65 FR 42985, July 12, 2000
                                                 A-588-853
                                                 Investigation
                                                 Public Document
                                                 GRP II Off. 5: CH

MEMORANDUM TO: Troy H. Cribb
               Acting Assistant Secretary
                 for Import Administration

FROM:          Holly A. Kuga
               Acting Deputy Assistant Secretary 
                 for Group II, Import Administration

SUBJECT: Issues and Decision Memorandum for the Final Determination
         in the Antidumping Duty Investigation of Circular Seamless 
         Stainless Steel Hollow Products from Japan

Summary

We have analyzed the comments and rebuttal comments of interested parties
in the antidumping duty investigation covering circular seamless stainless
steel hollow products from Japan. We recommend that you approve the
position we have developed in the Discussion of the Issues section of this
memorandum. 

Background

On May 1, 2000, the Department of Commerce (the Department) published the
preliminary determination in the antidumping duty investigation of
circular seamless stainless steel hollow products from Japan. The period
of investigation (POI) is October 1, 1998, through September 30, 1999. We
invited parties to comment on the preliminary determination. 

Scope of Investigation (1)

The scope of this investigation covers seamless stainless steel hollow
products, including pipes, tubes, redraw hollows, and hollow bars, of
circular cross section, containing 10.5 percent or more by weight
chromium, regardless of production process, outside diameter, wall
thickness, length,

industry specification (domestic, foreign or proprietary), grade or
intended use. Common specifications for the subject seamless stainless
steel hollow products include, but are not limited to American Society for
Testing and Materials (ASTM)-A-213, ASTM-A-268, ASTM-A-269, ASTM-A-270,
ASTM-A-271, ASTM-A-312, ASTM-A-376, ASTM-A-498, ASTM-A-511, ASTM-A-632,
ASTM-A-731, ASTM-A-771, ASTM-A-789, ASTM-A-790, ASTM-A-826 and their
proprietary or foreign equivalents.

The merchandise covered by this investigation is found in the Harmonized
Tariff Schedule of the United States (HTSUS) subheadings 7304.10.50.20,
7304.10.50.50, 7304.10.50.80, 7304.41.30.05, 7304.41.30.15,7304.41.30.45,
7304.41.60.05, 7304.41.60.15, 7304.41.60.45, 7304.49.00.05, 7304.49.00.15,
7304.49.00.45, 7304.49.00.60. Although HTSUS subheadings are provided for
convenience and customs purposes, the written description of the
merchandise is dispositive.

Excluded from the scope of the investigation are finished oil country
tubular goods (OCTG) certified to a proprietary (non-API) specification if
such OCTG products are (1) not certified, marked or otherwise warranted or
qualified for use as a non-OCTG product; (2) produced to a common OCTG
casing, tubing or drill pipe size as found in the standard size tables of
API specifications 5CT and 5D, or produced to standard VTI sizes for deep-
water temperature-controlled tubing; (3) rated for a minimum yield
strength of not less than 85,000 psi and a minimum tensile strength of not
less than 100,000 psi, as noted on the mill certificate or other relevant
sales documentation; (4) continuously stenciled with the appropriate
proprietary OCTG specification, size (e.g., outside diameter and weight),
minimum yield and tensile strength, and the phrase "OCTG," "oil country
tubular goods" or a similar phrase, with such information also written on
the entry documents; (5) not marked or otherwise certified as meeting a
specification other than an API or proprietary OCTG specification whether
or not also marked, warranted or certified to an OCTG specification; and
(6) not used in any application other than a down-hole, OCTG application. 

Also excluded from the scope of the investigation are finished OCTG
certified to an American Petroleum Institute (API) specification 5D or 5CT
if such OCTG products are (1) not certified, marked or otherwise warranted
or qualified for use as a non-OCTG product; (2) produced to a common OCTG
casing, tubing or drill pipe size as found in the standard size tables of
API specifications 5CT and 5D, or produced to standard VTI sizes for deep-
water temperature-controlled tubing; (3) designated with the appropriate
API OCTG specification and the phrase "OCTG", "oil country tubular goods"
or a similar phrase on the entry documents; (4) not marked or otherwise
certified as meeting a specification other than an API OCTG specification;
and (5) not used in any application other than a down-hole, OCTG
application. 

Any OCTG products marked, certified or otherwise warranted for non-OCTG
use, or actually used in a non-OCTG application, are within the scope of
this investigation. 

Also excluded from the scope of this investigation is OCTG coupling stock
that (1) is entered within the same entry as matching (complementary)
sizes and matching grades of exempted OCTG, or (2) is entered with
documentation linking the entered OCTG coupling stock products to another
entry of matching sizes and grades of OCTG, and (3) is actually used in
the production of OCTG couplings or other OCTG accessories. All coupling
stock that does not have such "Mother - Child Traceability" remains within
the scope of the investigation, and coupling stock that is traceable
remains within the scope if used in an application other than the
production of OCTG couplings or accessories. 

Line pipe marked, produced, warranted, or certified only to API or
proprietary line pipe specifications and used in a pipeline application is
excluded from the scope of the investigation. Line pipe products are
included in the scope if (1) marked, produced, warranted, or certified to
one of the covered seamless stainless steel hollow products specifications
listed above (or their proprietary or foreign equivalents), whether or not
also certified to an API, proprietary, or foreign line pipe specification,
or (2) they are used in an application other than in an oil or gas
pipeline. 

Also excluded are hollow drill bars and rods, classifiable under item
number 7228.80 of the HTSUS.

With regard to the excluded OCTG products, OCTG coupling stock, and line
pipe used in oil or gas pipeline applications, the Department will not
instruct Customs to require end-use certification until such time as
petitioner or other interested parties provide a reasonable basis to
believe or suspect that imports of these products are not being used for
their intended purpose of OCTG or oil or gas line pipe. If such
information is provided, we will require end-use certification only for
the product(s) (or specification(s)) for which the evidence demonstrates
such new use. For example, if, based on evidence provided by petitioner,
the Department finds a reasonable basis to believe or suspect that
seamless pipe produced to a proprietary specification is being used in a
non-OCTG application, we will require end-use certifications for imports
of that specification. Normally we will require only the importer of
record to certify to the end use of the imported merchandise. If it later
proves necessary for adequate implementation, we may also require
producers who export such products to the United States to provide such
certification on invoices accompanying shipments to the United States.

Class or Kind

In the course of this investigation, SMI and the American Boiler
Manufacturers Association (ABMA) have argued that the scope of the
investigation should be divided into two classes or kinds of merchandise,
hot-finished SSHP and cold-finished SSHP. In our preliminary
determination, we treated all SSHP as one class or kind of merchandise.

In determining whether merchandise covered by an investigation
constitutes more than one class or kind, the Department normally refers to
the following criteria: (1) general physical characteristics; (2) ultimate
use; (3) expectations of the ultimate purchaser; (4) channels of trade;
and (5) manner of advertising and display. See Notice of Final
Determination of Sales at Less Than Fair Value; Stainless Steel Sheet and
Strip from the United Kingdom, 64 FR 30688, 30706 (June 8, 1999) (SSSS
from the U.K.). As revealed by the following application of these criteria
to the merchandise at issue, the Department properly considers this
merchandise to constitute a single class or kind.

As its name implies, the most important physical characteristic of
stainless steel is its resistance to corrosion. This resistance to
corrosion is brought about by the addition of chromium; it is the presence
of this element that allows a steel to be defined as "stainless." The
scope of the order adopts the HTSUS definition of stainless steel as being
one which contains 10.5 percent or more of chromium. This is the key
physical characteristic of stainless steel hollow products, whether hot-
or cold-finished.

Further, the ASTM book of standards shows that both hot- and cold-
finished SSHP may be produced to the same grades and specifications. For
products over one inch in diameter, there is also an overlap in the
dimensions to which hot- and cold-finished SSHP are produced. 

The end-use of the product and the expectations of the end user are also
similar. The ASTM book of standards shows that both hot- and cold-finished
SSHP may be used in a wide range of overlapping types of applications,
such as boiler tubing, heat-exchanger tubing and pipes for general
service. The primary reason ultimate users choose a stainless steel
product over other steel products is for its anti-corrosive properties,
which are the same for both hot- and cold-finished SSHP. 

With regard to advertising and channels of distribution, all parties
agree that there is significant overlap for both hot- and cold-finished
products. 

Further, treating hot- and cold-finished SSHP as one class or kind of
merchandise is consistent with recent Department precedent. Numerous other
orders on stainless steel products include cold-finished and hot-finished
products within the same class or kind. See, e.g., SSSS from the U.K. and
Stainless Steel Bar From Japan: Final Results of Antidumping
Administrative Review, 65 FR 13717 (March 14, 2000). Recent cases
involving pipe have also treated hot- and cold-finished products as a
single class or kind. See, e.g., Notice of Final Determinations of Sales
at Less Than Fair Value: Certain Large Diameter Carbon and Alloy Seamless
Standard, Line and Pressure Pipe from Japan; and Certain Small Diameter
Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Japan and
the Republic of South Africa, 65 FR 25907 (May 4, 2000), and Small
Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and
Pressure Pipe From Germany: Final Results of Antidumping Duty
Administrative Review, 63 FR 13217 (March 18, 1998). Therefore, in this
final determination, we have continued to treat hot- and cold- finished
SSHP as a single class or kind of merchandise.

Discussion of the Issues

1. Ultra-high purity 316L Redraw Hollows

Plymouth Tube Company (Plymouth Tube) requests that ultra-high purity
316L redraw hollows (316L redraw hollows) be excluded from the scope of
the investigation because it claims there is no U.S. industry producing
this product and because ultra-high purity redraw hollows are a distinct
and different product from the SSHP covered in this investigation.

According to Plymouth Tube, it has tried to purchase ultra-high purity
316L redraw hollows from a U.S. producer, but it has been unable to do so.
To support its contention, Plymouth Tube described and documented its
correspondence with Sandvik/PEXCO in which the two companies failed to
come to an agreement after Sandvik/PEXCO stated it could not guarantee
Plymouth Tube's chemistry requirements on an order of only 20,000 lbs. per
month. Plymouth Tube claims there is no evidence to indicate that
Sandvik/PEXCO could have met Plymouth Tube's requirements even at a higher
rate of consumption.

Using criteria outlined in Diversified Products Corp. v. United States,
572 F. Supp. 883 (CIT 1983) (Diversified Products), Plymouth Tube argues
that ultra-high purity redraw hollows differ from the other covered
products With regard to physical characteristics, Plymouth Tube states
that ultra-high purity redraw hollows differ from standard 316L redraw
hollows in that they have significantly lower levels of manganese, copper
and tin. The ultimate use of the merchandise is, according to Plymouth
Tube, to produce ultra-high purity cold-finished tubes for use in the
semiconductor industry. Plymouth Tube states that this industry demands
ultra-high purity tubes to be suitable for use in its production process
and, to the best of its knowledge, would not accept tubes produced from
standard purity redraw hollows. Finally, Plymouth Tube states that while
the channels of trade are similar for ultra-high purity redraw hollows and
other types of redraw hollows, Plymouth Tube markets its ultra-high purity
cold finished tubing through special brochures directed exclusively at the
semiconductor industry. 

The petitioners object to excluding ultra-high purity 316L redraw hollows
from the scope of the investigation. First, the petitioners argue, ultra-
high purity 316L redraw hollows clearly fit into the scope description. 

The petitioners point out that the scope, as published in the preliminary
determination, covers all seamless stainless steel hollow products
regardless of production process, industry specification, grade, or
intended use. Citing to Wheatland Tube Co. v. United States, 161 F. 3d
1365 (Fed. Cir. 1998), the petitioners argue that because the description
of the merchandise is unambiguous, it is unnecessary for the Department to
do a Diversified Products analysis.

Second, the petitioners point out that the statute does not require the
Department to consider the domestic availability of a particular product
within the scope when considering a scope request. See Notice of Final
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon
Steel Flat Products from Argentina, 58 FR 37062, 37070-1 (July 9, 1993).
In any event, the petitioners state that Sandvik/PEXCO makes the product
required by Plymouth Tube. According to the petitioners, the fact that the
sale did not take place due to a disagreement over quantity does not mean
that Sandvik/PEXCO is incapable of producing the product.

DOC Position: We agree with the petitioners, and we have not excluded
ultra-high purity 316L redraw hollows from the scope of this
investigation. It is the Department's view that it should give "ample
deference to the petitioners" on the definition of the product for which
they seek relief under the antidumping law. See Eckstrom Industries, Inc.
v. United States, 27 F. Supp. 2d 217, 223 (CIT 1998). In this case, the
petitioners have expressly stated that they intend the scope to include
ultra-high purity 316L redraw hollows.

Furthermore, Plymouth Tube filed scope comments on December 13, 1999, in
which it admitted (at 2) that ultra-high purity redraw hollows "come
within the literal terms of the petition and the Department's scope
decision." As described above, the scope of this investigation covers
seamless stainless steel hollow products, including pipes, tubes, redraw
hollows, and hollow bars . . . regardless of production process, outside
diameter, wall thickness, length, industry specification (domestic,
foreign or proprietary), grade or intended use. As a consequence, it is
unnecessary to do a Diversified Products analysis.

Finally, both the Department and the International Trade Commission have
determined that all products described in the scope of the investigation
constitute a single like product, and that the petitioners manufacture
products that fit into the like product description. Section 732(c)(4)(A)
of the Tariff Act of 1930, as amended, states that the Department will
determine that a petition has been filed on behalf of the industry if the
domestic producers or workers who support the petition account for: (1) at
least 25 percent of the total production of the domestic like product; and
(2) more than 50 percent of the production of the domestic like product
produced by that portion of the industry expressing support for, or
opposition to, the petition (emphasis added). There is no statutory
requirement that the petitioners produce all products covered by the
scope. In other words, while the petitioners are required to produce the
domestic like product, they need not produce every permutation or model of
the domestic like product. Notwithstanding this, evidence on the record
indicates that there is a domestic producer that may be able to make the
exact merchandise that Plymouth Tube wants excluded.

Therefore, since the ultra-high purity 316L redraw hollows clearly meet
the definition of covered merchandise, and the petitioners have
specifically stated that the petition covers this merchandise, we continue
to include ultra-high purity 316L redraw hollows in the scope of the
investigation.

2. OCTG Scope Exclusion

The petitioner requested that the scope be amended to differentiate
between the requirements for OCTG made to API 5D or 5CT specifications and
OCTG made to proprietary specifications. In short, API grades 5D and 5CT
would not have to have a minimum tensile strength of 85,000 psi, and would
not have to have the information relating to yield and tensile strength
stenciled along the length of the pipe. 

SMI agrees with the petitioners' clarification of the OCTG exclusion as
it applies to API grades, and requests that the Department direct the 
Customs Service to apply the revised criteria to all pending entries 
immediately after the final determination.

DOC Position: We have adopted the petitioners' scope revisions, and will
instruct the Customs Service to release bonds posted and refund any cash
deposits made on all merchandise that is not subject to any antidumping
duty order resulting from this investigation.

Recommendation

Based on our analysis of the comments received, we recommend adopting the
above positions.

If this recommendation is accepted, we will publish the final
determination in the Federal Register.

AGREE____ DISAGREE____

_________________________

Troy H. Cribb
Acting Assistant Secretary
  for Import Administration

_________________________
Date 

_________________________________________________________________________
footnote:

1. In their case brief, filed May 31, 2000, Altx, Inc., American Extruded
Products, PMAC Ltd, DMV Stainless USA, Inc., Salem Tube Inc., Sandvik
Steel Co., International Extruded Products LLC, Pennsylvania Extruded
Company (PEXCO) and the United Steel Workers of America, AFL-CIO/CLC (the
petitioners) requested a change to the scope clarifying the OCTG
exemption. This change is reflected in the current scope.