Certain Welded Carbon Steel Pipes and Tubes From Thailand: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping duty administrative review: Certain welded carbon steel pipes and tubes from Thailand.

SUMMARY:

In response to requests by a Thai manufacturer, Saha Thai Steel Company, Ltd. (“Saha Thai”), and two importers, Ferro Union Inc. (“Ferro Union”), and ASOMA Corp. (“ASOMA”), the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on certain welded carbon steel pipes and tubes from Thailand. This review covers Saha Thai Steel Pipe Co., Ltd. (“Saha Thai”), a Thai manufacturer of the subject merchandise to the United States. The period of review (POR) is March 1, 1998, through February 28, 1999.

We have preliminarily determined that the respondent sold subject merchandise at less than normal value (“NV”) during the POR. If these preliminary results are adopted in our final results, we will instruct U.S. Customs to assess antidumping duties based on the differences between the export price and NV.

Interested parties are invited to comment on these preliminary results. Parties who submit argument in this proceeding should also submit with the argument: (1) A statement of the issue; and (2) a brief summary of the argument.

EFFECTIVE DATE:

April 7, 2000.

FOR FURTHER INFORMATION CONTACT:

Linda Ludwig or Javier Barrientos, AD/CVD Enforcement Group III, Room 7866, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3833 and (202) 482-2243, respectively.

Applicable Statute

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (“the Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department's regulations are to those codified at 19 CFR part 351 (1999).

SUPPLEMENTARY INFORMATION:

Background

On March 11, 1986, the Department published in the Federal Register an antidumping duty order on certain welded carbon steel pipes and tubes from Thailand (51 FR 8341). On March 9, 1999, the Department published a notice of opportunity to request an administrative review of this order covering the period March 1, 1998, through February 28, 1999 (64 FR 11439). Timely requests for an administrative review of the antidumping order with respect to sales by Saha Thai during the POR were filed by Saha Thai, Ferro Union and ASOMA. The Department published a notice of initiation of this antidumping duty administrative review on May 28, 1999 (64 FR 28973).

Because the Department determined that it was not practicable to complete this review within statutory time limits, on December 3, 1999, we published in the Federal Register our notice of extension of the time limit for this review (64 FR 67876). As a result, we extended the deadline for these preliminary results. The deadline for the final results will continue to be 120 days after publication of these preliminary results.

Scope of the Review

The products covered by this administrative review are certain welded carbon steel pipes and tubes from Thailand. The subject merchandise has an outside diameter of 0.375 inches or more, but not exceeding 16 inches. These products, which are commonly referred to in the industry as “standard pipe” or “structural tubing,” are hereinafter designated as “pipe and tube.” The merchandise is classifiable under the Harmonized Tariff Schedule (HTS) item numbers 7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, and 7306.30.5090. Although the HTS subheadings are provided for convenience and Customs purposes, our written description of the scope of the order is dispositive.

Date of Sale

As in previous segments of this proceeding, Saha Thai reported invoice date as the date of sale. In order to determine whether invoice date was the appropriate date of sale, i.e., whether the material terms of sale were established on that or an earlier date, we examined the contracts provided by Saha Thai for its U.S. sales and found that the terms of sale changed in a significant number of sales. Therefore, we have preliminarily determined that the invoice date is the appropriate date of sale. With respect to home market sales, the invoice is the first written document that establishes the terms of sale.

Normal Value Comparisons

To determine whether sales of steel pipes and tubes from Thailand to the United States were made at less than NV, we compared the export price (EP) to the NV for Saha Thai as specified in the “Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to individual U.S. transactions.

Saha Thai's reported U.S. sales include both its own sales and sales made by another company of subject merchandise processed by Saha Thai under a tolling agreement. We have included all of these sales in our analysis for these preliminary results. After reviewing the submissions we requested additional information regarding Saha Thai and its relationship with the other company to which it provided tolling services and the degree to which certain costs and expenses incurred by Saha Thai and this other company (e.g., the cost of tolling services, coil cost, interest expenses, exchange rate losses and selling expenses) were fully allocated and reported. We have also requested additional information regarding the various weight conversion methodologies used in reporting sales, costs and expenses. Due to the timing of these requests, we were not able to use this information for these preliminary results. Parties are invited to comment on this information as part of their case briefs and/or rebuttal briefs. This information plus any relevant comments will be fully considered in our final results of this review.

Export Price

Based upon our review of the record evidence, we classified all Saha Thai sales to United States customers as EP sales because, as in previous segments of this proceeding, we found that Saha Thai is not affiliated with its U.S. distributors, which are the first purchasers in the United States. Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review, 61 FR 56515, 56517 (November 1, 1996). Therefore, we calculated the EP based on the price from Saha Thai to the first unaffiliated purchaser in the U.S. in accordance with section 772(a) of the Act.

Where appropriate, in accordance with section 772(c)(2) of the Act, we made deductions from the starting price for ocean freight to the U.S. port, foreign inland freight, foreign brokerage and handling, foreign inland insurance, bill of lading charge, U.S. duty and U.S. brokerage and handling charges. In addition, pursuant to section 772(c)(1)(B) of the Act, we have made an adjustment for duty drawback.

Normal Value

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared the volume of Saha Thai's home market sales of the foreign like product to the volume of U.S. sales of subject merchandise, in accordance with section 773(a)(1) of the Act. Based on this comparison, we determined that the aggregate volume of Saha Thai's home market sales of the foreign like product is greater than five percent of the aggregate volume of Saha Thai's U.S. sales. Thus, we determined that Saha Thai had a viable home market during the POR. Consequently, we based NV on home market sales.

We applied the standard arm's length test to Saha Thai's sales to affiliated parties. Therefore, where Saha Thai's sales to affiliated parties were not made at arm's length prices, we excluded these sales from our home market normal value calculation.

Pursuant to section 773(b)(2)(A)(ii) of the Act, there were reasonable grounds to believe or suspect that Saha Thai had made home market sales at prices below its cost of production (“COP”) in this review because the Department had disregarded sales that failed the cost test in the 1996-1997 administrative review (i.e., the most recently completed review at the time we issued our antidumping questionnaire). As a result, the Department initiated an investigation to determine whether Saha Thai made home market sales during the POR at prices below its COP. We calculated the COP based on the sum of respondent's cost of materials and fabrication for the foreign like product, plus amounts for SG&A and packing costs, in accordance with section 773(b)(3) of the Act.

For these preliminary results we are using respondent's reported COP. We have requested additional information about Saha Thai's costs and those of another company for which Saha Thai provided tolling services. We invite parties to comment on this information and will consider this information for the final results.

We compared the COP figures to home market sales of the foreign like product as required under section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP. On a product-specific basis, we compared the COP to home market prices, less any applicable movement charges and discounts.

In determining whether to disregard home market sales made at prices below the COP, we examined: (1) Whether, within an extended period of time, such sales were made in substantial quantities, and (2) 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.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of the respondent's sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of the respondent's sales of a given product during the POR were at prices less than the COP, we determined such sales to have been made in substantial quantities within an extended period of time in accordance with section 773(b)(1)(A) of the Act. In such cases, we also determined that such sales were not made at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1)(B) of the Act. Therefore, we disregarded the below-cost sales.

Where appropriate, we adjusted Saha Thai's home market sales for discounts, direct selling expenses and inland freight. In addition, in accordance with section 773(a)(6), we deducted home market packing costs and added U.S. packing costs, U.S imputed credit, bank charges, and penalty fees.

In accordance with section 773(e) of the Act, we calculated CV based on the sum of Saha Thai's cost of materials, fabrication, SG&A, 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 Saha Thai in connection with the production and sale of the foreign like product in the ordinary course of trade, for consumption in the foreign country. For selling expenses, we used the average of the selling expenses reported for home market sales that passed the cost test, weighted by the total quantity of those sales. For actual profit, we first calculated the difference between the home market sales value and home market COP, and divided the difference by the home market COP. We then multiplied this percentage by the COP for each U.S. model to derive an actual profit.

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade as the EP or the CEP. The NV level of trade is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive selling, general and administrative expenses and profit. For EP, the U.S. level of trade is the level of the starting-price sale, which is usually from exporter to importer.

To determine whether NV sales are at a different level of trade than EP or CEP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different level of trade, 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 level of trade of the export transaction, we make a level of trade adjustment under section 773(a)(7)(A) of the Act. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

For the U.S. market, Saha Thai reported only one level of trade for its EP sales. This single level of trade represents large volume sales to unaffiliated trading companies/distributors in the United States. In the home market, Saha Thai claimed that it made sales at one level of trade. These sales were made to unaffiliated trading companies and distributors (made at the same level of trade as U.S. sales). There are no significant differences in the selling functions Saha Thai performs for these customers in the home market or in the United States. Therefore, we conclude that EP and NV sales are made at the same LOT and no adjustment is warranted.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with section 773A of the Act, based on exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank. Section 773A(a) of the Act directs the Department to use a daily exchange rate in order to convert foreign currencies into U.S. dollars unless the daily rate involves a fluctuation. It is the Department's practice to find that a fluctuation exists when the daily exchange rate differs from the benchmark rate by 2.25 percent. The benchmark is defined as the moving average of rates for the past 40 business days. When we determine a fluctuation to have existed, we substitute the benchmark rate for the daily rate, in accordance with established practice. See Change in Policy Regarding Currency Conversions, 61 FR 9434 (March 8, 1996).

Preliminary Results of the Review

We preliminarily determine that the following weighted-average dumping margins exist:

The Department will disclose to parties to this proceeding within 5 days after publication of these preliminary results. Any interested party may request a hearing within 30 days of publication. Any hearing, if requested, will be held 37 days after the date of publication or the first business day thereafter. Case briefs and/or other written comments from interested parties may be submitted not later than 30 days after the date of publication. Rebuttal briefs and rebuttals to written comments, limited to issues raised in those comments, may be filed not later than 35 days after the date of publication of this notice. The Department will publish the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days from the date of publication of these preliminary results.

The Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b), we calculated importer-specific ad valorem duty assessment rates for the class or kind of merchandise based on entered value. Upon completion of this review, the Department will issue appraisement instructions directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon the publication of the final results of this administrative review for all shipments of certain welded carbon steel pipes and tubes from Thailand entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(c) of the Act: (1) The cash deposit rate for the reviewed company will be that established in the final results of this review; (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, or the original 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; (4) the cash deposit rate for all other manufacturers or exporters will continue to be 15.67 percent, the “All Others” rate made effective by the LTFV investigation. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This notice 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.

These preliminary results of review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.