Notice of Initiation and Preliminary Results of Antidumping Duty Changed Circumstances Review: Carbon and Certain Alloy Steel Wire Rod From Mexico

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Initiation of Antidumping Duty Changed Circumstances Review: Carbon and Certain Alloy Steel Wire Rod from Mexico.

SUMMARY:

In response to a request from ArcelorMittal las Truchas, S.A. de C.V. (AMLT), an exporter of carbon and certain alloy steel wire rod from Mexico, and pursuant to section 751(b) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.216 and 351.221(c)(3), the Department is initiating a changed circumstances review of the antidumping order on carbon and certain alloy steel wire rod from Mexico. Based on the information received, we preliminarily determine that AMLT is the successor-in-interest to Siderurgica Lazaro Cardenas las Truchas S.A. de C.V. (Sicartsa) for purposes of determining antidumping duty liability. Interested parties are invited to comment on these preliminary results.

DATES:

Effective Date: November 3, 2010.

FOR FURTHER INFORMATION CONTACT:

Eric B. Greynolds, Program Manager, Office of AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-6071.

Background

Sicartsa, as an exporter of carbon and certain steel alloy wire rod from Mexico to the United States, participated in the Department's administrative reviews with respect to wire rod from Mexico for the periods April 10, 2002, to September 30, 2003, and October 1, 2003, to September 30, 2004; the Department issued the final results of the reviews, giving Sicartsa a 1.06 percent margin, and a 1.26 percent margin, respectively. See Notice of Final Results of Antidumping Duty Administrative Review: Carbon and Certain Alloy Steel Wire Rod From Mexico, 70 FR 25809 (May 16, 2005); see also Notice of Final Results of Antidumping Duty Administrative Review: Carbon and Certain Alloy Steel Wire Rod From Mexico, 71 FR 27989 (May 15, 2006).

On September 10, 2010, AMLT filed a request for a changed circumstances review claiming that Sicartsa changed its name to AMLT. AMLT requested that it receive the same antidumping duty treatment accorded to Sicartsa and submitted documentation in support of its claim. AMLT requested that the Department combine the notice of initiation of the review and the preliminary results of review in a single notice as this review essentially involves only corporate name changes.

On October 6, 2010, petitioners submitted comments regarding AMLT's September 10, 2010, request for a changed circumstances review. On October 6, 2010, the Department issued a questionnaire to AMLT regarding its September 10, 2010, submission. On October 18, 2010, AMLT submitted its questionnaire response.

Scope of the Order

The merchandise subject to this order is certain hot-rolled products of carbon steel and alloy steel, in coils, of approximately round cross section, 5.00 mm or more, but less than 19.00 mm. in solid cross-sectional diameter.

Specifically excluded are steel products possessing the above-noted physical characteristics and meeting the Harmonized Tariff Schedule of the United States (HTSUS) definitions for (a) stainless steel; (b) tool steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete reinforcing bars and rods. Also excluded are (f) free machining steel products (i.e., products that contain by weight one or more of the following elements: 0.03 percent or more of lead, 0.05 percent or more of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of phosphorus, more than 0.05 percent of selenium, or more than 0.01 percent of tellurium).

Also excluded from the scope are 1080 grade tire cord quality wire rod and 1080 grade tire bead quality wire rod. This grade 1080 tire cord quality rod is defined as: (i) Grade 1080 tire cord quality wire rod measuring 5.0 mm or more but not more than 6.0 mm in cross-sectional diameter; (ii) with an average partial decarburization of no more than 70 microns in depth (maximum individual 200 microns); (iii) having no non-deformable inclusions greater than 20 microns and no deformable inclusions greater than 35 microns; (iv) having a carbon segregation per heat average of 3.0 or better using European Method NFA 04-114; (v) having a surface quality with no surface defects of a length greater than 0.15 mm; (vi) capable of being drawn to a diameter of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing by weight the following elements in the proportions shown: (1) 0.78 percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, in the aggregate, of copper, nickel and chromium.

This grade 1080 tire bead quality rod is defined as: (i) Grade 1080 tire bead quality wire rod measuring 5.5 mm or more but not more than 7.0 mm in cross-sectional diameter; (ii) with an average partial decarburization of no more than 70 microns in depth (maximum individual 200 microns); (iii) having no non-deformable inclusions greater than 20 microns and no deformable inclusions greater than 35 microns; (iv) having a carbon segregation per heat average of 3.0 or better using European Method NFA 04-114; (v) having a surface quality with no surface defects of a length greater than 0.2 mm; (vi) capable of being drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per ton; and (vii) containing by weight the following elements in the proportions shown: (1) 0.78 percent or more of carbon, (2) less than 0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of nitrogen, and (5) either not more than 0.15 percent, in the aggregate, of copper, nickel and chromium (if chromium is not specified), or not more than 0.10 percent in the aggregate of copper and nickel and a chromium content of 0.24 to 0.30 percent (if chromium is specified).

For purposes of the grade 1080 tire cord quality wire rod and the grade 1080 tire bead quality wire rod, an inclusion will be considered to be deformable if its ratio of length (measured along the axis—that is, the direction of rolling—of the rod) over thickness (measured on the same inclusion in a direction perpendicular to the axis of the rod) is equal to or greater than three. The size of an inclusion for purposes of the 20 microns and 35 microns limitations is the measurement of the largest dimension observed on a longitudinal section measured in a direction perpendicular to the axis of the rod. This measurement methodology applies only to inclusions on certain grade 1080 tire cord quality wire rod and certain grade 1080 tire bead quality wire rod that are entered, or withdrawn from warehouse, for consumption on or after July 24, 2003.

The designation of the products as “tire cord quality” or “tire bead quality” indicates the acceptability of the product for use in the production of tire cord, tire bead, or wire for use in other rubber reinforcement applications such as hose wire. These quality designations are presumed to indicate that these products are being used in tire cord, tire bead, and other rubber reinforcement applications, and such merchandise intended for the tire cord, tire bead, or other rubber reinforcement applications is not included in the scope. However, should the petitioners or other interested parties provide a reasonable basis to believe or suspect that there exists a pattern of importation of such products for other than those applications, end-use certification for the importation of such products may be required. Under such circumstances, only the importers of record would normally be required to certify the end use of the imported merchandise.

All products meeting the physical description of subject merchandise that are not specifically excluded are included in this scope.

The products subject to this order are currently classifiable under subheadings 7213.91.3011, 7213.91.3015, 7213.91.3092, 7213.91.4500, 7213.91.6000, 7213.99.0030, 7213.99.0090, 7227.20.0000, 7227.90.6010, and 7227.90.6080 of the HTSUS. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this proceeding is dispositive.

Initiation and Preliminary Results of Antidumping Duty Changed Circumstances Review

During 2007, Mittal Steel merged with Arcelor S.A. to form ArcelorMittal. The merger was finalized on November 13, 2007. As part of the merger process, but prior to its formal completion, ArcelorMittal acquired 100 percent of Sicartsa. The acquisition was completed in April 2007. On February 25, 2008, Sicarsta changed its name to AMLT. On September 10, 2010, AMLT filed its changed circumstances review request in which it claimed that it is the successor-in-interest to Sicartsa.

Pursuant to section 751(b)(1) of the Act, the Department will conduct a changed circumstances review upon receipt of a request from an interested party or receipt of information concerning an antidumping duty order which shows changed circumstances sufficient to warrant a review of the order. On September 10, 2010, AMLT submitted its request for a changed circumstances review. With its request, AMLT submitted certain information related to its claim that Sicartsa changed its name to AMLT, and that this name change has not affected the company's management, sales operations, supplier relationships or customer base in any meaningful way. In accordance with section 751(b) of the Act and 19 CFR 351.216, the Department has determined that there is a sufficient basis to initiate a changed circumstances review to determine whether AMLT is the successor-in-interest to Sicartsa.

In making a successor-in-interest determination in antidumping proceedings, the Department typically examines several factors including, but not limited to: (1) Management; (2) production facilities; (3) supplier relationships, and (4) customer base. See, e.g., Brass Sheet and Strip from Canada: Final Results of Antidumping Duty Administrative Review, 57 FR 20460, 20462 (May 13, 1992) and Certain Cut-To-Length Carbon Steel Plate from Romania: Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Administrative Review, 70 FR 22847 (May 3, 2005) (Plate from Romania), unchanged in the Notice of Final Results of Antidumping Duty Changed Circumstances Review: Certain Cut-to-Length Carbon Steel Plate from Romania, 70 FR 35624 (June 21, 2005). While no single factor or combination of factors will necessarily be dispositive, the Department generally will consider the new company to be the successor to the predecessor company if the resulting operations are essentially the same as those of the predecessor company. See, e.g., Industrial Phosphoric Acid from Israel: Final Results of Antidumping Duty Changed Circumstances Review, 59 FR 6944, 6945 (February 14, 1994), and Plate from Romania, 70 FR 22847. Thus, if the record evidence demonstrates that, with respect to the production and sale of the subject merchandise, the new company operates as the same business entity as the predecessor company, the Department may assign the new company the cash deposit rate of its predecessor. See, e.g., Final Results of Antidumping Duty Changed Circumstances Review: Fresh and Chilled Atlantic Salmon from Norway, 75 FR 32370, 32371 (June 8, 2010), and accompanying Issues and Decision Memorandum at Comment 1.

In accordance with 19 CFR 351.221(c)(3)(i), we preliminarily determine that AMLT is the successor-in-interest to Sicartsa. AMLT claims that the name change has not affected the company's management, sales operations, supplier relationships, or customer base in a meaningful way. In its September 10, 2010, submission AMLT provided evidence supporting its claim. This documentation consists of: (1) An excerpt of the ArcelorMittal 2007 Annual Report indicating that ArcelorMittal acquired 100 percent interest of Sicartsa prior to Sicartsa's name change; (2) Sicartsa's Stock Register indicating the completion of ArcelorMittal's acquisition of Sicartsa; (3) Notary Public Office No.18 Federal District, Mexico certifying that Sicartsa changed its name to AMLT; (4) the articles of amendment that reflect the name change; and (5) a copy of an extraordinary shareholders' meeting approving the name change. In its October 18, 2010, submission AMLT provided additional evidence supporting its claim that management structure, sales operations, supplier relationships, and customer base have not changed significantly. While there has been turnover with respect to several senior management positions over the course of the period corresponding to 2007, 2008, and 2010, the board members remained the same. See AMLT's October 18, 2010, questionnaire response at Exhibit 1. The production operations also remained the same during the 2007, 2008, and 2010 time period, which is evident through business licenses, utility bills and invoices. See AMLT's October 18, 2010, questionnaire response at Exhibits 2, 3, and 4. Additionally, the suppliers for Sicartsa and AMLT, while not identical, overlap during the relevant time period to a degree that provides support for consistency in supplier base. See AMLT's October 18, 2010, questionnaire response at Exhibits 8, 9, and 10 and the Memorandum to the File from Eric B. Greynolds, Program Manager, Office 3, Operations, “Analysis of Supplier and Customer Data” (October 25, 2010) (Supplier and Customer Data Memorandum), a business proprietary document of which the public version is on file in the Central Records Unit (CRU). The customers for Sicartsa and AMLT overlap to an even greater degree than the suppliers, which again provides consistency in the customer base. See AMLT's October 18, 2010, questionnaire response at Exhibits 5, 6, and 7 and the Supplier and Customer Data Memorandum.

The documentation described above demonstrates that there was little to no change in management structure, sales operations, supplier relationships, or customer base. For these reasons, we preliminarily find that AMLT is the successor-in-interest to Sicartsa and, thus, should receive the same antidumping duty treatment with respect to carbon and certain alloy steel wire rod from Mexico.

When “expedited action is warranted,” the Department may publish the notice of initiation and preliminary determination concurrently. See 19 CFR 351.221(c)(3)(ii); see also Granular Polytetrafluoroethylene Resin from Italy: Initiation and Preliminary Results of Antidumping Changed Circumstances Review, 68 FR 13672 (March 20, 2003), unchanged in Granular Polytetrafluoroethylene Resin from Italy: Final Results of Changed Circumstances Review, 68 FR 25327 (May 12, 2003). The Department has determined that such action is warranted because AMLT has provided prima facie evidence that AMLT is the successor-in-interest, and we have the information necessary to make a preliminary finding already on the record.

Based on the record evidence, we find that AMLT operates as the same business entity as Sicartsa. Thus, we preliminarily determine that AMLT is the successor-in-interest to Sicartsa.

Public Comment

Interested parties are invited to comment on these preliminary results. Case briefs from interested parties may be submitted not later than 14 days after the date of publication of this notice. Rebuttal briefs, limited to the issues raised in those comments, may be filed not later than 21 days after the date of publication of this notice. All written comments shall be submitted in accordance with 19 CFR 351.303. Any interested party may request a hearing within 14 days of publication of this notice. Any hearing, if requested, will be held no later than 30 days after the date of publication of this notice, or the first workday thereafter. Persons interested in attending the hearing, if one is requested, should contact the Department for the date and time of the hearing. In accordance with 19 CFR 351.216(e), the Department will issue the final results of its antidumping duty changed circumstances review not later than 270 days after the date on which the review is initiated, or within 45 days if all parties agree to our preliminary results.

During the course of this antidumping duty changed circumstances review, cash deposit requirements for the subject merchandise exported by AMLT will continue to be the all others rate established in the investigation. See Notice of Antidumping Duty Orders: Carbon and Certain Alloy Steel Wire Rod from Brazil, Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 FR 65945 (October 29, 2002). The cash deposit rate will be altered, if warranted, pursuant only to the final results of this review.

We are issuing and publishing these preliminary results and notice in accordance with sections 751(b)(1) and 777(i)(1) and (2) of the Act and 19 CFR 351.216.