Preliminary Results of Antidumping Duty Changed Circumstances Review: Carbon and Certain Alloy Steel Wire Rod from Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On November 6, 2006, the Department of Commerce published a notice of initiation of a changed circumstances review of the antidumping duty order on carbon and certain alloy steel wire rod products from Canada. We have preliminarily concluded that 1) Ivaco Rolling Mills 2004 L.P. is the successor-in-interest to Ivaco Rolling Mills L.P.; and 2) Sivaco Ontario, a division of Sivaco Wire Group 2004 L.P., is the successor-in-interest to Ivaco Inc. As a result, Ivaco Rolling Mills 2004 L.P., and Sivaco Ontario, a division of Sivaco Wire Group 2004 L.P., (collectively “Ivaco”) should receive the same antidumping duty treatment with respect to carbon and certain alloy steel wire rod from Canada as Ivaco Rolling Mills L.P. and Ivaco Inc.

EFFECTIVE DATE:

December 14, 2006.

FOR FURTHER INFORMATION CONTACT:

Audrey Twyman or Brandon Farlander, at (202) 482-3534 or (202) 482-0182, respectively; AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street & Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

In its January 12, 2006 response to Section A of the Department's original questionnaire, Ivaco notified the Department that the assets of Ivaco, Inc. and all of its divisions (e.g., Sivaco Ontario, and Sivaco Quebec) had been purchased on December 1, 2004. As a result, the Department self-initiated a changed circumstances review of the antidumping duty order on carbon and certain alloy steel wire rod from Canada. See Preliminary Results of Antidumping Duty Administrative Review and Notice of Initiation of Changed Circumstances Review: Carbon and Certain Alloy Steel Wire Rod from Canada, 71 FR 64921 (November 6, 2006). On June 1, 2006, and October 27, 2006, the Department issued Ivaco supplemental questionnaires requesting further details on Ivaco's successor-in-interest claims. The company's responses were received by the Department on July 6, 2006, and November 20, 2006.

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. 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.

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 grade 1080 tire cord quality wire rod and 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 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 under review are currently classifiable under subheadings 7213.91.3010, 7213.91.3015, 7213.91.3090, 7213.91.3092, 7213.91.4510, 7213.91.4590, 7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6010, 7227.90.6051, 7227.90.6053, 7227.90.6058, 7227.90.6059, 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.

Preliminary Results of the Review

Pursuant to section 751(b) of the Tariff Act of 1930, as amended (“the Act”), and 19 CFR 351.216, we will conduct a changed circumstances review upon receipt of information concerning, or a request from an interested party for a review of, an antidumping duty finding or order that shows changed circumstances sufficient to warrant a review of the order. The information submitted by Ivaco stating the change in ownership and change in the respondent entities' legal names demonstrates changed circumstances sufficient to warrant a review. See 19 CFR 351.216(d).

The respondents named in our initiation notice were Ivaco Rolling Mills L.P. (aka Ivaco Rolling Mills 2004 L.P.), and Sivaco Ontario Processing (aka Sivaco Ontario, a division of Sivaco Wire Group 2004 L.P.). In the most recently completed review, the responding entities were Ivaco Rolling Mills L.P. (the producer) and Ivaco Inc., which through its division Sivaco Ontario, purchased wire rod from Ivaco Rolling Mills L.P. and sold wire rod to unaffiliated customers after further processing.

As noted above in the “Background” section of this notice, Ivaco notified the Department that the assets of Ivaco, Inc. and all of its divisions were purchased on December 1, 2004. Subsequent to the purchase, Ivaco Rolling Mills L.P. was renamed and is now known as Ivaco Rolling Mills 2004 L.P., and Sivaco Ontario and Sivaco Quebec were reorganized into divisions of Sivaco Wire Group 2004 L.P. Ivaco, Inc. is now known as Heico 2004 Member Inc. (“Heico 2004”). Heico 2004 functions as a headquarters, managing the operations of Ivaco Rolling Mills 2004 L.P. and Sivaco Wire Group 2004 L.P. Heico 2004, Ivaco Rolling Mills 2004 L.P., and Sivaco Wire group 2004 L.P. are commonly owned.

Therefore, the Department self-initiated a changed circumstances review to determine whether Ivaco Rolling Mills 2004 L.P. and Sivaco Wire Group 2004 L.P., including its divisions, Sivaco Ontario and Sivaco Quebec, are successors-in-interest to Ivaco Rolling Mills L.P. and Ivaco Inc., respectively.

In determining whether one company is the successor-in-interest to another for purposes of applying the antidumping duty law, the Department examines several factors including, but not limited to, changes in: (1) management; (2) production facilities; (3) supplier relationships; and (4) customer base. See, e.g., Polychloroprene Rubber from Japan: Final Results of Changed Circumstances Review, 67 FR 58 (January 2, 2002) (“Polychloroprene Rubber from Japan”) (citing Brass Sheet and Strip from Canada: Final Results of Antidumping Duty Administrative Review, 57 FR 20460, 20462 (May 13, 1992) (“Canadian Brass”)). While no single factor or combination of factors will necessarily provide a dispositive indication, the Department will generally consider the new company to be the successor-in-interest to the previous company if the resulting operation with regard to the subject merchandise is not materially dissimilar to that of its predecessor. See, e.g., Industrial Phosphoric Acid from Israel; Final Results of Antidumping Duty Changed Circumstances Review, 59 FR 6944, 6945 (February 14, 1994); and Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances: Certain Orange Juice from Brazil, 71 FR 2183 (January 13, 2006) and accompanying Issues and Decision Memorandum, at Comment 3. Thus, if the 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 former company, the Department will accord the new company the same antidumping duty treatment as its predecessor.

Taking each condition in order, we begin with management. Ivaco reported that the key management personnel of both Ivaco Rolling Mills L.P. and Sivaco Ontario are identical to the management of each company after the acquisition. See Supplemental Questionnaire Response of Ivaco, at 1 and Appendices 1 and 2 (November 20, 2006). We find that the management structure has remained unchanged.

Second, we looked at the production facilities for subject merchandise. Ivaco explained that there have been no material changes to its operations or the way it produces or sells subject merchandise after the acquisition. See Section A Response, at Volume 1, page A-10 (January 12, 2006). We find that Ivaco's productions facilities have not changed as a result of the acquisition.

Third, we reviewed the supplier relationships before and after the change in ownership. Ivaco provided Ivaco Rolling Mills L.P.'s accounts payable records of its top 50 suppliers for the three month period leading up to the acquisition and the three month period immediately following the acquisition. Based on a comparison of these supplier lists, we determine that the vast majority of the suppliers are the same. Ivaco explained that the few supplier changes that did occur simply reflected changes in suppliers that take place in the normal course of business. Ivaco also provided Sivaco Ontario's accounts payable records of its top 10 suppliers for the same time periods. In this case, the suppliers are almost identical. See Supplemental Questionnaire Response of Ivaco, at 1-2 and Appendices 3 and 4 (November 20, 2006).

Fourth, we reviewed the customer base and find that the customer base is almost identical for both companies before and after the acquisition. Ivaco explained that the small changes that did occur in the customer base happened in the normal course of business. See Supplemental Questionnaire Response of Ivaco, at 2-3 and Appendices 5-7 (November 20, 2006).

In addition, we requested information about Ivaco's marketing and sales of products before and after the acquisition. Ivaco provided the distribution process and sales process from the 2003-2004 review, as well as the 2004-2005 review. We found that the processes remained unchanged. See Supplemental Questionnaire Response of Ivaco, at 3 and Appendix 8 (November 20, 2006). Further, Ivaco noted that products and services continue to be marketed under the Ivaco name because the Ivaco name was among the assets purchased by the entity. See Supplemental Questionnaire Response of Ivaco, at Volume 1, page 2 (July 7, 2006).

In summary, Ivaco reported that its acquisition did not meaningfully affect the production facilities, supplier relationships, customer base, management, marketing or sale of products and services by Ivaco Rolling Mills 2004 L.P. or Sivaco Wire Group 2004 L.P. Moreover, there have been no material changes to Ivaco's operations or the way it produces and sells subject merchandise resulting from the acquisition.

Based on Ivaco's evidence of the change in ownership and absent any other record evidence that would contradict Ivaco's statements, we preliminarily determine that Ivaco Rolling Mills 2004 L.P., and Sivaco Wire Group 2004 L.P. are the successor-in-interest to Ivaco Rolling Mills L.P. and Ivaco Inc. As a result, Ivaco Rolling Mills 2004 L.P., and Sivaco Ontario, a division of Sivaco Wire Group 2004 L.P., (collectively “Ivaco”) should receive the same antidumping duty treatment with respect to carbon and certain alloy steel wire rod from Canada as Ivaco Rolling Mills L.P. and Ivaco Inc., respectively.

If the above preliminary results are affirmed in the Department's final results, the cash deposit rate most recently calculated for Ivaco Rolling Mills L.P. and Ivaco Inc. will apply to all entries of subject merchandise by Ivaco Rolling Mills 2004 L.P., and Sivaco Ontario, a division of Sivaco Wire Group 2004 L.P., entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this changed circumstances review. See, e.g., Granular Polytetraflouroethylene Resin from Italy; Final Results of Antidumping Duty Changed Circumstances Review, 68 FR 25327 (May 12, 2003). This deposit rate shall remain in effect until publication of the final results of the next administrative review in which Ivaco participates.

Public Comment

Any interested party may request a hearing within 30 days of publication of this notice in accordance with 19 CFR 351.310(c). Interested parties may submit case briefs no later than 30 days after the date of publication of this notice, in accordance with 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, which must be limited to issues raised in the case briefs, may be filed no later than 5 days after the case briefs, in accordance with 19 CFR 351.309(d)(1). Any hearing, if requested, will be held two days after rebuttal briefs are due, in accordance with 19 CFR 351.310(d)(1).

The Department will issue its final results of review within 270 days after the date on which the changed circumstances review is initiated, in accordance with 19 CFR 351.216(e), and will publish these results in the Federal Register.

The current requirement for a cash deposit of estimated antidumping duties on all subject merchandise will continue unless and until it is modified pursuant to the final results of this changed circumstances review.

This notice is published in accordance with sections 751(b)(1) and 777(i) of the Act and 19 CFR 351.216 of the Department's regulations.