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Steel Exporter Tells CAFC Commerce's 'Smoothing' of Steel Plate Costs Leads to 'Illogical' Results

The U.S. and antidumping duty petitioner Wind Tower Trade Coalition failed to respond to the "critical arguments" raised by exporter Dongkuk S&C Co. in a case on the AD investigation on utility scale wind towers from South Korea, Dongkuk told the U.S. Court of Appeals for the Federal Circuit. In a Sept. 1 reply brief, Dongkuk said both the government and the coalition did not, or could not, establish that the Commerce Department relied on substantial evidence when it weight averaged the respondent's steel plate cost for all reported control numbers (CONNUMs) (Dongkuk S&C Co. v. U.S., Fed. Cir. #23-1419).

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Dongkuk said the U.S. and petitioner also fell short in their attempts to justify the agency's "misguided" cost analysis that failed to compare the physical characteristics of Dognkuk's reported CONNUMs. Nor did they explain Commerce's failure to pick constructed value financial ratios that show manufacturing and sales operations of comparable steel pipe makers in South Korea, the brief said.

In the investigation, Commerce found that Dongkuk's reported steel plate costs were significantly different from costs of its CONNUMs sold in the Japanese and the U.S. markets. The agency decided to account for the timing of the steel plate purchases, instead of the towers' physical characteristics. Commerce did so by weight-averaging the reported steel plate costs for all reported CONNUMs. Dongkuk unsuccessfully challenged Commerce's final determination at the Court of International Trade (see 2211170084).

On appeal, the U.S. and Wind Tower Trade Coalition said Commerce properly weight averaged, or "smoothed," Dongkuk's steel plate costs due to the "distortive nature of such costs." In its reply, the exporter said the record evidence in no way shows that the company's steel plate costs "were in any way distortive" and in fact shows that the steel plate costs "varied within a normal range of costs."

If the approach of treating any "minor cost variance as a gross distortion is allowed to stand, then every producer in every antidumping proceeding would ... need to have costs smoothed to account for any slight indication of varying costs, an entirely illogical and unreasonable result," the brief said. Dongkuk added both the U.S. and petitioner also misused past Commerce decisions, since none of the cited cases supports the agency's practice, "which failed to consider both DKSC's steel consumption and the physical characteristics of the finished wind towers."

Dongkuk also said the government and coalition improperly argue that Commerce sufficiently identified a relationship between the steel plate inputs and the towers' physical characteristics and that timing was the only explanation for differences in the costs. The relationship between steel plate inputs and the towers' physical characteristics is not supported by evidence since the steel plate dimensions have "no direct correlation to the physical characteristics of the finished wind tower," the brief said. Instead, it is the "volume of such steel plate consumed that primarily dictates the weight, height, and build of a wind tower."