[Federal Register Volume 75, Number 240 (Wednesday, December 15, 2010)]
[Notices]
[Pages 78216-78223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31517]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-201-805]
Certain Circular Welded Non-Alloy Steel Pipe From Mexico:
Preliminary Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests by interested parties, the Department
of Commerce (the Department) is conducting an administrative review of
the antidumping duty order on certain circular welded non-alloy steel
pipe from Mexico. This administrative review covers mandatory
respondents Mueller Comercial de Mexico, S. de R.L. de C.V. (Mueller)
and Ternium Mexico, S.A. de C.V. (Ternium). Tuberia Nacional, S.A. de
C.V. (TUNA) is subject to a concurrent changed circumstances review of
this order; in its changed circumstances review, the Department has
preliminarily determined that Lamina y Placa Comercial, S.A. de C.V.
(Lamina) is the successor-in-interest to TUNA. See Preliminary Results
of Antidumping Duty Changed Circumstances Review: Certain Circular
Welded Non-Alloy Steel Pipe and Tube from Mexico, 75 FR 67685 (November
3, 2010). Therefore, we are continuing to refer to this entity as TUNA
for these preliminary results, pending a final determination. The
period of review (POR) is November 1, 2008, through October 31, 2009.
We preliminarily determine that sales of subject merchandise have
been made at less than normal value (NV). One of the companies,
Ternium, refused to cooperate with the Department in this
administrative review. We have calculated a dumping margin for Mueller.
We preliminarily determine that TUNA had no reviewable sales,
shipments, or entries during the POR. The Department's review of import
data supported TUNA's claim (see ``TUNA's No-Shipment Claim'' section
of this notice for further explanation). Interested parties are invited
to comment on these preliminary results.
DATES: Effective Date: December 15, 2010.
FOR FURTHER INFORMATION CONTACT: Mark Flessner or Robert James, AD/CVD
Operations, Office 7, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
6312 or (202) 482-0469, respectively.
SUPPLEMENTARY INFORMATION:
Background
On November 2, 1992, the Department published the antidumping duty
order on certain circular welded non-alloy steel pipe from Mexico. See
Notice of Antidumping Duty Orders: Certain Circular Welded Non-Alloy
Steel Pipe from Brazil, the Republic of Korea (Korea), Mexico, and
Venezuela and Amendment to Final Determination of Sales at Less Than
Fair Value: Certain Welded Non-Alloy Steel Pipe from Korea, 57 FR 49453
(November 2, 1992) (Antidumping Duty Order). On November 2, 2009, the
Department published a notice of opportunity to request an
administrative review in the Federal Register. See Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation;
Opportunity to Request Administrative Review, 74 FR 56573 (November 2,
2009). On November 30, 2009, the Department received requests for
administrative review of Ternium (including its affiliates Hylsa,
Ternium Grupo IMSA, and Galvak), TUNA, and Mueller from petitioners
Allied Tube and Conduit Corp. (Allied) and TMK IPSCO; respondents
Mueller and TUNA also submitted requests for administrative review on
that day. On December 23, 2009, the Department published a Federal
Register notice initiating an antidumping administrative review. See
Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Request for Revocation in Part, 74 FR 68229 (December 23,
2009). On December 28, 2009, TUNA withdrew its request for an
administrative review. However, the Department did not terminate the
review with regard to TUNA because petitioners had timely requested a
review of TUNA. On January 6, 2010, the Department issued its
antidumping questionnaire to Mueller, TUNA, and Ternium.
On February 5, 2010, Ternium and TUNA notified the Department that
they would not submit responses to the Department's questionnaire; TUNA
did so with a no-shipments claim. With regard to TUNA's no-shipments
claim, on February 17, 2010, petitioners Allied and TMK IPSCO submitted
comments; on August 4, 2010, they submitted further comments. On August
16, 2010, TUNA replied to the petitioner's comments. On August 31,
2010, the Department issued a supplemental questionnaire to TUNA
concerning its U.S. sales of mechanical tubing. On September 8, 2010,
TUNA submitted its response to the supplemental questionnaire
concerning mechanical tubing.
With respect to sales data, on February 26, 2010, Mueller submitted
its response to section A of the questionnaire; on March 19, 2010,
Mueller submitted its sections B and C response to the questionnaire.
On May 25, 2010, the Department issued its first supplemental section
A, B, and C questionnaire to Mueller. On June 4, 2010, Mueller
submitted its responses to the first supplemental section A, B, and C
questionnaire. On June 24, 2010, Mueller submitted a clarification of
its first supplemental section A questionnaire response. On June 17,
2010, the Department issued its second supplemental section A, B, and C
questionnaire to Mueller. On July 14, 2010, Mueller submitted its
response to the second supplemental section A questionnaire; on July
16, 2010, Mueller submitted its response to the second supplemental
sections B and C questionnaire. On July 19, 2010, Mueller submitted
corrections to its response to the second supplemental sections B and C
questionnaire. On December 1, 2010, Mueller submitted revised home and
U.S. market databases in response to the Department's request made at
the end of verification (see ``Verification'' section below).
On April 8, 2010, petitioner U.S. Steel alleged that Mueller had
made sales below the cost of production (COP) during the POR. On June
30, 2010, the Department required both TUNA and Ternium \1\ to submit
COP data. See the memorandum from Maryanne Burke to the file entitled
``Administrative Review of Circular Welded Non-Alloy Steel Pipe from
Mexico: Mueller Comercial de Mexico, S. de R.L. de C.V. and Southland
Pipe Nipples Company, Inc.,'' dated June 30, 2010. On July 13, 2010,
the Department issued supplemental section D questionnaires to Ternium,
TUNA, and Mueller. On August 20, 2010, Ternium, TUNA, and Mueller each
submitted a response to the section
[[Page 78217]]
D questionnaire. On October 1, 2010, U.S. Steel submitted comments on
the respondents' cost data submissions. On October 12, 2010, the
Department issued supplemental section D questionnaires to TUNA and
Mueller; on October 13, 2010, the Department issued a supplemental
section D questionnaire to Ternium. On November 8, 2010, TUNA, Mueller,
and Ternium submitted their responses to the Department's first
supplemental section D questionnaires. On November 24, 2010, U.S. Steel
submitted comments with regard to the section D responses of Mueller,
TUNA, and Ternium. On December 1, 2010, Mueller submitted a response to
U.S. Steel's comments with regard to the section D responses of
Mueller, TUNA, and Ternium.
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\1\ Though U.S. Steel's April 8, 2010, allegation was directed
at Mueller, we required Mueller to obtain and report COP information
from TUNA and Ternium because these suppliers produced subject
merchandise sold by Mueller.
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On July 29, 2010, the Department extended the deadline for the
preliminary results of this review from August 9, 2010, to December 7,
2010. See Certain Circular Welded Non-Alloy Steel Pipe From Mexico;
Extension of Time Limit for Preliminary Results of Antidumping Duty
Administrative Review, 75 FR 44763 (July 29, 2010).
Verification
As provided in section 782(i) of the Act, and 19 CFR 351.307, we
conducted a verification of Mueller's sales responses on October 25-29,
2010, in Monterrey, Mexico. We conducted a verification of TUNA's no-
shipment claim on November 1-3, 2010, in Monterrey, Mexico. We used
standard verification procedures, including on-site inspection of both
companies' facilities. Because there was insufficient time to complete
the verification report for the preliminary results of review, we are
unable to consider verification report findings for purposes of these
preliminary results but intend to consider them in the final results.
However, Mueller submitted sales data on December 1, 2010, based on
revisions discussed at the verifications; we have used this data in our
margin calculations for Mueller. Interested parties will have an
opportunity to comment on the verification memoranda in their case
briefs. See ``Disclosure and Public Comment'' section below.
Scope of the Order
The products covered by this order are circular welded non-alloy
steel pipes and tubes, of circular cross-section, not more than 406.4
millimeters (16 inches) in outside diameter, regardless of wall
thickness, surface finish (black, galvanized, or painted), or end
finish (plain end, beveled end, threaded, or threaded and coupled).
These pipes and tubes are generally known as standard pipes and tubes
and are intended for the low pressure conveyance of water, steam,
natural gas, and other liquids and gases in plumbing and heating
systems, air conditioning units, automatic sprinkler systems, and other
related uses, and generally meet ASTM A-53 specifications. Standard
pipe may also be used for light load-bearing applications, such as for
fence tubing, and as structural pipe tubing used for framing and
support members for reconstruction or load-bearing purposes in the
construction, shipbuilding, trucking, farm equipment, and related
industries. Unfinished conduit pipe is also included in these orders.
All carbon steel pipes and tubes within the physical description
outlined above are included within the scope of this order, except line
pipe, oil country tubular goods, boiler tubing, mechanical tubing, pipe
and tube hollows for redraws, finished scaffolding, and finished
conduit. Standard pipe that is dual or triple certified/stenciled that
enters the U.S. as line pipe of a kind used for oil or gas pipelines is
also not included in this order.
The merchandise covered by the order and subject to this review are
currently classified in the Harmonized Tariff Schedule of the United
States (HTSUS) at subheadings: 7306.30.10.00, 7306.30.50.25,
7306.30.50.32, 7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and
7306.30.50.90. Although the HTSUS subheadings are provided for
convenience and customs purposes, our written description of the scope
of these proceedings is dispositive.
Date of Sale
The Department's regulations state that it will normally use the
date of invoice, as recorded in the exporter's or producer's records
kept in the ordinary course of business, as the date of sale. See 19
CFR 351.401(i). However, if the Department is satisfied that ``a
different date * * * better reflects the date on which the exporter or
producer establishes the material terms of sale,'' the Department may
choose a different date. Id. Mueller has reported the invoice date as
the sale date. In Mueller's normal books and records, invoice date is
recorded as the date of sale. However, changes in prices or quantities
do occur. See Mueller's July 16, 2010, supplemental questionnaire
response at 21-22. Therefore, the Department preliminarily determines
that the invoice date is the date of sale provided that the invoice is
issued on or before the shipment date; the shipment date will be used
as the date of sale where the invoice is issued after the shipment
date. See Certain Circular Welded Non-Alloy Steel Pipe from Mexico:
Preliminary Results Analysis Memorandum for Mueller Comercial de
Mexico, S. de R.L., dated December 7, 2010 (Analysis Memorandum), for
further discussion of date of sale. A public version of this memorandum
is on file in the Department's Central Records Unit (CRU) located in
Room 7046 of the main Department of Commerce Building, 14th Street and
Constitution Avenue, NW., Washington, DC 20230.
Sales Made Through Affiliated Resellers
Mueller has two U.S. affiliates who sold subject merchandise in the
United States during the POR to unaffiliated customers. The first is
Southland Pipe and Nipples Company, Inc. (Southland), which is
Mueller's importer-of-record for direct sales in the United States. See
``Export Price'' section, below; see also Mueller's section A response
at 3-4. The second is Mueller Streamline Co. (Streamline). Streamline
sells Mueller's subject merchandise to unaffiliated customers in the
United States out of inventory maintained in warehouses in the United
States for many of its sales; for others, it makes sales in which
Mueller's subject merchandise is shipped directly from Mueller's
facilities in Mexico (``indent sales''). Id. See ``Constructed Export
Price'' section, below. Mueller, Southland, and Streamline are wholly-
owned subsidiaries of Mueller Industries, Inc. Id. For these
preliminary results of review, we have included both Southland's and
Streamline's sales of subject merchandise to unaffiliated customers in
the United States in our margin calculation. Mueller made no sales to
affiliates in the home market. See Mueller's section A response at 14.
Fair Value Comparisons
To determine whether sales of circular welded non-alloy steel pipe
and tube from Mexico to the United States were made at less than fair
value (LTFV), we compared EP and CEP sales made in the United States by
Mueller, Southland, and Streamline to unaffiliated purchasers to NV as
described in the ``Constructed Export Price'' and ``Normal Value''
sections of this notice, below. In accordance with section 777A(d)(2)
of the Tariff Act of 1930, as amended (the Act), we compared individual
EP and CEP sales prices to monthly weighted-average NVs.
[[Page 78218]]
Product Comparisons
In accordance with section 771(16) of the Act we considered all
products produced by Mueller covered by the description in the ``Scope
of the Order'' section above, and sold in the home market during the
POR, to be foreign like product for purposes of determining appropriate
product comparisons to U.S. sales. We relied on five characteristics to
match U.S. sales of subject merchandise to comparison sales of the
foreign like product (listed in order of priority): (1) Grade; (2)
nominal pipe size; (3) wall thickness; (4) surface coating; and (5)
end-finish. Where there were no sales of identical merchandise in the
home market to compare to U.S. sales, we compared U.S. sales to the
next most similar foreign like product on the basis of the
characteristics and reporting instructions listed in the Department's
original January 6, 2010, questionnaire.
Export Price (EP)
Section 772(a) of the Act defines EP as ``the price at which the
subject merchandise is first sold (or agreed to be sold) before the
date of importation by the producer or exporter of subject merchandise
outside of the United States to an unaffiliated purchaser in the United
States or to an unaffiliated purchaser for exportation to the United
States,'' as adjusted under section 772(c) of the Act. In accordance
with section 772(a) of the Act, we used EP for a number of Mueller's
U.S. sales because these sales were made before the date of importation
and were sales directly to unaffiliated customers in the United States,
and because CEP methodology was not otherwise indicated.
As mentioned above, Southland is Mueller's importer-of-record for
direct sales in the United States. See Mueller's section A response at
3-4. These sales are made prior to importation and shipped directly
from Mueller's facilities to the unaffiliated U.S. customer. Mueller
therefore treated these sales as EP sales. Id.
We based EP on the packed, delivered duty paid, cost and freight
(C&F) or free on board (FOB) prices to unaffiliated customers in the
United States. Mueller reported discounts for which we accounted in the
margin program. See Analysis Memorandum. We made deductions for
movement expenses in accordance with section 772(c)(2)(A) of the Act,
which included, where appropriate, foreign inland freight from the mill
to the U.S. border, inland freight from the border to the customer or
warehouse, and U.S. brokerage and handling. In addition, we made
adjustments for differences in circumstances of sale in accordance with
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(c) by deducting
direct selling expenses incurred on home market sales (credit expenses)
and adding U.S. direct selling expenses (credit expenses).
Constructed Export Price
Mueller stated it made CEP sales through its U.S. affiliate,
Streamline, by two methods during the POR. The first was sales of
Mueller subject merchandise by Streamline from Streamline's U.S.
warehouses (``warehouse sales''). The second was sales of Mueller
subject merchandise by Streamline in which Mueller shipped its product
directly to the Streamline customer (``indent sales''). For all sales
under each method, Southland was the actual seller to Streamline. See
Mueller's section A response at pages 3-4.
In accordance with section 772(b) of the Act, CEP is the price at
which the subject merchandise is first sold (or agreed to be sold) in
the United States before or after the date of importation by or for the
account of the producer or exporter of such merchandise, or by a seller
affiliated with the producer or exporter, to a purchaser not affiliated
with the producer or exporter. We preliminarily find Mueller properly
classified all of its U.S. sales of subject merchandise through its
U.S. affiliate Streamline as CEP transactions because such sales were
made in the United States to unaffiliated purchasers. We based CEP on
packed prices to unaffiliated purchasers in the United States sold by
Streamline. We made adjustments for billing adjustments, discounts and
rebates, where applicable. We also made deductions for movement
expenses in accordance with section 772(c)(2)(A) of the Act, including
foreign inland freight, foreign brokerage and handling, inland
insurance, U.S. customs duties, U.S. inland freight, U.S. brokerage and
handling, and U.S. warehousing expenses. As directed by section
772(d)(1) of the Act, we deducted those selling expenses associated
with economic activities occurring in the United States, including
direct selling expenses (i.e., credit expenses and warranty expenses),
inventory carrying costs, packing costs, and other indirect selling
expenses. We also made an adjustment for profit in accordance with
section 772(d)(3) of the Act. See Analysis Memorandum.
Because Streamline neither segregates product in its warehouses
according to manufacturer, nor records the manufacturer when the
subject merchandise is entered into its warehouses, Streamline and
Mueller are unable to state with certainty which of Mueller's suppliers
manufactured the particular subject merchandise in any given Streamline
``warehouse sale.'' However, Mueller is able to report the percentage
manufactured by its suppliers (for each diameter and surface coating)
which it shipped to Streamline warehouses. Applying these percentages,
a percentage for each manufacturer can be assigned for each such sale.
We preliminarily determine that this methodology is the best available
and have used it in the margin program.
Level of Trade
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we base NV on sales made in the comparison market
at the same level of trade (LOT) as the export transaction. The NV LOT
is based on the starting price of sales in the home market or, when NV
is based on CV, on the LOT of the sales from which SG&A expenses and
profit are derived. With respect to CEP transactions in the U.S.
market, the CEP LOT is defined as the level of the constructed sale
from the exporter to the importer. See 19 CFR 351.412(c)(1)(ii).
To determine whether NV sales are at a different LOT than EP or CEP
sales, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the customer.
See 19 CFR 351.412(c)(2). If the comparison-market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make a LOT adjustment under section
773(a)(7)(A) of the Act. For CEP sales, if the NV level is more remote
from the factory than the CEP level and there is no basis for
determining whether the difference in the levels between NV and CEP
affects price comparability, we adjust NV under section 773(a)(7)(B) of
the Act (the CEP offset provision). See, e.g., Certain Hot-Rolled Flat-
Rolled Carbon Quality Steel Products from Brazil; Preliminary Results
of Antidumping Duty Administrative Review, 70 FR 17406, 17410 (April 6,
2005), results unchanged in Notice of Final Results of Antidumping Duty
Administrative Review: Certain Hot-Rolled Flat-Rolled Carbon Quality
Steel Products from Brazil, 70 FR 58683 (October 7, 2005); see also
Final Determination of Sales at Less Than Fair Value: Greenhouse
Tomatoes From
[[Page 78219]]
Canada, 67 FR 8781 (February 26, 2002) and accompanying Issues and
Decisions Memorandum at Comment 8. For CEP sales, we consider only the
selling activities reflected in the price after the deduction of
expenses and CEP profit under section 772(d)(3) of the Act. See Micron
Technology, Inc. v. United States, 243 F.3d 1301, 1314-15 (Fed. Cir.
2001). We expect that if the claimed LOTs are the same, the functions
and activities of the seller should be similar. Conversely, if a party
claims that the LOTs are different for different groups of sales, the
functions and activities of the seller should be dissimilar. See
Porcelain-on-Steel Cookware from Mexico: Final Results of Antidumping
Duty Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying
Issues and Decisions Memorandum at Comment 6.
Mueller reported it sold circular welded non-alloy steel pipe and
tube to end-users and distributors in the home market and to end-users
in the United States. For the home market, Mueller identified two
channels of distribution: Direct shipments (channel 1) and warehouse
shipments (channel 2). See Mueller's section A response at 14-15 and
Exhibit A-5. For the U.S. market, Mueller identified two channels of
distribution: Direct sales (channel 1) and indirect sales (channel 2).
Id. Mueller stated that ``a level-of-trade adjustment cannot be
established;'' rather, a CEP offset was requested. See Mueller's
section B response at 28.
We obtained information from Mueller regarding the marketing stages
involved in making its reported home market and U.S. sales. See
Mueller's July 16, 2010, supplemental questionnaire response at 13-19.
We reviewed Mueller's claims concerning the intensity to which all
selling functions were performed for each home market channel of
distribution and customer category. Based on our analysis of all of
Mueller's home market selling functions, we agree with Mueller's
conclusion that a level-of-trade adjustment cannot be established. We
further conclude that there is a single level of trade in the home
market.
In the U.S. market, Mueller did not report multiple levels of trade
for EP sales. Accordingly, we agree with Mueller and preliminarily
determine that all EP sales were made at the same LOT.
We compared Mueller's EP level of trade to the single NV level of
trade found in the home market. While we find differences in the levels
of intensity performed for some of these functions between the home
market NV level of trade and the EP level of trade, such differences
are minor and do not establish distinct levels of trade between the
home market and the U.S. market. Based on our analysis of all of
Mueller's home market and EP selling functions, we find these sales
were made at the same level of trade.
For CEP sales, Mueller claims that the number and intensity of
selling functions performed by Mueller in making its sales to
Streamline are lower than the number and intensity of selling functions
Mueller performed for its EP sales, and further claims that CEP sales
are at a less advanced stage than home market sales. See Mueller's July
16, 2010, supplemental questionnaire response at 13-19.
We compared the NV LOT (based on the selling activities associated
with the transactions between Mueller and its customers in the home
market) to the CEP LOT (which is based on the selling activities
associated with the transaction between Mueller and its affiliated
importer, Streamline). Our analysis indicates the selling functions
performed for home market customers are either performed at a higher
degree of intensity or are greater in number than the selling functions
performed for Streamline. For example, in comparing Mueller's selling
activities, we find many of the reported selling functions performed in
the home market are not performed with respect to CEP sales in the U.S.
market. For those selling activities performed for both home market
sales and CEP sales, Mueller reported it performed each activity at
either the same or at a higher level of intensity in one or both of the
home market channels of distribution. See Mueller's July 16, 2010
supplemental questionnaire response at Exhibit SA-10. Based on the
foregoing, we conclude that the NV LOT is at a more advanced stage than
the CEP LOT.
Because we found the home market and U.S. CEP sales were made at
different LOTs, we examined whether a LOT adjustment or a CEP offset
may be appropriate in this review. As we found only one LOT in the home
market, it was not possible to make a LOT adjustment to home market
sales, because such an adjustment is dependent on our ability to
identify a pattern of consistent price differences between the home
market sales on which NV is based and home market sales at the LOT of
the U.S. sales. See 19 CFR 351.412(d)(1)(ii). Furthermore, we have no
other information that provides an appropriate basis for determining a
LOT adjustment. Because the data available do not form an appropriate
basis for making a LOT adjustment, and because the NV LOT is at a more
advanced stage of distribution than the CEP LOT, we have made a CEP
offset to NV in accordance with section 773(a)(7)(B) of the Act.
Normal Value
A. Selection of Comparison Market
To determine whether there is a sufficient volume of sales in the
home market to serve as a viable basis for calculating NV (i.e., the
aggregate volume of home market sales of the foreign like product is
greater than five percent of the aggregate volume of U.S. sales), we
compared Mueller's volume of home market sales of the foreign like
product to the volume of its U.S. sales of the subject merchandise, in
accordance with section 773(a)(1)(B) of the Act. Because Mueller's
aggregate volume of home market sales of the foreign like product was
greater than five percent of its aggregate volume of U.S. sales for
subject merchandise, we determined the home market was viable. See,
e.g., Mueller's July 16, 2010, supplemental questionnaire response
(revised home market and U.S. sales databases).
B. Cost of Production Analysis
In response to a timely allegation from U.S. Steel, and in
accordance with section 773(b)(1) of the Act, we initiated an
investigation to determine whether Mueller made home market sales of
the foreign like product at prices below its cost of production during
the POR. Because Mueller is a re-seller of pipe, and not a
manufacturer, we solicited COP data from its two principal suppliers,
TUNA and Ternium. We also requested that Mueller report its costs for
the further processing it performs (e.g., threading or cutting to
length) on the pipe it purchases from TUNA and Ternium.
In accordance with section 773(b)(3)(A) of the Act, we calculated
COP based on the sum of the supplier's cost of materials, fabrication
or other processing employed in producing the foreign like product. In
accordance with section 773(b)(3)(B) and (C) of the Act, we included
amounts for SG&A expenses and packing costs. For pipe further processed
by Mueller, we added the costs of materials, direct labor and variable
overhead incurred by Mueller. We also included amounts for Mueller's
SG&A expenses and packing costs, if any. Based on the review of record
evidence, Mueller did not appear to experience significant changes in
cost of manufacturing during the period of review. Therefore, we
followed our normal methodology of calculating an annual weighted-
average cost. We relied
[[Page 78220]]
on home market sales and COP information provided by Mueller, TUNA and
Ternium in their respective section D questionnaire responses, except
as noted below:
For Mueller, we adjusted the reported depreciation, G&A, and
financial expenses. For additional details, see the memorandum from
Heidi K. Schriefer to Neal M. Halper entitled ``Cost of Production
Adjustments for the Preliminary Results--Mueller Comercial de Mexico,
S. de R.L. de C.V.'' dated December 7, 2010.
For TUNA, we adjusted the reported hot-rolled coil, G&A and
financial expenses. For additional details, see the memorandum from
Heidi K. Schriefer to Neal M. Halper entitled ``Cost of Production
Adjustments for the Preliminary Results--Tuberia Nacional, S.A. de
C.V.'' dated December 7, 2010.
For Ternium, we adjusted the reported G&A and financial expenses.
Due to time constraints, the Department has accepted Ternium's
submissions, as adjusted, for the preliminary results. However, we note
that there are several outstanding issues which include Ternium's
failure to provide an overall reconciliation and to account for the
cost differences associated with dimensional physical characteristics
which will need to be resolved for the final results. For additional
details on the adjustments made to Ternium's submissions for the
preliminary results, see the memorandum from Heidi K. Schriefer to Neal
M. Halper entitled ``Cost of Production Adjustments for the Preliminary
Results--Ternium Mexico, S.A. de C.V.'' dated December 7, 2010.
In determining whether to disregard home market sales made at
prices below the COP, we examine, in accordance with sections
773(b)(1)(A) and (B) of the Act, whether such sales were made within an
extended period of time and in substantial quantities, and whether such
sales were made at prices which permitted the recovery of all costs
within a reasonable period of time in the normal course of trade. As
noted in section 773(b)(2)(D) of the Act, prices are considered to
provide for recovery of costs if such prices are above the weighted
average per-unit COP for the period of investigation or review.
Where less than 20 percent of the respondent's home market sales of
a given model are at prices below the COP, we do not disregard any
below-cost sales of that model because we determine that the below-cost
sales are not made within an extended period of time and in
``substantial quantities.'' Where 20 percent or more of the
respondent's home market sales of a given model are at prices less than
the COP, we disregarded the below-cost sales; because: (1) They were
made within an extended period of time in ``substantial quantities,''
in accordance with sections 773(b)(2)(B) and (C) of the Act; and (2)
based on our comparison of prices to the weighted-average COPs for the
POR, they were at prices which would not permit the recovery of all
costs within a reasonable period of time, in accordance with section
773(b)(2)(D) of the Act.
Our cost test for Mueller revealed that, for home market sales of
certain models, less than 20 percent of the sales of those models were
at prices below the COP. We therefore retained all such sales in our
analysis and used them as the basis for determining NV. Our cost test
also indicated that for home market sales of other models, more than 20
percent were sold at prices below the COP within an extended period of
time and at prices which would not permit the recovery of all costs
within a reasonable period of time. Thus, in accordance with section
773(b)(1) of the Act, we excluded these below-cost sales from our
analysis and used the remaining above-cost sales as the basis for
determining NV.
C. Affiliated Party Transactions and Arm's-Length Test
Mueller made no sales to affiliates in the home market. See
Mueller's section A response at 14.
D. Constructed Value
In accordance with section 773(e) of the Act, we calculated CV as
described above in the ``Cost of Production Analysis'' section of this
notice, plus profit and U.S. packing costs. In accordance with section
773(e)(2)(A) of the Act, we based SG&A expenses and profit on the
amounts incurred and realized by the respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade, for consumption in the foreign country.
E. Price-to-Price Comparisons
We calculated NV based on prices to unaffiliated customers. Mueller
reported home market sales in Mexican pesos during the POR. See
Mueller's section B response at Exhibit B-1. We accounted for billing
adjustments, discounts, and rebates, and advertising expenses where
appropriate. We also made deductions, where appropriate, for foreign
inland freight, insurance, handling, and warehousing, pursuant to
section 773(a)(6)(B) of the Act. In addition, we made adjustments for
differences in cost attributable to differences in physical
characteristics of the merchandise compared pursuant to section
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We also made
adjustments for differences in circumstances of sale (COS) in
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR
351.410. In particular, we made COS adjustments for imputed credit
expenses and warranty expenses. Finally, we deducted home market
packing costs and added U.S. packing costs in accordance with sections
773(a)(6)(A) and (B) of the Act.
F. Price-to-CV Comparisons
Where we were unable to find a home market match of such or similar
merchandise, in accordance with section 773(a)(4) of the Act, we based
NV on CV. Where appropriate, we made adjustments to CV in accordance
with section 773(a)(8) of the Act.
TUNA's No-Shipment Claim
TUNA maintains that while the CBP data placed on the record
indicate there were shipments of the subject merchandise manufactured
by TUNA during the POR, in fact, it was not the exporter for any
entries. TUNA originally submitted a ``no-shipment'' letter, dated
February 5, 2010, in which the company claimed it did not have exports,
sales, or entries of subject merchandise to the United States during
the POR. Rather, TUNA asserts it made sales of subject merchandise to
unaffiliated companies in the Mexican home market and believes some of
those home market customers export the subject merchandise to the
United States. However, TUNA insists it did not know where the material
was destined at the time of TUNA's sale to its customers. TUNA explains
the sales in question were ``co-export'' sales and, thus, exempt from
the value-added tax (VAT) normally collected on sales in the domestic
market. However, TUNA insists that at the time of sale, it has no idea
which shipments of pipe are actually destined for the United States.
Accordingly, TUNA requests, pursuant to 19 CFR 351.213(d)(3), that we
rescind this administrative review with respect to TUNA.
Meanwhile, on February 17, 2010, Allied and TMK IPSCO submitted
comments arguing TUNA's ``no-shipment'' claims are not supported by
record evidence. Allied and TMK IPSCO urged the Department to gather
more information regarding TUNA's sales to an unaffiliated exporter.
According to Allied and TMK IPSCO, the nature of TUNA's home market
sales pursuant to Mexico's IMMEX ``co-export'' program made it highly
probable TUNA knew at the time of the sale that its merchandise
[[Page 78221]]
was destined for the United States. Allied and TMK IPSCO also urged the
Department to gather more information from U.S. Customs and Border
Protection (CBP), such as Customs Forms 7501 and other import
documentation. See Allied and TMK IPSCO's letter dated February 17,
2010.
The Department did, in fact, solicit additional information from
both TUNA and CBP. See, e.g., Memorandum from Richard Weible, Director,
Office 7 to Michael Walsh, Director, AD/CVD Revenue Policy & Programs,
U.S. Customs and Border Protection, dated May 3, 2010 (entering on the
record entry documentation for selected TUNA entries). In addition,
between November 1 and November 3, 2010, the Department conducted an
on-site verification of TUNA's no shipment claims.
From our examination of the customs entry documentation, we saw no
evidence to suggest TUNA had made any reviewable entries of subject
merchandise to the United States. Rather, the documentation indicated
sales were made to a certain home market customer under Mexico's IMMEX
co-export program. See Mueller's July 14, 2010, supplemental
questionnaire response at Exhibit S-5. While TUNA had a general
knowledge that some of its pipe would be exported--perhaps to the
United States or elsewhere--it did not know which specific pipes would
be exported to the United States at the time of its sale to its
customer. See Mueller's section A response at 5. Therefore, we find the
record provides no information to contradict TUNA's claim that, at the
time of its sales to the home market customer, it did not have
knowledge its merchandise would be exported to the United States. As a
result, we preliminarily find TUNA had no knowledge its merchandise
entered the United States and is, therefore, not properly subject to
review.
Use of Facts Available
Section 776(a)(2) of the Act, provides that if an interested party
withholds information requested by the administering authority, or
fails to provide such information by the deadlines for submission of
the information and in the form or manner requested (subject to
subsections (c)(1) and (e) of section 782 of the Act), or significantly
impedes a proceeding under this title, or provides such information but
the information cannot be verified as provided in section 782(i) of the
Act, then the administering authority shall use (subject to section
782(d) of the Act) facts otherwise available in reaching the applicable
determination. Section 782(d) of the Act provides that if the
administering authority determines that a response to a request for
information does not comply with the request, the administering
authority shall promptly inform the responding party and provide an
opportunity to remedy the deficient submission. Section 782(e) of the
Act states further that the Department shall not decline to consider
submitted information if all of the following requirements are met: (1)
The information is submitted by the established deadline; (2) the
information can be verified; (3) the information is not so incomplete
that it cannot serve as a reliable basis for reaching the applicable
determination; (4) the interested party has demonstrated that it acted
to the best of its ability; and (5) the information can be used without
undue difficulties.
Because Ternium has not responded to sections A, B, or C of the
Department's original questionnaire in the instant administrative
review, its actions constitute a refusal to provide information
necessary to conduct the Department's antidumping analysis under
sections 776(a)(2)(A) and (B) of the Act. Thus, Ternium withheld
information requested by the Department's original questionnaire and
significantly impeded the administrative review. See section
776(a)(2)(A) and (C) of the Act. Therefore, we preliminarily determine
to base the margin for Ternium on facts otherwise available, pursuant
to sections 776(a)(2)(A) and (C) of the Act.
Application of Adverse Inferences for Facts Available
In applying the facts otherwise available, section 776(b) of the
Act provides that--if the Department finds an interested party has
failed to cooperate by not acting to the best of its ability to comply
with a request for information--in reaching the applicable
determination under this title, the Department may use an inference
adverse to the interests of that party in selecting from among the
facts otherwise available.
Adverse inferences are appropriate ``to ensure that the party does
not obtain a more favorable result by failing to cooperate than if it
had cooperated fully.'' See Statement of Administrative Action
accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316,
vol. 1 (1994) at 870 (SAA). Further, ``affirmative evidence of bad
faith on the part of a respondent is not required before the Department
may make an adverse inference.'' See Antidumping Duties; Countervailing
Duties, 62 FR 27296, 27340 (May 19, 1997). Ternium failed to cooperate
to the best of its ability by failing to answer sections A, B, or C of
the Department's questionnaire. As a result, we determine that Ternium
failed to cooperate by not acting to the best of its ability to comply
with the Department's request for information. Therefore, pursuant to
section 776(b) of the Act, the Department has preliminarily determined
that in selecting from among the facts otherwise available, an adverse
inference is warranted. See, e.g., Notice of Final Determination of
Sales at Less Than Fair Value: Circular Seamless Stainless Steel Hollow
Products From Japan, 65 FR 42985, 42986 (July 12, 2000) (the Department
applied total AFA where a respondent failed to respond to subsequent
antidumping questionnaires).\2\
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\2\ Ternium submitted no response to the Department's section A,
B, or C questionnaires during the course of this review. Ternium
did, however, submit a response to the Department's section D
questionnaire with respect to subject merchandise manufactured by
Ternium which was exported to the United States by Mueller. Sales by
Mueller or its affiliates will be assessed at the Mueller rate
without the use of adverse inferences; otherwise, sales of subject
merchandise manufactured by Ternium will be assessed at a rate
determined from facts available. See ``Preliminary Results of
Review'' and ``Assessment'' sections below.
---------------------------------------------------------------------------
Selection and Corroboration of Information Used as Facts Available
Section 776(b) of the Act provides that the Department may use as
AFA information derived from the petition, the final determination in
the investigation, any previous review, or any other information placed
on the record. When selecting an AFA rate from among the possible
sources of information, the Department's practice has been to ensure
the margin is sufficiently adverse to induce respondents to provide the
Department with complete and accurate information in a timely manner.
See, e.g., Certain Steel Concrete Reinforcing Bars From Turkey; Final
Results and Rescission of Antidumping Duty Administrative Review in
Part, 71 FR 65082, 65084 (November 7, 2006).
Accordingly, as total AFA, we have assigned Ternium the rate of
48.33 percent, which is the highest calculated transaction-specific
margin from the most recently-completed administrative review of this
antidumping duty order in which a rate was calculated. See Circular
Welded Non-Alloy Steel Pipe From Mexico: Amended Final Results of
Antidumping Duty Administrative Review, 66 FR 37454 (July 18, 2001);
see
[[Page 78222]]
also Magnesium Metal From the Russian Federation: Final Results and
Partial Rescission of Antidumping Duty Administrative Review, 74 FR
39919 (August 10, 2009) (single-highest transaction margin assigned as
AFA to respondent AVISMA). See Memorandum from Christian Marsh to Paul
Piquado entitled ``Certain Circular Welded Non-Alloy Steel Pipe from
Mexico: Use of Facts Available for Ternium and the Corroboration of
Secondary Information,'' dated December 7, 2010 (Facts Available
Memorandum). We find this rate is sufficiently adverse to serve the
purpose of facts available and is appropriate, as it is the highest
transaction-specific margin determined in the most recently completed
review in which a rate was calculated.
Section 776(c) of the Act provides that, to the extent practicable,
the Department shall corroborate secondary information used for facts
available by reviewing independent sources reasonably at its disposal.
Information from a prior segment of the proceeding constitutes
secondary information. See SAA at 870; Antifriction Bearings and Parts
Thereof From France, et al.: Final Results of Antidumping Duty
Administrative Reviews, Rescission of Administrative Reviews in Part,
and Determination To Revoke Order in Part, 69 FR 55574, 55577
(September 15, 2004). The word ``corroborate'' means the Department
will satisfy itself that the secondary information to be used has
probative value. See SAA at 870; see also Tapered Roller Bearings and
Parts Thereof, Finished and Unfinished, From Japan, and Tapered Roller
Bearings, Four Inches or Less in Outside Diameter, and Components
Thereof, From Japan; Preliminary Results of Antidumping Duty
Administrative Reviews and Partial Termination of Administrative
Reviews, 61 FR 57391, 57392 (November 6, 1996). To corroborate
secondary information, the Department will examine, to the extent
practicable, the reliability and relevance of the information used.
As fully explained in the Facts Available Memorandum, the
Department finds the rate of 48.33 percent to be reliable and relevant
for use as AFA. See Facts Available Memorandum at 7-8. As such, the
Department finds this rate to be corroborated to the extent practicable
consistent with section 776(c) of Act. We have, therefore, selected the
rate of 48.33 percent to apply as an AFA rate to Ternium and consider
it to be sufficiently high so as to encourage participation in future
segments of this proceeding.
Preliminary Results of Review
As a result of our review, we preliminarily determine the following
weighted-average dumping margins exist for the period November 1, 2008,
through October 31, 2009:
------------------------------------------------------------------------
Weighted-
Manufacturer/exporter average margin
(percentage)
------------------------------------------------------------------------
Ternium (formerly known as Hylsa \3\)................. 48.33
Mueller............................................... 4.81
------------------------------------------------------------------------
Disclosure and Public Comment
We will disclose pertinent memoranda concerning these preliminary
results to parties in this review within five days of the date of
publication of this notice in accordance with 19 CFR 351.224(b). We
shall be releasing the sales verification reports from this
administrative review with sufficient time to allow parties to comment
upon their contents. Any interested party may request a hearing within
30 days of the publication of this notice in the Federal Register. See
19 CFR 351.310(c). If a hearing is requested, the Department will
notify interested parties of the hearing schedule.
---------------------------------------------------------------------------
\3\ Ternium is the successor in interest to Hylsa, S.A. de C.V.
See Final Results of Antidumping Duty Changed Circumstances Review:
Certain Circular Welded Non-Alloy Steel Pipe and Tube from Mexico,
74 FR 41681 (August 18, 2009).
---------------------------------------------------------------------------
Interested parties are invited to comment on the preliminary
results of this review. The Department will consider case briefs filed
by interested parties within 30 days after the date of publication of
this notice in the Federal Register. See 19 CFR 351.309(c). Interested
parties may file rebuttal briefs, limited to issues raised in the case
briefs. See 19 CFR 351.309(d). Any hearing, if requested, will be held
two days after the deadline for submission of rebuttal briefs. See 19
CFR 351.310(d). Parties who submit arguments are requested to submit
with each argument: (1) A statement of the issue, (2) a brief summary
of the argument, and (3) a table of authorities cited. Further, we
request that parties submitting written comments provide the Department
with an electronic copy of the public version of such comments. We
intend to issue the final results of this administrative review,
including the results of our analysis of issues in any such case
briefs, rebuttal briefs, and written comments or at a hearing, within
120 days of publication of these preliminary results in the Federal
Register.
Assessment
The Department shall determine, and CBP shall assess, antidumping
duties on all appropriate entries. Upon completion of this
administrative review, pursuant to 19 CFR 351.212(b), the Department
will calculate an assessment rate on all appropriate entries. Mueller
has reported entered values for all of its sales of subject merchandise
to the United States during the POR. Therefore, in accordance with 19
CFR 351.212(b)(1), we will calculate importer-specific duty assessment
rates on the basis of the ratio of the total amount of antidumping
duties calculated for the examined sales to the total entered value of
the examined sales of that importer. These rates will be assessed
uniformly on all entries the respective importers made during the POR
if these preliminary results are adopted in the final results of
review. Where the assessment rate is above de minimis, we will instruct
CBP to assess duties on all entries of subject merchandise by that
importer. Because we are relying on total AFA to establish Ternium's
dumping margin, we will instruct CBP to apply a dumping margin of 48.33
percent ad valorem to all entries of subject merchandise during the POR
that was produced and/or exported by Ternium (except those entries
produced by Ternium and exported by Mueller, to which the Mueller
assessment will apply). In accordance with 19 CFR 356.8(a), the
Department intends to issue appropriate assessment instructions
directly to CBP on or after 41 days following the publication of the
final results of review.
Cash Deposit Requirements
If these preliminary results are adopted in the final results of
review, the following deposit requirements will be effective upon
completion of the final results of this administrative review for all
shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication of the final
results of this administrative review, as provided in section 751(a)(1)
of the Act: (1) The cash-deposit rate for Mueller and Ternium will be
the rate established in the final results of this review; (2) for
previously reviewed or investigated companies not covered in this
review, the cash-deposit rate will continue to be the company-specific
rate published for the most recent period; (3) if the exporter is not a
firm covered in this review, a prior review, or the less-than-fair-
value (LTFV) investigation but the manufacturer is, the cash-deposit
rate
[[Page 78223]]
will be the rate established for the most recent period for the
manufacturer of the subject merchandise; (4) if neither the exporter
nor the manufacturer is a firm covered in this or any previous segment
of the proceeding, the cash-deposit rate will continue to be the all-
others rate established in the LTFV investigation which is 32.62
percent. See Antidumping Duty Order. These cash-deposit requirements,
when imposed, shall remain in effect until further notice.
Notification to Importers
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f)(2) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
The preliminary results of administrative review and this notice
are issued and published in accordance with sections 751(a)(1) and
777(i)(1) of the Act.
Dated: December 7, 2010.
Paul Piquado,
Acting Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-31517 Filed 12-14-10; 8:45 am]
BILLING CODE 3510-DS-P