Steel Scrap Inputs Not 'Primarily Dedicated' to Downstream Products, DOJ Says in Remand Probe
The Commerce Department reasonably declined to investigate alleged off-peak sales of electricity and correctly decided not to treat an affiliate as a cross-owned input supplier in a countervailing duty investigation on carbon and alloy steel cut-to-length plate from South Korea, DOJ argued April 24 at the Court of International Trade (Nucor v. U.S., CIT # 21-00182).
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On remand, Commerce created a distinction between processed and unprocessed steel scrap, finding that the unprocessed scrap is an input used across multiple industries and products. DOJ argued that Commerce’s determination not to treat Plantec as a cross-owned input supplier of scrap metal to POSCO was the correct decision because that scrap was not primarily dedicated to downstream products. Commerce’s “primarily dedicated” analysis is case specific and can't be reduced to a single factor, so Commerce conducted a "holistic, multifactor analysis," DOJ said.
The term “primarily dedicated” is undefined in the statute, DOJ said. Commerce correctly found guidance in its own regulations, explaining that the purpose of countervailing the subsidies to an input supplier is appropriate when the product is "dedicated almost exclusively to the production of a higher-value added product," which was not the case here, DOJ said. "Nucor’s reduction of Commerce’s analysis to single, isolated factual comparisons taken out of context do not accurately reflect Commerce’s multi-factor analysis," it said.
Commerce reasonably declined to investigate the alleged off-peak sale of electricity for less than adequate remuneration (LTAR) because Nucor did not submit enough evidence, the agency said. Commerce applied the correct standard by requiring Nucor to include all “important facts which are reasonably available."
The information provided by Nucor didn't support its benefit allegation, DOJ said. Instead of considering the variety of factors incorporated into the pricing of electricity, which was necessary to establish a reasonable allegation of benefit, Nucor focused only on the system marginal price and argued that it proved that the Korean government was providing electricity for LTAR during off-peak hours. Because Commerce had publicly available prior findings concerning the Korean electricity market, Nucor needed to submit evidence addressing those "reasonably available" facts, DOJ argued.
DOJ's comments responded to Nucor's March 2 remand comments, in which Nucor argued that Commerce had repeatedly found steel scrap primarily dedicated to downstream steel production and that the Korean government effectively subsidizes large industrial electricity consumers that shift their consumption to off-peak hours (see 2303070039).