Korean Steel Exporter Challenges de Facto Specificity Finding on Electricity Provision
The Commerce Department erred in finding that the South Korean government's provision of electricity below cost was de facto specific in the 2022 review of the countervailing duty order on cut-to-length carbon-quality steel plate from South Korea, exporter Hyundai Steel Co. argued in a Nov. 12 complaint at the Court of International Trade. Hyundai added that Commerce violated the statute on specificity in CVD cases in relying on the "original electricity consumption data" for its de facto specificity finding (Hyundai Steel Co. v. United States, CIT # 24-00190).
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The exporter also challenged Commerce's finding that the provision of electricity provided a benefit to Hyundai.
In the review, Commerce analyzed whether the Korea Electric Power Corp.'s (KEPCO's) electricity prices are in line with market principles, focusing on whether KEPCO fully recovered its cost plus a profit. The agency asked KEPCO for cost data, which the Korean government provided for calendar year 2021, since the 2022 data wasn't available at that time. The South Korean government also provided "confidential usage data during 2022 for the steel industry and the ten largest electricity consuming industries," Hyundai said.
The South Korean government then submitted a revised version of the 10 largest electricity-consuming industries in 2022, with the revised list being classified under the Korea Standard Industrial Classification, the brief said. The South Korean government said the originally submitted data is inaccurate since each category covers industries that don't match with their names. For instance, the "steel" category covers steel, copper and non-ferrous metal, the brief said.
The South Korean government also said KEPCO introduced a "Fuel Cost Adjusted Charge" and the cost pass-through tariff system in early 2021 to account for fuel price fluctuations. The adjusted charge "reflects changes in fuel prices every quarter to the prices that KEPCO charges to its customers." If KEPCO can't charge the entire fluctuation to its customers in a given quarter, the cost pass-through system lets KEPCO accumulate such portions and reflect them in the total comprehensive cost. This cost is then used to calculate the cost recovery rate going forward and establish base and usage charges, the brief said.
Hyundai said the Korean government also explained that KEPCO "accumulated portions of the fuel costs that were not charged to its customers through the" adjusted charge in 2021 and included these costs as an item in its 2022 operating costs. The total operating costs were allocated to the costs of each electricity class to set the basis for calculating each class' recovery rate.
In its final results, Commerce found the electricity provision to be de facto specific, basing the decision on the original usage data from the South Korean government. The agency said the data showed that the steel industry, combined with three other industries, consumed a "disproportionately large amount of electricity in Korea." Commerce additionally rejected the South Korean government's claim that the "accumulated fuel costs incurred in 2021 should have been excluded from the 2022 cost data that Commerce used for its cost recovery test."
Exporter Dongkuk Steel Mill Co. also filed a complaint on Nov. 12 challenging the 2022 review, similarly challenging the finding that electricity was provided below cost (Dongkuk Steel Mill Co. v. United States, CIT # 24-00191).