Bratsk Aluminum Smelter v. United States

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