In response to requests for an administrative review by two respondent parties, Maquilacero S.A. de C.V. (Maquilacero) and Regiomontana de Perfiles y Tubos S.A. de C.V. (Regiopytsa), the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on light-walled rectangular pipe and tube (LWR pipe and tube) from Mexico. For these preliminary results, we have found that neither company sold subject merchandise at less than normal value during the period of review, which covers August 1, 2010, through July 31, 2011. If these preliminary results are adopted in our final results of administrative review, we will issue appropriate assessment instructions to U.S. Customs and Border Protection (CBP).
Effective Date: September 7, 2012.
FOR FURTHER INFORMATION CONTACT:
Dena Crossland (Maquilacero) or Edythe Artman (Regiopytsa), 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) 482-3362 or (202) 482-3931, respectively.
The Department published a notice of opportunity to request an administrative review of the order on LWR pipe and tube from Mexico on August 1, 2011.
Two respondents, Maquilacero and Regiopytsa, requested a review of their own entries of subject merchandise for the period of review. Hence, the Department published a notice of initiation of the review on October 3, 2011.
Both Maquilacero and Regiopytsa submitted responses to the Department's antidumping questionnaire and responses to subsequent requests for additional information. The petitioner filed no comments on these responses.
Extension of Preliminary Results
On May 10, 2012, the Department published a notice extending the time limit for issuing the preliminary results of review by 120 days.
The extension notice established the deadline of August 30, 2012, for these preliminary results.
Period of Review
The period of review is August 1, 2010, through July 31, 2011.
Scope of the Order
The merchandise that is the subject of the order is certain welded carbon-quality light-walled steel pipe and tube, of rectangular (including square) cross section, having a wall thickness of less than 4 mm.
The term carbon-quality steel includes both carbon steel and alloy steel which contains only small amounts of alloying elements. Specifically, the term carbon-quality includes products in which none of the elements listed below exceeds the quantity by weight respectively indicated: 1.80 percent of manganese, or 2.25 percent of silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or 0.15 percent vanadium, or 0.15 percent of zirconium. The description of carbon-quality is intended to identify carbon-quality products within the scope. The welded carbon-quality rectangular pipe and tube subject to the order is currently classified under the Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7306.61.50.00 and 7306.61.70.60. While HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of the order is dispositive.
Under section 771(33)(E) of the Tariff Act of 1930, as amended (the Act), if one party owns, directly or indirectly, five percent or more of another party, such parties are considered to be affiliated for purposes of the antidumping law. Furthermore, pursuant to 19 CFR 351.403, the Department may require a respondent to report the downstream sales of its affiliated customer to the first unaffiliated customer if: (1) The respondent's sales to all affiliated customers account for five percent or more of the respondent's total sales of foreign-like product in the comparison market, and (2) those sales to the affiliated customer are determined to have not been made at arm's-length.
In past segments of this proceeding, the Department found that Maquilacero should report the downstream sales of an affiliated home-market customer pursuant to section 771(33)(E) of the Act.
But, although Maquilacero reported its sales to the affiliated reseller to constitute more than five-percent of Maquilacero's total home-market sales during the period of the current review, we also found that the sales were made at arm's-length and, thus, we did not request that Maquilacero submit its affiliate's downstream sales.
Regiopytsa also reported sales to an affiliated home-market reseller during the period of review but, as the value of the sales constituted less than five percent of Regiopytsa's total home-market sales during the period, we did not request that Regiopytsa report the downstream sales of this affiliate.
Fair Value Comparisons
To determine if sales of subject merchandise were made in the United States at less than fair value (LTFV), we compared the price of U.S. sales to normal value, as described in the “U.S. Price” and “Normal Value” sections of this notice. For these preliminary results, the Department applied the methodology for calculation of a weighted-average dumping margin recently adopted in Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings; Final Modification, 77 FR 8101 (February 14, 2012) (Final Modification for Reviews). In particular, we compared monthly weighted-average U.S. prices with monthly weighted-average normal values and granted offsets for any non-dumped comparisons in the calculation of the weighted-average dumping margin.
In accordance with section 771(16) of the Act, we considered all products covered by the description in the “Scope of the Order” section above and that were produced by Maquilacero and Regiopytsa and sold in the home market during the period of review, to be foreign like product for purposes of determining appropriate product comparisons to subject merchandise sold in the United States. We relied on the following six product characteristics to identify identical subject merchandise and foreign like product: (1) Steel input type; (2) whether the product was metallic-coated or not; (3) whether the product was painted or not; (4) product perimeter; (5) wall thickness; and (6) shape. Where there were no sales of identical merchandise in the home market to compare to subject merchandise sold in the United States, we compared the U.S. sales to home-market sales of the most-similar, foreign like product on the basis of the reported product characteristics and instructions provided in our antidumping questionnaire.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act and to the extent practicable, we determine normal value based on sales made in the home market at the same level of trade as the export price or the constructed export price. The normal-value level of trade is based on the starting prices of sales in the home market or, when normal value is based on constructed value, those of the sales from which we derived selling, general, and administrative expenses and profit. See also 19 CFR 351.412(c)(1)(iii). For export price, the level of trade is based on the starting price, which is usually the price from the exporter to the importer. See 19 CFR 351.412(c)(1)(i). In this review, both Maquilacero and Regiopytsa reported only export-price sales to the United States.
To determine if home-market sales are made at a different level of trade than export-price sales, we examine stages in the marketing process and the selling functions performed along the chain of distribution between the producer and the unaffiliated customer. See 19 CFR 351.412(c)(2). If home-market sales are at a different level of trade, as manifested in a pattern of consistent price differences between the sales on which normal value is based and home-market sales made at the level of trade of the export transaction and this difference affects price comparability, then we make a level-of-trade adjustment to normal value under section 773(a)(7)(A) of the Act and 19 CFR 351.412.
In response to section A of the antidumping questionnaire and in supplemental responses to the questionnaire, Maquilacero reported one level of trade with one channel of distribution for its export-price sales. Based on our analysis of the selling functions performed by Maquilacero on its sales to the United States, we determined that the sales were made at one level of trade.
For the home market, Maquilacero identified two channels of distribution in its section A response as follows: (1) Direct sales made by Maquilacero, and (2) indirect sales made by its affiliated reseller to the first unaffiliated customer. Maquilacero reported that the sales in both channels were made at one level of trade. Based on our analysis of all of Maquilacero's home-market selling functions, we found that the sales made in both channels of distribution were made at one level of trade, the normal-value level of trade.
We then compared the selling functions performed for the sales at the normal-value level of trade to those performed for sales at the export-price level of trade. Based on this analysis, we preliminarily determined that the starting price of Maquilacero's home-market sales and its export price represented different stages in the marketing process and were thus at different levels of trade. However, because Maquilacero only sold at one level of trade in the home market, there is no basis on which to determine if there was a pattern of consistent price differences between two levels of trade in that market. Furthermore, there is no other record evidence on which to base a level-of-trade adjustment. Therefore, although the normal-value level of trade differed from the export-price level of trade, we are unable to make a level-of-trade adjustment to normal value for Maquilacero.
In its initial and supplemental responses to section A, Regiopytsa reported one channel of distribution for its home-market sales made to two types of customers (i.e., distributors and end-users). For all sales made through the affiliated reseller in the home market, Regiopytsa reported that the merchandise was resold to unaffiliated customers. Regiopytsa reported a single level of trade in its home market sales database. Based on our analysis of Regiopytsa's home-market selling functions, we preliminary found that the selling functions for the reported channel of distribution constituted one level of trade in the home market, or the normal-value level of trade.
In the U.S. market, Regiopytsa reported one level of trade for which there was one channel of distribution to two types of customers (i.e., distributors and steel service centers). It reported a single level of trade in its U.S. sales database. Based on our analysis of the selling functions Regiopytsa performed for its export-price sales, we determined that there was one level of trade for its U.S. sales.
Next we compared the selling functions associated with the sales at the normal-value level of trade to those associated with the export-price level of trade and, based on our analysis of record evidence, we found that the degree and number of selling functions provided by Regiopytsa for its customers in the home market was greater than the degree to which it provided some of those selling functions to U.S. customers. However, as with Maquilacero, we were unable to calculate a level-of-trade adjustment because we found only one level of trade in Regiopytsa's home market and there is no other record evidence on which to base an adjustment. Therefore, for these preliminary results, we matched the export-price sales to home-market sales without making a level-of-trade adjustment to normal value.
Date of Sale
The Department will normally use invoice date, as recorded in the exporter's or producer's records kept in the ordinary course of business, as the date of sale, but may use a date other than the invoice date if it better reflects the date on which the material terms of sale are established. See 19 CFR 351.401(i). For Maquilacero and Regiopytsa, we found that the invoice date best reflected the date on which material terms of sales were established with one exception. Regiopytsa reported that it had some home-market sales for which the invoice and shipment dates did not coincide. Based on our analysis of the factual circumstances of these sales, we found that the material terms of sale were in fact subject to change up until the time the merchandise was released for shipment. Thus, for these preliminary results, we determined that the most appropriate date of sale for these sales was the date of shipment, as discussed in the “Date of Sale” section of Regiopytsa Preliminary Analysis Memo at 5.
Section 772(a) of the Act defines export price 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 subsection (c).”
For purposes of these preliminary results, we calculated the U.S. price as the export price for Maquilacero and Regiopytsa in accordance with section 772(a) of the Act, because the merchandise was sold, prior to importation by the producer, outside of the United States to the first unaffiliated purchaser in the United States. For each company, we calculated export price based on the packed price that was charged to the first unaffiliated U.S. customer. We made deductions for movement expenses, where appropriate, in accordance with section 772(c)(2)(A) of the Act, including deductions for foreign inland freight (plant/warehouse to the border), U.S. inland freight (border to the unaffiliated customer), country of manufacture inland insurance, and brokerage and handling. We also made adjustments, where appropriate, for imputed credit, certain direct selling expenses (including commissions), and billing adjustments.
A. Selection of Home Market
To determine if there was a sufficient volume of sales of LWR pipe and tube in the home market during the period of review to serve as a viable basis for calculating normal value, we compared Maquilacero and Regiopytsa's quantity of home-market sales of the foreign like product to the quantity of each company's respective U.S. sales of the subject merchandise, in accordance with section 773(a) of the Act. Because both Maquilacero and Regiopytsa's aggregate quantity of home-market sales of the foreign like product was greater than five percent of their aggregate quantity of U.S. sales for subject merchandise, we determined that the home market was viable for comparison purposes for both companies, pursuant to section 773(a)(1)(B) of the Act.
B. Affiliated Party Transactions and Arm's-Length Test
Sales to affiliated customers in the home market that were not made at arm's-length prices were excluded from our analysis because we consider them to be outside the ordinary course of trade. See section 773(f)(2) of the Act; see also 19 CFR 351.102(b). Consistent with 19 CFR 351.403(c) and (d) and agency practice, “the Department may calculate normal value based on sales to affiliates if satisfied that the transactions were made at arm's-length.” See China Steel Corp. v. United States, 264 F. Supp. 2d 1339, 1365 (CIT 2003). To test whether the sales to affiliates were made at arm's-length prices, we compared, on a model-specific basis, the starting prices of sales to affiliated and unaffiliated customers, net of all direct selling expenses, billing adjustments, discounts, rebates, movement charges and packing. Where prices to the affiliated party were, on average, within a range of 98 to 102 percent of the price of identical or comparable merchandise to the unaffiliated parties, we determined that the sales made to the affiliated party were at arm's-length. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186, 69194 (November 15, 2002). Based on this analysis, Maquilacero's sales through its affiliated reseller were made at arm's length but those made by Regiopytsa through its affiliated reseller and to other affiliated customers were not. Therefore, in our margin calculations, we included Maquilacero's sales to its affiliate but excluded Regiopytsa's sales to its affiliates.
C. Cost of Production Analysis
Both respondents have had home-market sales disregarded in prior reviews on the basis that they had sales priced below the cost of production (COP), which were made within an extended period of time, in substantial quantities, and at prices which permitted the recovery of all costs within a reasonable period of time.
Thus, pursuant to section 773(b)(2)(A)(ii) of the Act, there were reasonable grounds in the current review to believe or suspect that Maquilacero and Regiopytsa had made sales of the foreign like product at prices below the COP. On October 14, 2011, we therefore requested that both parties provide cost information in response to section D of the Department's antidumping questionnaire.
Based on a review of the cost information provided, neither company appeared to experience significant changes in its cost of manufacturing (COM) throughout the period of review. Thus, we followed our normal methodology of calculating a review-period, weighted-average cost for each product. We relied on the COP information provided by Maquilacero and Regiopytsa except, in accordance with section 773(f)(2) of the Act, we made an adjustment to Maquilacero's affiliated-party-supplied labor costs to reflect the higher of the transfer price or COP. Because the record did not provide market prices for these services in the market under consideration, we used the COP of the affiliate as a proxy for the amount representing the value of labor costs usually reflected in the market under consideration.
On a product-specific basis, we compared the adjusted, weighted-average COP figures to the prices of home-market sales of the foreign like product in order to determine if these sales were made at prices below the COP. The prices were exclusive of any applicable movement charges, packing expenses, warranty expenses, or indirect selling expenses. In determining whether to disregard home-market sales made at prices below their COP, we examined if such sales were made within an extended period of time, in substantial quantities, and at prices which permitted the recovery of all costs within a reasonable period of time.
We found that, for certain products for Maquilacero and Regiopytsa, more than 20 percent of the home-market sales were made at prices below the COP and that these below-cost sales were made within an extended period of time and in substantial quantities. In addition, the sales were made at prices that did not permit the recovery of costs within a reasonable period of time. Thus, for both Maquilacero and Regiopytsa, in accordance with section 773(b)(1) of the Act, we disregarded these below-cost sales, and used only the remaining sales of the same product as the basis for determining normal value.
D. Price-to-Price Comparisons
We calculated the weighted-average normal value based on prices to unaffiliated customers and those to affiliated customers that passed the arm's-length test.
We also based normal value on home-market sales that passed the cost test. In our calculation of normal value, we accounted for billing adjustments, discounts, and rebates, where appropriate. We also made deductions, where applicable, for inland freight, insurance, handling, and warehousing, pursuant to section 773(a)(6)(B) of the Act. We also made adjustments for differences in circumstances of sale, in accordance with section 773(a)(6)(C)(iii) of the Act. In particular, we made circumstances-of-sale adjustments for home-market direct selling expenses, such as imputed credit expenses and warranty expenses, and certain U.S. direct selling expenses, including commissions and warranty expenses. For Maquilacero, we calculated home-market and U.S. warranty expenses based on a three-year history of such expenses. See Maquilacero Preliminary Analysis Memo at 4 and 5. For Regiopytsa, we calculated U.S. warranty expenses based on a three-year history of such expenses but, because the company does not track warranty expenses in its normal course of business, it was unable to provide a history of these expenses for its home market. Regiopytsa did include refunds granted for merchandise in its reported home-market billing adjustments. 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.
For more detailed information on the calculation of normal value, see Maquilacero Preliminary Analysis Memo at 9 and 10 and Regiopytsa Preliminary Analysis Memo at 9 and 10.
The Department's preferred source for daily exchange rates is the Federal Reserve Bank.
However, we note that the Federal Reserve Bank does not track or publish exchange rates for the Mexican peso. Therefore, pursuant to section 773A(a) of the Act, we made currency conversions from Mexican pesos to U.S. dollars based on the daily exchange rates from Factiva, a Dow Jones & Reuters Retrieval Service. Because Factiva only publishes exchange rates for Monday through Friday, we used the rate of exchange on the most recent Friday for conversion of dates involving a Saturday or Sunday. See Import Administration Web site at http://ia.ita.doc.gov/exchange/index.html.
Preliminary Results of Review
As a result of our review, we preliminarily determine the following weighted-average dumping margins exist for the period August 1, 2010, through July 31, 2011:
|Maquilacero S.A. de C.V.||0.00%|
|Regiomontana de Perfiles y Tubos S.A. de C.V.||0.00%|
Disclosure and Public Comments
The Department will disclose the calculations we used in our analysis to interested parties to this review within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first business day thereafter, unless the Department alters the date pursuant to 19 CFR 351.310(d). Interested parties may submit case briefs no later than 30 days after the date of publication of these preliminary results of review. See 19 CFR 351.309(c). Rebuttal briefs, limited to issues raised in the case briefs, may be filed no later than five days after the time limit for submitting the case briefs. See 19 CFR 351.309(d). Parties who submit argument in these proceedings 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.
Parties are reminded that any requests or other submissions must be filed electronically using Import Administration's Antidumping and Countervailing Duty Centralized Electronic Service System, in compliance with the procedures set forth in Antidumping and Countervailing Duty Proceedings: Electronic Filing Procedures; Administrative Protective Order Procedures, 76 FR 39263 (July 6, 2011). An electronically-filed document must be received successfully in its entirety by 5 p.m. Eastern Time (ET) on the day of its filing.
The Department intends to issue the final results of this administrative review, including the results of our analysis of the issues in any such argument or at a hearing, within 120 days of the date of publication of this notice. See section 751(a)(3)(A) of the Act.
Upon completion of this administrative review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. If either Maquilacero's or Regiopytsa's weighted-average dumping margin is above de minimis in the final results of this review, we will calculate importer- or customer-specific ad valorem assessment rates for the merchandise based on the ratio of the total amount of antidumping duties calculated for the importer's or customer's examined sales made during the period of review to the total entered value of the sales in accordance with 19 CFR 351.212(b)(1). See Final Modification for Reviews, 77 FR at 8103. Where the duty assessment rates are above de minimis, we will instruct CBP to assess duties on all entries of subject merchandise by that importer in accordance with the requirements set forth in 19 CFR 351.106(c)(2).
The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the period of review that were produced by the companies included in these preliminary results of review and for which the reviewed companies did not know that the merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate un-reviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.
In accordance with 19 CFR 356.8(a), the Department intends to issue assessment instructions to CBP on or after 41 days following the publication of the final results of this review.
Cash Deposit Requirements
The following cash-deposit requirements will be effective, upon completion of the final results of this administrative review, for all shipments of LWR pipe and tube from Mexico entered or withdrawn from warehouse, for consumption, on or after the date of publication of the final results of review, as provided by section 751(a)(1) of the Act: (1) The cash-deposit rates for the companies covered by this review (i.e., Maquilacero and Regiopytsa) will be the rates established in the final results of this review, except if the rate is less than 0.50 percent (de minimis within the meaning of 19 CFR 351.106(c)(1)), in which case the cash deposit will be zero; (2) for previously reviewed or investigated companies not listed above, 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 previous 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 merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this or any previous review conducted by the Department, the cash-deposit rate will be the all-others rate of 3.76 percent, as established in the LTFV investigation.
These 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.
These preliminary results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: August 30, 2012.
Assistant Secretary for Import Administration.
[FR Doc. 2012-22109 Filed 9-6-12; 8:45 am]
BILLING CODE 3510-DS-P