3) Shanghai Jade Shuttle Hardware Tools Co., Ltd.; (4) Huanghua Xionghua Hardware Products Co., Ltd.; (5) Zhaoqing Harvest Nails Co., Ltd.; (6) S-Mart Tianjing Technology Development Co., Ltd.; and (7) SDC International Australia Pty., Ltd.

2. Joint Ventures Between Chinese and Foreign Companies or Wholly Chinese-Owned Companies

Hongli58 and 11 other Separate Rate Respondents59 stated that they are either joint ventures between Chinese and foreign companies or are wholly Chinese-owned companies. In accordance with our practice, the Department has analyzed whether these Separate Rate Respondents have demonstrated the absence ofde jureandde factogovernmental control over their respective export activities.

58 SeeHongli's Section A Questionnaire Response, dated March 8, 2012, at 1-13.

59These companies are: (1) Huanghua Jinhai Hardware Products Co., Ltd.; (2) Shanxi Tianli Industries Co., Ltd.; (3) Shandong Dinglong Import & Export Co., Ltd.; (4) Tianjin Jinchi Metal Products Co., Ltd.; (5) Tianjin Zhonglian Metals Ware Co., Ltd.; (6) Shanghai Yueda Nails Industry Co., Ltd.; (7) Hebei Cangzhou New Century Foreign Trade Co., Ltd.; (8) Nanjing Yuechang Hardware Co., Ltd.; (9) Guangdong Foreign Trade Import & Export Corporation; (10) Shanxi Hairui Trade Co., Ltd.; and (11) Qingdao D&L Group Ltd.

a. Absence of De Jure Control

The Department considers the followingde jurecriteria in determining whether an individual company may be granted a separate rate: (1) An absence of restrictive stipulations associated with an individual exporter's business and export licenses; (2) any legislative enactments decentralizing control of companies; and (3) any other formal measures by the government decentralizing control of companies.60 The evidence provided by Hongli61 and the Separate Rate Respondents62 supports a preliminary finding ofde jureabsence of government control based on the following: (1) An absence of restrictive stipulations associatedwith the individual exporter's business and export licenses; (2) there are applicable legislative enactments decentralizing control of the companies; and (3) there are formal measures by the government decentralizing control of companies.

60 See Sparklers,56 FR at 20589.

61 See, e.g.,Hongli's Section A Questionnaire Response, dated March 8, 2012, at 4 and Exhibit A-2.

62 SeeSeparate Rate Respondents' SRAs and SRCs, dated between October 11 and December 5, 2011.

b. Absence of De Facto Control

Typically the Department considers four factors in evaluating whether each respondent is subject tode factogovernment control of its export functions: (1) Whether the export prices are set by or are subject to the approval of a government agency; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses.63 The Department has determined that an analysis ofde factocontrol is critical in determining whether respondents are, in fact, subject to a degree of government control which would preclude the Department from assigning separate rates. The evidence provided by Hongli64 and the Separate Rate Respondents65 supports a preliminary finding ofde factoabsence of government control based on the following: (1) The companies set their own export prices independent of the government and without the approval of a government authority; (2) the companies have authority to negotiate and sign contracts and other agreements; (3) the companies have autonomy from the government in making decisions regarding the selection of management; and (4) there is no restriction on any of the companies' use of export revenue. Therefore, the Department preliminarily finds that Stanley, Hongli, and Separate Rate Respondents have established that they qualify for a separate rate under the criteria established bySilicon CarbideandSparklers.

63 See Silicon Carbide,59 FR at 22586-87;see also Notice of Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From the People's Republic of China,60 FR 22544, 22545 (May 8, 1995).

64 SeeHongli's Section A Questionnaire Response, dated March 8, 2012, at 8-9.

65 SeeSeparate Rate Respondents' SRAs and SRCs, dated between October 11 and December 5, 2011.

We note that for Mingguang Abundant Hardware Co., Ltd., (“Mingguang Abundant”), we are not granting a separate rate. Although it applied for a separate rate, the CBP data do not contain evidence of an entry during the POR. We issued a supplemental requesting Mingguang Abundant demonstrate it had an entry of subject merchandise during the POR. Mingguang Abundant was only able to provide the invoice, shipping list, and proof of payment.66 Because Mingguang Abundant was unable to provide the CBP 7501 demonstrating the date the merchandise entered the United States, we intend to rescind the review for Mingguang Abundant unless Mingguang Abundant can demonstrate it had POR entries of subject merchandise within 20 days after the date of publication of these preliminary results.

66 SeeMingguang Abundant's Separate Rate Certification Supplemental Response, dated July 23, 2012.

Calculation of Margin for Separate Rate Companies

The statute and the Department's regulations do not address the establishment of a rate to be applied to individual companies not selected for examination where the Department limited its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, we have looked to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in an investigation, for guidance when calculating the rate for respondents we did not examine in an administrative review. Section 735(c)(5)(A) of the Act instructs that we are not to calculate an all-others rate using any zero orde minimismargins or any margins based entirely on facts available. Accordingly, the Department's practice in this regard, in reviews involving limited respondent selection based on exporters accounting for the largest volume of trade, has been to average the rates for the selected companies, excluding zero andde minimisrates and rates based entirely on facts available.67 Section 735(c)(5)(B) of the Act also provides that, where all margins are zero,de minimis,or based entirely on facts available, we may use “any reasonable method” for assigning the rate to non-selected respondents, including “averaging the estimated weighted average dumping margins determined for the exporters and producers individually investigated.” In this instance, consistent with our practice, we have preliminarily established a margin for the Separate Rate Respondents based on the rate we calculated for the mandatory respondents whose rates were not zero,de minimis,or based entirely on facts available.68

67 See Certain Frozen Warmwater Shrimp From the Socialist Republic of Vietnam: Final Results and Final Partial Rescission of Antidumping Duty Administrative Review,73 FR 52273, 52275 (September 9, 2008), and accompanying Issues and Decision Memorandum at Comment 6.

68 See, e.g., Fourth Administrative Review of Certain Frozen Warmwater Shrimp From the People's Republic of China: Preliminary Results, Preliminary Partial Rescission of Antidumping Duty Administrative Review and Intent Not To Revoke, In Part,75 FR 11855, 11859 (March 12, 2010).

PRC-Wide Entity

As discussed above, in this administrative review we limited the selection of respondents using CBP import data.69 In this case, we made available to the companies who were not selected, the SRA and SRC, which were put on the Department's Web site.70 Because certain parties for which a review was requested did not apply for separate rate status, they did not demonstrate eligibility for a separate rate and effectively became part of the PRC-wide entity, which is considered to be part of this review.71 We continue to use the PRC-wide rate determined in the original investigation, the highest rate identified in the petition of 118.04 percent.72 Certain companies did not apply for separate rates and are thus considered to be part of the PRC-wide entity.73

69 SeeFirst and Second Respondent Selection Memos.

70 See Initiation Notice.

71 See, e.g., Honey From the People's Republic of China: Preliminary Results of Review,77 FR 46699, 46700 (August 6, 2012);Certain Preserved Mushrooms From the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review,71 FR 64930, 64933 (November 6, 2006).

72 See Certain Steel Nails From the People's Republic of China: Preliminary Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances and Postponement of Final Determination,73 FR 3928, 3934-35 (January 23, 2008) (unchanged in the final results).

73 SeeAppendix IV.

Date of Sale

The date of sale is generally the date on which the parties agree upon all substantive terms of the sale, which normally includes the price, quantity, delivery terms and payment terms.74 19 CFR 351.401(i) states that, “{i}n identifying the date of sale of the merchandise under consideration or foreign like product, the Secretary normally will use the date of invoice, asrecorded in the exporter or producer's records kept in the normal course of business. The Secretary may use a date other than the date of invoice if the Secretary is satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale.”75 However, as noted by the Court of International Trade (“CIT”) inAllied Tube,a party seeking to establish a date of sale other than invoice date bears the burden of establishing that “a different date better reflects the date on which the exporter or producer establishes the material terms of sale.”76

74 See Carbon and Alloy Steel Wire Rod from Trinidad and Tobago: Final Results of Antidumping Duty Administrative Review,72 FR 62824 (November 7, 2007), and accompanying Issues and Decision Memorandum at Comment 1;see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Products from Turkey,65 FR 15123 (March 21, 2000), and accompanying Issues and Decision Memorandum at Comment 2.

75 See19 CFR 351.401(i);see also Allied Tube & Conduit Corp. v. United States,132 F. Supp. 2d 1087, 1090-1092 (CIT 2001) (“Allied Tube”).

76 See Allied Tube,132 F. Supp. 2d at 1090 (quoting 19 CFR 351.401(i)).

As in the last administrative review, Stanley explained that because of alterations or cancellations, the earlier of invoice date or shipment date is the appropriate date of sale because it reflects the date on which the material terms no longer change.77 Consistent with the regulatory presumption for invoice date and because the Department found no evidence on the record contrary to Stanley's claims, for these preliminary results, the Department used the invoice date as the date of sale. Consistent with the Department's practice, for those sales where shipment date preceded invoice date, the Department used the shipment date as the date of sale, as Stanley provided evidence that the material terms of sale were set on that date.78

77 SeeStanley's section A questionnaire response at 25, dated December 20, 2011;see alsoStanley's Supplemental A Response at 3-6, dated April 4, 2012.

78 See19 CFR 351.401(i);see also Certain Steel Nails From the People's Republic of China: Preliminary Results and Preliminary Rescission, in Part, of the Antidumping Duty Administrative Review and Preliminary Intent To Rescind New Shipper Review,76 FR 56147, 56151 (September 12, 2011) (unchanged in the final results).

Hongli reported that the PRC Export Declaration is the appropriate date of sale.79 As explained above, the Department will not use a date other than the date of invoice unless a party provides sufficient evidence that a different date better reflects the date on which the material terms of sale were established.80 Hongli did not provide such evidence. Instead, Hongli merely asserted that the PRC Export Declaration date is the correct date of sale without any discussion or factual support of when the material terms of sale such as price and quantity were established for their sales.81 Therefore, given its failure to demonstrate that a date other than invoice date better reflects the date on which the material terms of sale were established, the Department is following the presumption established in its regulation and using the invoice date as the date of sale.

79 SeeHongli's Section A questionnaire response at 16, dated March 8, 2012, and Hongli's supplemental A questionnaire response at 4-6, dated May 15, 2012.

80 See19 CFR 351.401(i).

81 SeeHongli's Supplemental Section A Questionnaire Response at 6, dated May 15, 2012;see alsoHongli's Sections C & D Questionnaire Response at 8, dated April 4, 2012.

Fair Value Comparisons

To determine whether sales of certain steel nails to the United States by Stanley and Hongli were made at less than NV, the Department compared export price (“EP”) and constructed export price (“CEP”) to NV, as described in the “U.S. Price,” and “Normal Value” sections below.82

82In these preliminary results, the Department applied the weighted-average dumping margin calculation method adopted inAntidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Proceedings: Final Modification,77 FR 8101 (February 14, 2012) (“Final Modification for Reviews”). In particular, the Department compared monthly weighted-average EPs (or CEPs) with monthly weighted-average NVs and granted offsets for non-dumped comparisons in the calculation of the weighted average dumping margin.

U.S. Price Export Price

For Hongli, in accordance with section 772(a) of the Act, we based the U.S. price for sales on EP because the first sale to an unaffiliated purchaser in the United States was made prior to importation, and the use of CEP was not otherwise warranted. In accordance with section 772(c) of the Act, we calculated EP by deducting the applicable movement expenses and adjustments from the gross unit price. We based these movement expenses on SVs where a PRC company provided the service and was paid in Renminbi (“RMB”).See“Factors of Production” section below for further discussion. For details regarding our EP calculations,seeMemorandum regarding: Antidumping Duty Administrative Review of Certain Steel Nails from the People's Republic of China: Tianjin Jinghai County Hongli Industry and Business Co., Ltd.,” dated concurrently with this notice.

Constructed Export Price

In accordance with section 772(b) of the Act, we based the U.S. price for Stanley's sales on CEP because the first sale to an unaffiliated customer was made by Stanley's U.S. affiliate. In accordance with section 772(c)(2)(A) of the Act, we calculated CEP by deducting the applicable expenses from the gross unit price charged to the first unaffiliated customer in the United States. Further, in accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), where appropriate, we deducted from the starting price the applicable selling expenses associated with economic activities occurring in the United States. In addition, pursuant to section 772(d)(3) of the Act, we made an adjustment to the starting price for CEP profit. We based movement expenses on either SVs or actual expenses, where appropriate. For details regarding our CEP calculations, and for a complete discussion of the calculation of the U.S. price for Stanley,seeMemorandum regarding: Antidumping Duty Administrative Review of Certain Steel Nails from the People's Republic of China: Stanley,” dated concurrently with this notice.

Normal Value

Section 773(c)(1) of the Act provides that the Department shall determine the NV using an FOP methodology if the merchandise is exported from an NME and the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act. The Department bases NV on the FOPs because the presence of government controls on various aspects of NMEs renders price comparisons and the calculation of production costs invalid under the Department's normal methodologies.

In accordance with 19 CFR 351.408(c)(1), the Department will normally use publicly available information to value the FOPs, but when a producer sources an input from an ME country and pays for it in an ME currency, the Department may value the factor using the actual price paid for the input. During the POR, Stanley reported that it purchased certain inputs from an ME supplier, which were produced in an ME country, and paid for the inputs in an ME currency.83 The Department has a rebuttable presumption that ME input prices are the best available information for valuing an input when the total volume of the input purchased from all ME sources during the period of investigation or review exceeds 33 percent of the total volume of the input purchased from all sources during the period.84

83 SeeStanley's Section D Response at 7-8, dated January 19, 2012; and Stanley's Supplemental C Response at Exhibit SC-3(a), dated April 25, 2012.

84 See Antidumping Methodologies: Market Economy Inputs, Expected Non-Market EconomyWages, Duty Drawback; and Request for Comments,71 FR 61716, 61717-18 (October 19, 2006) (“Antidumping Methodologies”).

In this case, unless case-specific facts provide adequate grounds to rebut the Department's presumption, the Department will use the weighted-average ME purchase price to value the input. Alternatively, when the volume of an NME firm's purchases of an input from ME suppliers during the period is below 33 percent of its total volume of purchases of the input during the period, but where these purchases are otherwise valid and there is no reason to disregard the prices, the Department will weight-average the ME purchase price with an appropriate SV according to their respective shares of the total volume of purchases, unless case-specific facts provide adequate grounds to rebut the presumption.85 When a firm has made ME input purchases that may have been dumped or subsidized, are notbona fide,or are otherwise not acceptable for use in a dumping calculation, the Department will exclude them from the numerator of the ratio to ensure a fair determination of whether valid ME purchases meet the 33 percent threshold.86

85 See Antidumping Methodologies,71 FR at 61717-18.

86 See Antidumping Methodologies,71 FR at 61717-18.

In accordance with section 773(c) of the Act, we calculated NV based on FOP data reported by the respondents. To calculate NV, we multiplied the reported per-unit factor-consumption rates by publicly available S