Commerce Treats Exporter's Energy Costs as 'Material Costs' Instead of 'Conversion Costs'
On remand in an antidumping duty case, the Commerce Department continued to use a mandatory respondent’s weighted annualized cost data for most of its conversion costs, although it did analyze whether the exporter’s costs for natural gas and electricity specifically should have been averaged on a quarterly basis. It said it had chosen to treat them “as part of the material inputs” of the exporter after the Court of International Trade identified those inputs as “ripe for reconsideration” (Citribel NV v. United States, CIT # 24-00010).
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Commerce found that natural gas and electricity prices didn’t reach the 25% change in per-quarter price threshold to be averaged by quarter, however, so the change had no impact on the exporter’s final AD rate.
CIT Judge M. Miller Baker ruled in August that Commerce hadn’t properly explained its decision to value Belgian citric acid administrative review respondent Citribel using annualized conversion costs but quarterly raw material costs (see 2508220056). The exporter argues that Commerce’s standard practice of annualizing conversion costs was distortive in its case, as its conversion costs fluctuated substantially throughout the review period (see 2412170080).
Baker held in his order that the department had the discretion to decide the periods of time over which it may average exporters’ costs, but remanded the decision so that Commerce could properly consider Citribel’s argument.
“Here, Citribel has made the case, including by pointing to record evidence, that following this approach on these peculiar facts is distortive because of the extraordinary rise in at least certain conversion costs (e.g., natural gas and electricity) during the period of review,” Baker said. “The Department dismissed that contention without any analysis or discussion of the company’s evidence.”
In response, Commerce determined on remand to consider averaging Citribel’s energy costs on a quarterly basis. All other conversion costs, including expenses for direct labor, fixed overhead, maintenance and “other” cost categories, were still annualized, it said.
Acknowledging that the trade court had been right that Commerce initially failed to properly consider Citribel’s arguments, Commerce said that it “respectfully submit[s] that the broader conclusion remains intact:” Citribel hadn’t shown that annualizing those remaining conversion costs was distortive. Specifically, it said the exporter hadn’t explained how “macroeconomic and geopolitical events” such as the Russian invasion of Ukraine impacted those costs.
Commerce said it did choose to reconsider Citribel’s natural gas and electricity cost equations specifically because the remand order explicitly mentioned them as impacted by the invasion of Ukraine. It also noted that those costs could be isolated from the exporter’s other conversion costs.
But, when it did, each failed to meet the threshold for a quarterly analysis, the department said. Neither saw a greater than 25% change in cost between the highest and lowest quarters of the period of review, it said.
It said that, though Belgium’s energy prices had generally increased by 50% due to the conflict in Ukraine, Citribel’s hadn’t. And, generally, it said, the record didn’t reflect that Citribel’s “cost experience comported with that of the Belgian market writ large during the period.”