Bratsk Aluminum Smelter v. United States , 28 Ct. Int'l Trade 955 ( 2004 )

Slip Op. 04-75
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
______________________________________
:
BRATSK ALUMINUM SMELTER and :
RUAL TRADE LIMITED, :
:
Plaintiffs, :
:
and :
:
SUAL HOLDING and ZAO KREMNY; and :
GENERAL ELECTRIC SILICONES LLC, :
:
Plaintiff-Intervenors, : Consol. Court No.
: 03-00200
v. :
:
UNITED STATES, :
:
Defendant, :
:
and :
:
GLOBE METALURGICAL INC. and :
SIMCALA, INC., :
:
Defendant-Intervenors. :
______________________________________:
This consolidated action concerns the motions of Brastk
Aluminum Smelter (“Brastk”) and Rual Trade Limited and plaintiff-
intervenors, SUAL Holding, ZAO Kremny and General Electric
Silicones LLC (“General Electric”) (collectively, “Plaintiffs”)
pursuant to USCIT R. 56.2 for judgment upon the agency record
challenging certain aspects of the United States Trade Commission’s
(“ITC” or “Commission”) final determination entitled Silicon Metal
from Russia (“Final Determination”), 68 Fed. Reg. 14,260 (Mar. 24,
2003), in which the ITC found that an industry in the United States
is materially injured by reason of imports of silicon metal from
Russia that are sold in the United States at less than fair value
(“LTFV”). The views of the Commission were published in March
2003, in Silicon Metal From Russia (“ITC Determination”), Inv. No.
731-TA-991 (Final), USITC Pub. 3584 (Mar. 2003). Plaintiffs
generally argue that the Commission erred in determining that the
domestic silicon metal industry was materially injured by reason of
Consol. Court No. 03-00200 Page 2
silicon metal imports from Russia. Specifically, Plaintiffs
contend, inter alia, that the ITC erred in concluding that: (1) the
silicon metal prices in all three market segments key off the price
for secondary aluminum grade silicon metal; (2) Russian imports
were priced lower than non-subject imports; and (3) Russian imports
caused injury to the United States domestic industry.
Held: Plaintiffs’ motions for judgment on the agency record is
granted in part and denied in part. Case remanded to the
Commission with instructions: (1) to explain its reasons for
accepting evidence that “spot” prices may effect contract prices
while rejecting contradictory evidence; (2) to explain the
significance or effect of the similar pricing trends of the
different market segments; and (3) if the Commission cannot provide
sufficient reasons or explanations, to change its determination
accordingly.
[Plaintiffs’ 56.2 motions is granted in part and denied in part.
Case remanded.]
Shearman & Sterling LLP (Thomas B. Wilner, Jeffrey M. Winton,
Quentin M. Baird and Sam J. Yoon) for Brastk Aluminum Smelter and
Rual Trade Limited, plaintiffs.
Dewey Ballantine LLP (Michael H. Stein and Nathaniel M.
Rickard) for General Electric Silicones LLC, plaintiff-intervenor.
Vorys, Sater, Seymour and Pease LLP (Frederick P. Waite and
Kimberly R. Young) for SUAL Holding and ZAO Kremny, plaintiff-
intervenors.
Lyn M. Schlitt, General Counsel; James M. Lyons, Deputy
General Counsel, Office of the General Counsel, United States
International Trade Commission (Irene H. Chen and Andrea C. Casson)
for the United States, defendant.
Piper Rudnick LLP (William D. Kramer, Clifford E. Stevens, Jr.
and Martin Schaefermeier) for Globe Metalurgical Inc. and SIMCALA,
Inc., defendant-intervenors.
Dated: June 22, 2004
Consol. Court No. 03-00200 Page 3
OPINION
TSOUCALAS, Senior Judge: This consolidated action concerns
the motions of Brastk Aluminum Smelter (“Brastk”) and Rual Trade
Limited and plaintiff-intervenors, SUAL Holding, ZAO Kremny and
General Electric Silicones LLC (“General Electric”) (collectively,
“Plaintiffs”) pursuant to USCIT R. 56.2 for judgment upon the
agency record challenging certain aspects of the United States
Trade Commission’s (“ITC” or “Commission”) final determination
entitled Silicon Metal from Russia (“Final Determination”), 68 Fed.
Reg. 14,260 (Mar. 24, 2003), in which the ITC found that an
industry in the United States is materially injured by reason of
imports of silicon metal from Russia that are sold in the United
States at less than fair value (“LTFV”). The views of the
Commission were published in March 2003, in Silicon Metal From
Russia (“ITC Determination”), Inv. No. 731-TA-991 (Final), USITC
Pub. 3584 (Mar. 2003). Plaintiffs generally argue that the
Commission erred in determining that the domestic silicon metal
industry was materially injured by reason of silicon metal imports
from Russia. Specifically, Plaintiffs contend, inter alia, that
the ITC erred in concluding that: (1) the silicon metal prices in
all three market segments key off the price for secondary aluminum
grade silicon metal; (2) Russian imports were priced lower than
non-subject imports; and (3) Russian imports caused injury to the
Consol. Court No. 03-00200 Page 4
United States domestic industry.
BACKGROUND
On March 7, 2002, the United States domestic industry filed an
antidumping petition with the Commission alleging that it was
materially injured or threatened with material injury by reason of
LTFV imports of silicon metal from Russia. See Final
Determination, 68 Fed. Reg. at 14,260. On April 29, 2002, the
Commission published its preliminary determination that there was
a reasonable indication that the United States domestic industry is
materially injured by reason of LTFV imports of silicon metal from
Russia. See Silicon Metal From Russia, 67 Fed. Reg 20,993 (Apr.
29, 2002). The United States Department of Commerce (“Commerce”)
published its final determination that imports of silicon metal
from Russia are being, or are likely to be sold in the United
States at LTFV, see Notice of Final Determination of Sales at Less
Than Fair Value for Silicon Metal From the Russian Federation, 68
Fed. Reg. 6,885 (Feb. 11, 2003), and subsequently published an
amended final determination. See Notice of Amended Final
Determination of Sales at Less Than Fair Value for Silicon Metal
From the Russian Federation, 68 Fed. Reg. 12,037 (Mar. 13, 2003).
On March 26, 2003, Commerce published an antidumping duty order
with regard to silicon metal from Russia. See Antidumping Duty
Consol. Court No. 03-00200 Page 5
Order on Silicon Metal From Russia, 68 Fed. Reg. 14,578 (Mar. 26,
2003).
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 1516a(a)(2)(A)(i)(I) (2000) and 28 U.S.C. § 1581(c)
(2000).
STANDARD OF REVIEW
The Court will uphold an ITC determination unless it is
“unsupported by substantial evidence on the record, or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i) (2000).
Substantial evidence is “more than a mere scintilla. It means such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.” Universal Camera Corp. v. NLRB, 340 U.S.
474, 477 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Substantial evidence “is something less than the
weight of the evidence, and the possibility of drawing two
inconsistent conclusions from the [same] evidence does not prevent
an administrative agency’s finding from being supported by
substantial evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607,
620 (1966). Moreover, “[t]he court may not substitute its judgment
for that of the [agency] when the choice is ‘between two fairly
Consol. Court No. 03-00200 Page 6
conflicting views, even though the court would justifiably have
made a different choice had the matter been before it de novo.’”
American Spring Wire Corp. v. United States, 8 CIT 20, 22, 590 F.
Supp. 1273, 1276 (1984) (quoting Universal Camera, 340 U.S. at
488).
DISCUSSION
I. Statutory Background
In the final phase of an antidumping and countervailing duty
investigation, the Commission determines whether a United States
industry is materially injured by reason of subject imports. See
19 U.S.C. §§ 1671d(b)(1), 1673d(b)(1) (2000). Material injury is
defined as “harm which is not inconsequential, immaterial, or
unimportant.” 19 U.S.C. § 1677(7)(A) (2000). In making a material
injury determination, the ITC must consider: (1) the volume of the
subject imports; (2) the subject imports’ effect on prices for the
domestic like product; and (3) the impact of the subject imports on
the domestic industry in the context of production operations
within the United States. See 19 U.S.C. § 1677(7)(B). In addition
to these factors, the ITC “may consider such other economic factors
as are relevant to the determination regarding whether there is
material injury by reason of imports.” 19 U.S.C. § 1677(7)(B)(ii).
The statute explicitly describes the factors the ITC should
Consol. Court No. 03-00200 Page 7
consider in making its determination as to volume, price and the
impact on the affected domestic industry, see 19 U.S.C. §
1677(7)(C), yet no single factor is dispositive. See 19 U.S.C. §
1677(7)(E)(ii).
In evaluating the effect of subject imports on domestic
prices, the Commission must consider whether there has been
significant price underselling compared with the price of domestic
like products in the United States. See 19 U.S.C. §
1677(7)(C)(ii)(I). The Commission also considers whether subject
imports depress, suppress or prevent domestic price increases to a
significant degree. 19 U.S.C. § 1677(7)(C)(ii)(II). In
considering the impact of the subject imports, the ITC must assess
“all relevant economic factors which have a bearing on the state of
the [United States] industry.” 19 U.S.C. § 1677(7)(C)(iii). In
addition, the ITC must consider such economic factors “within the
context of the business cycle and conditions of competition that
are distinctive to the affected industry.” Id.II. The Commission Properly Determined that Subject Import Volume
Was Significant
A. The ITC’s Findings
In the case at bar, the Commission found that the volume and
increase in volume of subject imports was significant. See ITC
Consol. Court No. 03-00200 Page 8
Determination at 10-11. The ITC found that the quantity of subject
imports increased by 35.8 percent from 1999 to 2001 and by 38.6
percent from 2000 to 2001, after registering a slight decrease from
1999 to 2000. See id. at 10. Moreover, the overall volume of
subject imports was 57.6 percent higher during the January to
September 2002, period than it had been during the comparable
period in 2001, which allowed Russia to become the largest single
source of silicon metal imports during the 2002 period. See id.The Commission also noted that “subject import volume increased
during the [period of investigation] despite the inability of
Russian producers to manufacture low-iron silicon metal due to the
composition of quartzite deposits in Russia.”1 Id. The ITC found
that “[s]ubject imports gained market share [in the United States]
at the same time that apparent [United States] consumption declined
. . . from 62.2 percent in 1999 to 57.0 percent in 2000 and 54.6
percent in 2001, and was 39.7 percent in interim 2002 compared to
55.4 percent in interim 2001.” Id. From 1999 to 2000, non-subject
imports’ market share decreased from 35.5 percent to 33.2 percent
and domestic producers’ market share also fell from 57.0 percent to
54.6 percent while the market share of subject imports rose from
1
Quartzite is the primary raw material needed to produce
silicon metal. See ITC Determination at I-7. The mined quartzite
“is combined with a carbon-containing reducing agent . . . and a
bulking agent . . . in a submerged-arc electric furnace to produce
molten silica, which is reduced to silicon metal.” Id.Consol. Court No. 03-00200 Page 9
7.5 percent to 12.3 percent. See id. at 9-10.
B. Contentions of the Parties
1. Plaintiffs’ Contentions
Plaintiffs contend that Russian producers cannot compete in
the primary aluminum market because of their inability to produce
low-iron silicon metal. See Br. Pls.’ Brastk & Rual Trade Ltd. &
Pl.-Intervenor General Electric Supp. Pls.’ R. 56.2 Mots. J. Agency
R. (“Plaintiffs’ Br.”) at 9. Plaintiffs concede that “[t]he
silicon metal products sold by [United States] producers are
generally interchangeable with the products imported from Russia
and from other countries.” Id. The production of low-iron silicon
by Russian producers, however, is generally impractical because the
quartzite used by Russian producers has a high level of iron.
See id. Plaintiffs argue that United States producers, in turn,
“target their production specifically to meet the requirements of
the primary aluminum segment.” Id.In addition, Plaintiffs argue that the ITC should have used
1998 rather than 1999 as the starting point for its volume
analysis. See id. at 44 n.99. In doing so, the Commission “would
have found that imports from Russia had actually decreased
throughout the investigation period.” Id. Plaintiffs also note
that Russian imports peaked in 1994, totaling 62,990 tons but fell
Consol. Court No. 03-00200 Page 10
in 1999 to 25,158 tons and further declined in 2000 to 24,463 tons.
See id. at 12. In contrast, non-subject imports showed an opposite
trend with imports increasing between 1994 and 2000. See id.Plaintiffs maintain that the data supports a finding that “the
volume of non-subject imports dwarfed the volume imported from
Russia during the last three years.” Id. Accordingly, Plaintiffs
contend that non-subject imports “were a much larger factor in the
[United States] market than imports from Russia.” Id. at 13.
2. ITC’s Contentions
The Commission replies that its subject import volume findings
were reasonable and supported by substantial evidence. See Def.
ITC’s Opp’n Pls./Pl.-Intervenors’ Mots. J. Agency R. (“ITC’s Br.”)
at 15-19. The volume of subject imports “climbed by 35.8 percent
from 1999 to 2001 and by 38.6 percent from 2000 to 2001.” Id. at
15. Moreover, the overall volume of subject imports was higher
between January to September of 2002 than it had been during the
same period in 2001. See id. at 17. In contrast, non-subject
import volume did not increase as much during the same period. See
id. at 17. The ITC maintains that the “substantial and continued
increase occurred as Russia became the largest source of silicon
metal imports prior to suspension of liquidation in 2002, despite
the inability of Russian producers to produce low-iron silicon
metal for the primary aluminum market.” Id. at 15-16.
Consol. Court No. 03-00200 Page 11
The ITC also asserts that respective market share trends of
the domestic industry, subject and non-subject imports during the
period of investigation further supports its volume findings. The
ITC concedes that, in the 1999 to 2000 period, non-subject imports’
market share rose while the domestic industry lost market share and
subject imports’ market share remained flat. See id. at 16.
During the 2000 to 2001 period, however, the market share of
subject imports increased at the expense of non-subject imports and
domestic producers. See id. The Commission asserts that it
attributed part of the domestic industry’s market share loss to
non-subject imports “but, in light of the absolute and proportional
increases by subject imports in interim 2002, [it] reasonably
concluded that the domestic industry lost market share in
significant part to subject imports.” See id. at 16-17 (quotation
omitted).
The ITC further points out that the chemical and not primary
aluminum segment is the domestic industry’s largest customer
market. See id. at 17. In 2001, the primary aluminum market
segment was third in terms of the percentage of United States
producers’ domestic shipments. See id. at 17-18 (citing
proprietary information). The Commission found that “subject
import suppliers’ percentage of domestic silicon metal shipments to
the chemical sector, where the majority of domestic product
Consol. Court No. 03-00200 Page 12
competes, increased substantially during the [period of
investigation].” Id. at 18.
The Commission maintains that it followed its usual practice
of collecting and analyzing data for a three year period. See id.Here, the Commission analyzed data from 1999 to 2001 and interim
periods January to September 2001 and 2002. See id. The ITC
asserts that its period of investigation customarily consists of
the most recent three calendar years and applicable interim
periods. See id. During the final investigation, Plaintiffs
requested that the period of investigation be expanded, but the
Commission found that “plaintiffs provided no good reason for this
deviation from the [period of investigation], other than that it
might skew the data more favorably for them.” Id. at 19. The ITC
declined to expand the period of investigation because it reasoned
that such an expansion to include volume data without obtaining
relevant price and market conditions would yield an incomplete
analysis. See id.
3. Defendant-Intervenors’ Contentions
Defendant-Intervenors generally agree with the arguments made
by the ITC. See Def.-Intervenors’ Br. Opp’n Mots. J. Upon Agency
R. (“Defendant-Intervenors’ Br.”) at 18-20. Defendant-Intervenors
add that “Russian imports continued to flood the [United States]
Consol. Court No. 03-00200 Page 13
market during the first three quarters of 2002.” Id. at 19. Over
the period of investigation, the share of the United States silicon
metal market more than doubled for Russian imports, while United
States producers’ market share declined by twenty percent. See id.C. Analysis
With respect to its volume determination, the Commission must
consider whether the volume of subject imports is significant. See
19 U.S.C. § 1677(7)(C)(i). In reviewing the ITC Determination, the
court’s role is limited to determining whether the Commission’s
findings are supported by substantial evidence and the reasonable
inferences therefrom. See Daewoo Elecs. Co., Ltd. v. Int’l Union
of Elec., Elec., Technical, Salaried & Mach. Workers, AFL-CIO, 6
F.3d 1511, 1520 (Fed. Cir. 1993). Under this standard, the
question for this Court is whether the record supports the
Commission’s conclusions. See id. While different conclusions may
be drawn from record evidence, the Commission has the discretion to
reasonably interpret the evidence and its significance. See id.Accordingly, this Court “may not reweigh the evidence or substitute
its judgment for that of the ITC.” Goss Graphics Sys., Inc. v.
United States, 22 CIT 983, 1008-09, 33 F. Supp. 2d 1082, 1104
(1998) (quotation and citations omitted).
Consol. Court No. 03-00200 Page 14
The Court finds that there is substantial evidence supporting
the Commission’s findings that subject import volume was
significant. The volume of subject imports increased by 35.8
percent from 1999 to 2001 and by 38.6 percent from 2000 to 2001,
after registering a slight decrease from 1999 to 2000. See ITC
Determination at 10. In addition, the overall volume of subject
imports was 57.6 percent higher during the January to September
2002, period than it had been during the comparable period in 2001.
See id. From 1999 to 2001, non-subject imports’ market share
decreased from 35.5 percent to 33.2 percent and domestic producers’
market share also fell from 57.0 percent to 54.6 percent while the
market share of subject imports rose from 7.5 percent to 12.3
percent. See id. at 9-10. Based on record evidence, it was
reasonable for the Commission to conclude that an increase of
volume over the period of investigation was significant both in
absolute terms and relative to consumption in the United States.
See id. at 9–11.
Furthermore, Plaintiffs’ arguments as to the period of
investigation used by the ITC are without merit. Plaintiffs
contend that if the ITC had used 1998 as the starting point for its
volume analysis, the Commission would have found that the volume of
subject imports decreased during the period of investigation. See
Plaintiffs’ Br. at 44 n.99. The statute, however, does not direct
Consol. Court No. 03-00200 Page 15
the ITC to use a specific period of time for its analysis.
Accordingly, “the Commission has discretion to examine a period
that most reasonably allows it to determine whether a domestic
industry is injured by LTFV imports.” Kenda Rubber Indus. Co.,
Ltd. v. United States, 10 CIT 120, 126-27 , 630 F. Supp. 354, 359
(1986); see Usinor, Beautor, Haironville, Sollac Atlantique, Sollac
Lorraine v. United States, 26 CIT ___, ___, 2002 Ct. Intl. Trade
LEXIS 98 *32-*33 (stating that “in making a present material injury
determination, the Commission must address record evidence of
significant circumstances and events that occur between the
petition date and vote date”). The Court recognizes that “older
information on the record provides a historical backdrop against
which to analyze fresher data.”2 Usinor, 26 CIT at ___, 2002 Ct.
Intl. Trade LEXIS 98 at *34. Here, the ITC properly exercised its
discretion and followed its usual practice of collecting and
analyzing data for a three year period. The Commission reasonably
determined that using earlier volume data without obtaining price
and market condition data would lead to an incomplete analysis.
Accordingly, the Commission’s volume determination is affirmed.
2
The ITC has previously acknowledged that “the time period
for which [it] collects data –- three years in most cases –- merely
serves as a historical frame of reference for an analysis of the
current condition of the domestic industry at the time of the
Commission’s determination.” 12-Volt Motorcycle Batteries From
Taiwan, Inv. No. 731-TA-238 (Final), USITC Pub. 2213 at 11, (Aug.
1989).
Consol. Court No. 03-00200 Page 16
III. The Commission’s Determination That There was Significant
Underselling by Subject Imports
A. The Commission’s Findings
The ITC found that the subject imports and the domestically
produced silicon metal are generally substitutable. See ITC
Determination at 11. The ITC also found, and the parties agreed,
that “price is very important in purchasing decisions, given the
commodity-like nature of the subject product.” Id. at 11-12. The
Commission concluded that silicon metal prices in the primary,
secondary and chemical market segments key off the price for
secondary aluminum. See id. at 12. The data collected showed that
Russian silicon metal produced for the primary and secondary market
segments undersold comparable domestic products. See id. The data
also showed that subject imports were priced below the domestic
product in thirteen out of fifteen quarterly pricing comparisons
for primary aluminum grade silicon metal. See id. For secondary
aluminum grade silicon metal, subject imports were priced below the
domestic product in eleven out of fifteen quarters. See id.“Purchaser price data [also showed] underselling by Russian imports
in all quarterly comparisons.” Id. Subject imports undersold the
domestic product in all eleven quarters for all three aluminum
grades of silicon metal that were reviewed by the ITC. See id. In
addition, purchase price data showed that Russian silicon metal
undersold non-subject imports. See id. at 13. Subject imports had
Consol. Court No. 03-00200 Page 17
never been the lowest priced product in the United States market
throughout the period of investigation. See id. The Commission
found that the average unit value (“AUV”) of imports from Russia
were lower than the aggregate AUVs of non-subject imports. See id.Based on this pricing data, the ITC determined that the
underselling by subject imports was significant during the period
of investigation. See id.Prices in all three silicon metal segments declined during the
period of investigation for the United States product and the
subject imports, but the ITC found significant price depression by
the subject imports. See id. at 14. The Commission noted that
non-subject import prices “have had an independent price depressive
effect on domestic silicon metal prices.” Id. at 15. The ITC,
however, determined that “given the significant underselling by
subject imports, subject import volume surges during the [period of
investigation], and the high degree of substitutability between
subject imports and domestic product . . . subject imports
themselves have significantly depressed domestic silicon metal
prices in all three customer segments . . . .” Id. Based on a
comparison of purchaser data to the domestic product, the ITC found
that the underselling margins for subject imports were the highest
for chemical grade silicon, the market segment where most domestic
product is sold. See id.Consol. Court No. 03-00200 Page 18
B. The Commission’s Finding that Silicon Metal Prices Key
Off the Secondary Aluminum Price
1. Contentions of the Parties
a. Plaintiffs’ Contentions
Plaintiffs contend that the Commission’s conclusion— that
silicon metal prices in all three market segments key off published
“spot” prices for secondary aluminum grade silicon metal— is not
supported by substantial evidence. See Pls.’ Br. at 20-25.
Plaintiffs take issue with the ITC’s explanation of the way in
which prices in the market segments are set.
The record in this investigation indicates that
domestically produced silicon metal and subject imports
are generally substitutable, and that price is a key
factor in purchasing decisions. The parties agree that
price is very important in purchasing decisions, given
the commodity-like nature of the subject product. In
addition, silicon metal prices in all three segments key
off secondary aluminum price and exhibit similar trends.
ITC Determination at 11-12 (citations omitted). Plaintiffs
specifically argue that the ITC improperly accepted petitioners
assertion that “spot” prices for silicon metal in the secondary
aluminum segment, published in the industry publication Metals
Week, key off pricing for all segments of the market. See id. at
20. Plaintiffs assert that, “the ITC’s subsequent analysis of the
price effects of the imports from Russia was explicitly based on
this ‘finding,’” which lacked factual support. Id. at 21.
Consol. Court No. 03-00200 Page 19
Plaintiffs maintain that the ITC was unable to cite any data
from its staff report, any testimony from the hearing, or any
admissions from respondents to support its finding. See id.Rather, the Commission found support for its conclusion in “a
passage in petitioners’ pre-hearing brief, which actually referred
back to a ten-year-old ITC determination, and not to any evidence
on the record of the current proceeding.” Id. Plaintiffs argue
that there is overwhelming record evidence which demonstrates that
prices in the other market segments were not effected by the
published “spot” prices for the secondary aluminum segment. See
id. at 22. Plaintiffs assert that the testimony of the purchasing
manager of General Electric, which explained how published “spot”
prices for the secondary aluminum segment effect her contracts,
shows that “spot” prices “had absolutely no effect on the pricing
in contracts in the chemical market segment.” Id. at 23.
Additionally, the “metal markets index” had no bearing on the price
of contracts in the chemical segment. See id. Plaintiffs maintain
that price in the chemical market segment for General Electric was
“set based on [an] analysis of the price her company could pay
while remaining profitable . . . .” Id.While the silicon metal products sold by United States
producers are interchangeable with those imported from Russia and
other countries, the high level of quartzite used by Russian
Consol. Court No. 03-00200 Page 20
producers makes it “generally impractical for the Russian producers
to produce silicon metal meeting the low-iron requirements of the
primary aluminum market segment.” Reply Br. Pls.’ Brastk & Rual
Trade Ltd. & Pl.-Intervenor General Electric Supp. Pls.’ R. 56.2
Mots. J. Agency R. at 4. United States producers, on the other
hand, target their production for the primary aluminum segment, yet
most of their sales in the United States are in the chemical market
segment. See id. at 4-5; Pls.’ Br. at 9.
The ITC’s questionnaire to silicon metal purchasers asked
about the relationship of contract prices to “spot” prices.
See Pls.’ Br. at 23. Three of seven purchasers responded that
there is no relationship between contract and “spot” prices. See
id. at 24. Three other purchasers claimed that “spot” prices were
a factor in determining contract prices, but that there may not be
a direct relationship between the two prices. See id. The last
purchaser stated that a price differential ranging from $0.05 and
$0.10 between the two prices had been generally observed. See id.Based on these responses, Plaintiffs contend that “the ITC’s
erroneous analysis of the impact of the prices in the secondary
aluminum segment was the entire foundation of its decision that the
[United States] producers had been harmed in the chemical segment–
which was the only segment where [petitioners] actually complained
about imports from Russia.” Id. at 25.
Consol. Court No. 03-00200 Page 21
b. ITC’s Contentions
The ITC asserts that there was ample evidence to support its
finding, in its price effects analysis, that silicon metal prices
in all three segments key off published “spot” prices for the
secondary aluminum segment. See ITC’s Br. at 22. Furthermore, the
ITC asserts its determination must be reviewed by this Court as a
whole, “even if it does not agree with the Commission on each and
every subsidiary finding,” and that the Court should affirm the
ITC’s determination if the record, as a whole, supports the
determination. Id. The Commission points out that United States
producers’ price data indicated “similar pricing trends among the
three segments . . . .” Id. The ITC maintains that record
evidence showed that the “[s]pot prices published in Metals Week
are used as a measure of prevailing market prices by buyers and
sellers in all industry segments.” Id. at 23. One domestic
producer stated that its contracts had a pricing mechanism to
periodically adjust prices based on prices published in Metals Week
or Ryan’s Notes. See id. Another domestic producer indicated that
“its contract terms are generally fixed or indexed to prices
published in Metals Week or Ryan’s Notes depending on the customer
and duration of [sic] contract.” Id. The ITC asserts that
Plaintiffs’ depiction of its findings “belies their statement
during the final investigation,” that prices in the primary and
Consol. Court No. 03-00200 Page 22
secondary segments moved virtually in tandem. See id. at 24.
The ITC concedes that their was testimony on the record which
contradicted its determination. The ITC, however, asserts that
such testimony “does not render the Commission’s determination as
a whole unsupported by substantial evidence.” Id. Rather, the ITC
has discretion to reasonably interpret evidence and “to determine
the overall significance of any particular factor or piece of
evidence.” Id. Here, the Commission weighed all the evidence,
including contradictory testimony, to reach its price effects
determination. See id. at 24-25. The ITC maintains that it
discussed “record evidence about the influence of spot prices on
contracts in its conditions of competition section.” Id. at 25.
c. Defendant-Intervenors’ Contentions
Defendant-Intervenors assert that the ITC’s price effects
findings are reasonable and supported by substantial evidence. See
Defendant-Intervenors’ Br. at 20-24. Citing sales data for the
secondary aluminum market, Defendant-Intervenors note that subject
imports’ prices in the secondary aluminum segment declined from the
first quarter of 1999, to the fourth quarter of 2001 and continued
to drop in the first quarter of 2002. See id. at 20-21 (citing
proprietary information). Similarly, prices for subject imports in
the primary aluminum market dropped from the first quarter in 1999
Consol. Court No. 03-00200 Page 23
to the fourth quarter of 2001. See id. (citing proprietary
information). Defendant-Intervenors also argue that the record
supports the ITC’s conclusion that subject imports depressed the
prices of non-subject imports. See id. at 22. Defendant-
Intervenors maintain that at the beginning of the period of
investigation “the import AUV of non-subject imports was more than
$200/[short tons] higher than the AUV of the Russian imports.” Id.Defendant-Intervenors maintain that “[a]s the Russian imports
surged into the [United States] market in 2001, the prices of non-
subject imports were pulled down and this spread narrowed to
$98/[short tons].” Id. Subject imports, however, fell to their
lowest AUV during the period of investigation in the January to
September 2002 period, and the price gap increased to $191/short
tons. See id. Nonetheless, Defendant-Intervenors maintain that
the import AUV data supports the ITC’s determination that the
subject imports depressed the prices of both the domestic product
and non-subject imports. See id.
2. Analysis
The Commission has “broad discretion in analyzing and
assessing the significance of the evidence on price undercutting.”
Cooperweld Corp. v. United States, 12 CIT 148, 161, 682 F. Supp.
552, 565 (1988). Under 19 U.S.C. § 1677(7)(C)(ii)(I), the ITC must
determine if “there has been significant price underselling by the
Consol. Court No. 03-00200 Page 24
imported merchandise as compared with the price of domestic like
products of the United States.” The ITC must also consider whether
the subject imports otherwise suppress, depress or prevent domestic
price increases to a significant degree. See 19 U.S.C. §
1677(7)(C)(ii)(II). In the case at bar, the Commission found that
silicon metal prices in all three market segments key off the
secondary aluminum price. The ITC also found that subject imports
depressed prices in the secondary aluminum market, which
consequently affected prices in the other two segments as well.
The Court finds that the Commission’s conclusion that prices in all
three segments key off secondary aluminum prices is not supported
by substantial evidence.
The ITC failed to explain why it rejected certain evidence
indicating that “spot” prices did not effect contract prices.
Three out of seven responses to the ITC’s questionnaires indicate
that “spot” prices are a factor in determining contract prices, but
“there may not be a direct relationship between spot and contract
prices.” See ITC Determination at 9. During its investigation,
the ITC found that silicon metal sales in the United States are
made on both a contract and “spot” price basis. See id. at 8.
While United States producers reported that 95 percent of their
sales are made on a contract basis, importers and purchasers
reported that their sales were mixed: “some firms reporting that
Consol. Court No. 03-00200 Page 25
all or the majority of sales are done on a spot basis and others
reporting that all or the majority of sales are on a contract
basis.” Id. While United States producers indicated that most of
their sales price terms were set within contracts, one producer
indicated that its contracts “contain a pricing mechanism to adjust
prices quarterly, semi-annually, or annually based on a published
price like Metals Week or Ryan’s Notes.” Id. at 9. A different
producer indicated that it had contracts with meet-or-release
clauses. See id. Another producer indicated that its contract
terms are either fixed or indexed to the prices contained in one of
the two publications. See id. The Commission failed to reconcile
contradicting evidence and provide a reasonable explanation as to
why it chose the evidence used to support its findings.
The ITC gathered information from purchasers on whether prices
were adjusted during the terms of contracts. See id. The data
gathered indicates that “spot” prices did not key off secondary
aluminum prices. When asked if prices vary within the duration of
a contract in response to changes in “spot” prices, the majority of
respondents indicated that prices did not vary. See id. In
addition, five out of five respondents replied “in the negative
when asked if any suppliers had actually changed prices during the
period in which a contract with a meet-or-release clause was in
place.” Id. While the Commission found that three out of seven
Consol. Court No. 03-00200 Page 26
respondents indicated that “spot” prices are a factor in
determining contract prices, these respondents also indicated that
“there may not be a direct relationship between spot and contract
prices.” Id.Furthermore, the Commission notes that United States
producers’ price data indicated “similar pricing trends among the
three segments . . . .” ITC’s Br. at 22. Silicon metal sold to
chemical producers was, on average, $0.10 per pound more expensive
than that sold to primary aluminum producers. See id. The price
for silicon metal sold to primary aluminum producers was on average
$0.05 more expensive than that sold to secondary aluminum
producers. See id. The ITC determined that record evidence showed
that the “[s]pot prices published in Metals Week are used as a
measure of prevailing market prices by buyers and sellers in all
industry segments.” Id. at 23. One domestic producer stated that
its contracts had a pricing mechanism to periodically adjust prices
based on prices published in Metals Week or Ryan’s Notes. See id.Another domestic producer indicated that “its contract terms are
generally fixed or indexed to prices published in Metals Week or
Ryan’s Notes depending on the customer and duration of [sic]
contract.” Id. The ITC asserts that Plaintiffs’ depiction of the
ITC’s finding “belies their statement during the final
investigation,” that prices in the primary and secondary segments
Consol. Court No. 03-00200 Page 27
moved virtually in tandem. See id. at 24. While the Court
recognizes the broad discretion Congress granted to the Commission
in analyzing evidence presented to it, the ITC’s determinations
must be reasonable and supported by substantial evidence.
In the case at bar, the evidence before the ITC allows for the
drawing of two inconsistent conclusions from the same evidence.
The Commission, however, has not sufficiently explained its reasons
for concluding that silicon metal prices in all three segments
effect pricing in the secondary aluminum market. In addition, the
Court finds that the Commission failed to explain the significance
or effect of the similar pricing trends among the three market
segments. While the Court may not substitute its judgment for that
of the ITC, see American Spring, 8 CIT at 22, 590 F. Supp. at 1276,
the ITC’s determination must be reasonable and supported by
substantial evidence. The record does not adequately explain the
Commission’s determination with respect to its price determination.
Accordingly, the Court remands this issue to the ITC with
instructions: (1) to explain its reasons for accepting evidence
that “spot” prices may effect contract prices while rejecting
contradictory evidence; (2) to explain the significance or effect
of the similar pricing trends of the different market segments; and
(3) if the Commission cannot provide sufficient reasons or
explanations, to change its determination accordingly.
Consol. Court No. 03-00200 Page 28
CONCLUSION
The Court finds that the ITC’s determination with respect to
volume was reasonable and supported by substantial evidence. The
case is remanded to the Commission with instructions: (1) to
explain its reasons for accepting evidence that “spot” prices may
effect contract prices while rejecting contradictory evidence; (2)
to explain the significance or effect of the similar pricing trends
of the different market segments; and (3) if the Commission cannot
provide sufficient reasons or explanations, to change its
determination accordingly. The Court will consider the remaining
issues raised by Plaintiffs upon review of the remand
redetermination.
/s/NICHOLAS TSOUCALAS
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: June 22, 2004
New York, New York