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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6199Dec. 29, 1994). Shanghai suggests thatPetitioner objects to the use of steelvalues based on PRC imports and scrapvalues based on Indian imports asanother attack on the use of steel valuesbased on PRC imports.Department’s PositionWe agree with respondents. BecauseShanghai purchased inputs from amarket-economy supplier and paid in aconvertible currency, we valued thoseinputs using respondent’s actual costs.The absence of a direct scrap-offsetvalue should not prohibit us from usingthe actual market-economy price paid inconvertible currency by an NMEmanufacturer.In the Final Determination of Sales atLess Than Fair Value: Circular WeldedNon-Alloy Steel Pipe From Romania, 61FR 24274, 24277 (May 14, 1996), wecalculated a ratio of scrap value to steelvalue as suggested by Petitioner.However, in that instance, we had nopublic information by which to arrive ata scrap/steel ratio for our first-choicesurrogate country. Therefore, wecalculated the ratio using scrap valuesand steel values from the second-choicesurrogate country and applied the ratioto the surrogate steel values from thefirst-choice surrogate country todetermine a value for scrap.In this case, where producers haveused PRC-sourced steel inputs, we havevalued those inputs based onIndonesian import statistics for steelused to manufacture cups and conesand based on Indian import statistics forsteel used to manufacture rollers andcages (see our response to Comment 5).In other words, we have valued saleablescrap for each component using thesame respective source by applyingIndonesian scrap values to cups andcones and Indian scrap values to rollersand cages. Because Shanghai usedimported steel it purchased directlyfrom a market-economy supplier andpaid for with a market-economycurrency, we have valued Shanghai’ssteel inputs using the company’s actualcosts. In the absence of a correspondingscrap price, we valued the volume ofscrap actually produced in Shanghai’sproduction with cups and cones usingIndonesian scrap values and valued thevolume of scrap actually generated inShanghai’s production of rollers andcages using Indian scrap values.Petitioner’s contention that using asteel value from one source and scrapcredit value based on a different sourceis inherently distortive is unfounded.Petitioner has provided no evidence toindicate that the value of scrap is in anyway tied to the cost of raw steel.Furthermore, this approach allows us touse the actual amounts of scrapgenerated by the Chinese productionprocesses rather than the scrap ratiosassociated with Indian factories, whichmay be less accurate. Because we areusing the same source to value scrap forall respondents, we do not agree that weshould change our methodology simplybecause Shanghai’s steel bar was valuedusing Shanghai’s actual costs for itsmarket-economy purchases.Accordingly, where steel inputs werebased on actual costs of steel purchaseddirectly from market-economy sources,we have continued to value scrap usingthe surrogate sources noted above.Comment 9Petitioner states that the Department’sanalysis memoranda for somerespondents show a ‘‘scrap input value’’included in valuing certain materials.Petitioner asserts that, to the extent rawmaterials from which certain TRBs orparts were manufactured were assigneda scrap value, the value of thosematerials was understated. In terms ofacquisition cost, Petitioner contends,new material remains new throughoutthe production process. Petitionercontends that the only time a scrapvalue has any significance is when thereis a demonstration that scrap fromproduction was recovered and sold andnotes that respondents do not deny thatthey paid full price for the raw materialsthey characterize as scrap inputs.Petitioner explains that the per-kilogramvalue of the raw-material input piece isthe same whether the companiesproduce one or two finished pieces fromthe input piece and the only differencewhen two pieces are produced from asingle input piece is that the amount ofscrap at the end of the operation is lessthan if only one of the two pieces hadbeen produced from the input.Petitioner claims that, by increasing theyield from the raw material input andreducing scrap, these producers haveachieved economy of production.Petitioner asserts that the Departmentshould revert to its position in the1989–90 review, in which it did notvalue scrap steel input reused by onerespondent at the cost of steel scrap(citing Tapered Roller Bearings from thePeople’s Republic of China, 56 FR87590, 87596 (December 31, 1991)(TRBs)). At that time, Petitioner argues,the Department noted that therespondent had failed to raise the issueearly enough to permit consideration ofalternatives with which to value thereused steel input. Since then,Petitioner adds, respondents have notpresented alternatives for taking accountof their production of two pieces fromone bar. Petitioner states that the reusedsteel retains its value in the productionprocess fully as much as a new-steel bar.Petitioner claims that the fact that itmay be sold as scrap is irrelevantbecause respondents did not sell it andpaid full price when it was acquired.Guizhou Machinery et al. respondthat, although the above-referencedanalysis memoranda suggest that ‘‘scrapinput’’ was separately and differentlyvalued from ‘‘new’’ steel input, thecalculations show that the Departmentvalued scrap input the same as newsteelinput. Guizhou Machinery et al.assert that the Department should havevalued scrap input at scrap values, notthe same as new steel.Guizhou Machinery et al. state thatsome respondents accumulate scrappieces, store them in their warehouse onsite, and use large scrap pieces tomanufacture smaller bearings. GuizhouMachinery et al. argue that, becausescrap is actually used to manufacturethese bearings, the input materials costsshould appropriately account for thescrap value.Guizhou Machinery et al. claim thatPetitioner’s argument suggests that, eventhough scrap material was actually usedto manufacture certain bearings, theDepartment should ignore this fact andessentially ‘‘impute’’ the material cost ofnew steel instead. Guizhou Machineryet al. state that, as evidenced by therecord in this review, TRBs aremanufactured from different steel inputs(i.e., type, grade, and quality) and thatPetitioner’s argument that new-steelcosts should be used to value scrapinput ignores the fact that differentinputs are used in the manufacturingprocess and would be comparable tosubstituting the value of steel bar forsteel sheet. Guizhou Machinery et al.claim that Petitioner’s argument ignoresthe differences between steel bar andscrap because steel bar is a high-qualitymaterial which can be used as is,whereas scrap consists of leftover pieceswhich have already been ‘‘stressed’’once. Guizhou Machinery et al. claimthat Petitioner’s argument should berejected because its methodology wouldartificially inflate respondent’s materialcosts and because steel scrap has asubstantially lesser value than new steelbar, as evidenced by its sales prices inthe marketplace. To avoid aberrationalresults for the TRB models using scrapinput, Guizhou Machinery et al.recommend that the Department followthe methodology it used in thecalculations for the preliminary resultsof the 1990–93 administrative reviews,which most accurately reflects the valueof the actual inputs used for eachparticular model.