Certain Oil Country Tubular Goods from Mexico; Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a request from United States Steel Corporation, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain oil country tubular goods (OCTG) from Mexico. The period of review (POR) is August 1, 2003, through July 31, 2004.

We preliminarily find that Hylsa, S.A. de C.V (Hylsa) made sales of the subject merchandise at less than normal value (NV). In addition, we are preliminarily rescinding this review with respect to Tubos de Acero de Mexico, S.A. (Tamsa) because Tamsa reported, and we confirmed, that it made no shipments of subject merchandise to the United States during the POR. If these preliminary results are adopted in the final results of this administrative review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties based on the difference between constructed value (CV) and the NV for Hylsa.

Interested parties are invited to comment on these preliminary results. Parties who submit argument in this proceeding are requested to submit with the argument: 1) a statement of the issues, 2) a brief summary of the argument, and 3) a table of authorities.

EFFECTIVE DATE:

May 10, 2005.

FOR FURTHER INFORMATION CONTACT:

Stephen Bailey, 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) 482-0193.

SUPPLEMENTARY INFORMATION:

Background

On August 11, 1995, the Department published the antidumping duty order on OCTG from Mexico. See Antidumping Duty Order: Oil Country Tubular Goods From Mexico, 60 FR 41056 (August 11, 1995) (AD Order). On August 3, 2004, the Department published the opportunity to request administrative review of, inter alia, OCTG from Mexico for the period August 1, 2003, through July 31, 2004. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 69 FR 46496 (August 3, 2004).

In accordance with 19 CFR 351.213(b)(2), on August 31, 2004, United States Steel Corporation requested that we conduct an administrative review of the sales of subject merchandise of Tamsa and Hylsa. On September 22, 2004, the Department published in the Federal Register a notice of initiation of this antidumping duty administrative review covering the period August 1, 2003, through July 31, 2004. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 69 FR 183 (September 22, 2004).

On October 6, 2004, the Department issued its antidumping duty questionnaire to Hylsa and Tamsa. On October 25, 2004, Tamsa submitted a no-shipment certification letter to the Department explaining that it had no sales of subject merchandise during the POR and requested a rescission of the administrative review with respect to Tamsa. See Partial Rescission of Administrative Review below for a discussion of this issue.

Hylsa submitted its response to section A of the Department's questionnaire on November 9, 2004, and its response to section C on November 23, 2004. In its section A response, Hylsa informed the Department that it had no viable home market or third country sales to use as normal value and was therefore reporting constructed value data. The Department issued a supplemental sections A and C questionnaire to Hylsa on December 29, 2004. Hylsa submitted its response to the Department's sections A and C questionnaire on January 19, 2005. The Department issued a second supplemental sections A and C questionnaire on February 18, 2005 and on February 25, 2005 Hylsa submitted its response. The Department issued a third supplemental questionnaire on April 13, 2005 and on April 14, 2005 Hylsa submitted its response.

Because Hylsa did not have home market or third country sales of subject merchandise during the POR, Hylsa submitted a section D response on December 6, 2004. We issued a supplemental questionnaire regarding Hylsa's response to section D on March 9, 2005 and on April 4, 2005 Hylsa submitted its response.

Period of Review

The POR is August 1, 2003, through July 31, 2004.

Scope of the Order

The merchandise covered by this order are oil country tubular goods (OCTG), hollow steel products of circular cross-section, including oil well casing and tubing of iron (other than cast iron) or steel (both carbon and alloy), whether seamless or welded, whether or not conforming to American Petroleum Institute (API) or non-API specifications, whether finished or unfinished (including green tubes and limited-service OCTG products). This scope does not cover casing or tubing pipe containing 10.5 percent or more of chromium, or drill pipe. The OCTG subject to this order are currently classified in the HTSUS under item numbers: 7304.29.10.10, 7304.29.10.20, 7304.29.10.30, 7304.29.10.40, 7304.29.10.50, 7304.29.10.60, 7304.29.10.80, 7304.29.20.10, 7304.29.20.20, 7304.29.20.30, 7304.29.20.40, 7304.29.20.50, 7304.29.20.60, 7304.29.20.80, 7304.29.30.10, 7304.29.30.20, 7304.29.30.30, 7304.29.30.40, 7304.29.30.50, 7304.29.30.60, 7304.29.30.80, 7304.29.40.10, 7304.29.40.20, 7304.29.40.30, 7304.29.40.40, 7304.29.40.50, 7304.29.40.60, 7304.29.40.80, 7304.29.50.15, 7304.29.50.30, 7304.29.50.45, 7304.29.50.60, 7304.29.50.75, 7304.29.60.15, 7304.29.60.30, 7304.29.60.45, 7304.29.60.60, 7304.29.60.75, 7305.20.20.00, 7305.20.40.00, 7305.20.60.00, 7305.20.80.00, 7306.20.10.30, 7306.20.10.90, 7306.20.20.00, 7306.20.30.00, 7306.20.40.00, 7306.20.60.10, 7306.20.60.50, 7306.20.80.10, and 7306.20.80.50. The Department has determined that couplings, and coupling stock, are not within the scope of the antidumping order on OCTG from Mexico. See Letter to Interested Parties; Final Affirmative Scope Decision, August 27, 1998. The HTSUS subheadings are provided for convenience and customs purposes. Our written description of the scope of this order is dispositive.

Partial Rescission of Administrative Review

In response to our October 6, 2004 original questionnaire, Tamsa submitted an October 25, 2004 letter claiming they made no exports of the subject merchandise during the POR. We examined CBP data to confirm that Tamsa was not listed as a manufacturer or exporter of the subject merchandise on entries during the POR. We requested and received from CPB entry documents that showed Tamsa was the manufacturer of the entered merchandise. After reviewing the information, we determined that the entries in question were exported from third countries without Tamsa's knowledge and properly identified Mexico as the country of origin.

In addition, there is no information on the record to indicate that Tamsa had U.S. sales or exports of subject merchandise during the POR. As a result, we find that Tamsa made no entries, exports, or sales of the subject merchandise during the POR that are subject to the administrative review. Therefore, in accordance with 19 CFR 351.213(d)(3), we are preliminarily rescinding our review with respect to Tamsa.

Product Comparisons

Because Hylsa had no sales of identical or similar merchandise in the home market or any third country comparison market during the POR, we compared U.S. sales to CV in accordance with section 773(a)(4) of the Act.

Fair Value Comparisons

To determine whether Hylsa made sales of OCTG to the United States at less than fair value, we compared EP to NV, as described in the “Export Price” and “Normal Value” sections of this notice. Because Hylsa had no sales of subject merchandise either in the home market or to third countries during the POR, in accordance with section 773(a)(4) of the Act, we compared the EP of U.S. transactions falling within the period of review to CV.

Export Price

Section 772(a) of the Act defines export price (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 the 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 subsection (c). In contrast, section 772(b) of the Act defines constructed export price (CEP) as 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, as adjusted under sections 772(c) and (d).

For sales to the United States, we have used EP in accordance with section 772(a) of the Act because the subject merchandise was sold directly to an unaffiliated purchaser prior to importation.

We calculated EP based on the prices charged to the first unaffiliated customer in the United States. We used the date of invoice as the date of sale. We based EP on the packed delivered duty paid prices to the first unaffiliated purchasers in the United States. We made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Tariff Act, including: foreign inland freight, foreign brokerage and handling, U.S. inland freight and U.S. brokerage and handling.

Calculation of Constructed Value

Hylsa reported that it had no viable home or third country market during the POR. Therefore, in accordance with section 773(a)(4) of the Act, we based NV for Hylsa on CV. In accordance with section 773(e)(1) of the Act, we calculated CV based on the sum of the costs of materials, labor, overhead, selling, general and administrative (SG&A), profit, interest expenses, and U.S. packing costs. Section 773(e)(2)(A) states that SG&A and profit are to be based on the actual amounts incurred in connection with sales of a foreign like product. In the event such data is not available, section 773(e)(2)(B) of the Act sets forth three alternatives for computing profit and SG&A without establishing a hierarchy or preference among the alternative methods. The alternative methods are: (1) Calculate SG&A and profit incurred by the producer based on the sale of merchandise of the same general type as the exports in question; (2) average SG&A and profit of other producers of the foreign like product for sales in the home market; or (3) any other reasonable method, capped by the amount normally realized on sales in the foreign country of the general category of the products. In addition, the Statement of Administrative Action (“SAA”) states that, if the Department does not have the data to determine amounts for profit under alternatives one and two, or a profit cap under alternative three, it still may apply alternative three (without the cap) on the basis of the “facts available.” SAA at 841.

In this case, because Hylsa did not have a viable home market or third country market for this product, we based Hylsa's profit and indirect selling expenses on the following methodology. In accordance with section 773(e)(2)(B)(iii) of the Act, we calculated indirect selling expenses incurred and profit realized by the producer based on the sale of merchandise of the same general types as the exports in question. Specifically, we based our profit calculations and indirect selling expenses on the income statement of Hylsa's tubular products division, a general pipe division that produces OCTG and like products. We calculated a CV profit using Hylsa's tubular division financial statements for 2003 (i.e., tubular division profit 2003 divided by tubular division 2003 cost of goods sold). We deducted packing expenses allocated to Hylsa's tubular products division from the COGS denominator when we calculated CV profit.

For the preliminary results we recalculated Hylsa's SG&A expense by deducting packing expenses from the cost of goods sold denominator. We used the financial statements of Alfa, S.A. de C.V., Hylsa's parent company, to calculate financial expenses. See Analysis Memorandum from Stephen Bailey to the File and Accounting Cost Memorandum from Margaret Pusey to the File, both dated May 3, 2005, for further discussion.

There were no allegations of below-cost sales for Hylsa during this POR. Consequently, we did not initiate a cost of production (COP) analysis for Hylsa.

Price-to-CV Comparisons

For price-to-CV comparisons, we made circumstance-of-sale adjustments by deducting from CV the weighted-average home market indirect selling expenses and adding U.S. direct selling expenses (i.e., imputed credit, warranty, and other direct selling expenses) in accordance with section 773(a)(8) of the Act and section 19 CFR 351.401(c). For computing credit expenses, it is the Department's normal practice to use an interest rate applicable to loans in the same currency as that in which the sales are denominated (see, e.g., Analysis for the preliminary determination in the investigation of stainless steel plate in coils from Korea--Pohang Iron & Steel Company, 63 FR 59535 (November 4, 1998)). Because Hylsa had no short-term borrowings in U.S. dollars, the credit expense for Hylsa's U.S. sales was calculated using the average U.S. prime rate during the POR. See Hylsa's Section C response at exhibit 7.

Currency Conversion

We made currency conversions into U.S. dollars, in accordance with section 773A(a) of the Act, based on the exchange rates in effect on the dates of the U.S. sales, as certified by the Federal Reserve Bank.

Preliminary Results of Review

As a result of our review, we preliminarily find the weighted-average dumping margin for the period August 1, 2003, through July 31, 2004, to be as follows:

The Department will disclose calculations performed in connection with these preliminary results of review within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). Pursuant to section 351.309 of the Department's regulations, interested parties may submit written comments in response to these preliminary results. Unless extended by the Department, case briefs are to be submitted within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, are to be submitted no later than five days after the time limit for filing case briefs. Parties submitting arguments in this proceeding are requested to submit with the argument: (1) a statement of the issue, (2) a brief summary of the argument, and (3) a table of authorities. Case and rebuttal briefs and comments must be served on interested parties in accordance with section 351.303(f) of the Department's regulations.

Also, an interested party may request a hearing within 30 days of the date of publication of this notice. See section 351.310(c) of the Department's regulations. Unless otherwise specified, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, or the first business day thereafter. The Department will issue the final results of this administrative review, including the results of its analysis of the issues raised in any briefs or comments at a hearing, within 120 days of publication of these preliminary results.Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. Pursuant to section 351.212(b) of the Department's regulations, the Department calculates an assessment rate for each importer of the subject merchandise for each respondent. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of review.

Cash Deposit Requirements

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 date of the final results of this administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate will be the rate established in the final results of this review; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will be the company-specific rate established for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the subject merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this review, any previous reviews, or the LTFV investigation, the cash deposit rate will be 23.79 percent, the “all others” rate established in the LTFV investigation. See AD Order, 60 FR at 41056. These deposit rates, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) 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.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.