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[Federal Register Volume 75, Number 240 (Wednesday, December 15, 2010)]
[Notices]
[Pages 78216-78223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31517]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-805]

Certain Circular Welded Non-Alloy Steel Pipe From Mexico: 
Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests by interested parties, the Department 
of Commerce (the Department) is conducting an administrative review of 
the antidumping duty order on certain circular welded non-alloy steel 
pipe from Mexico. This administrative review covers mandatory 
respondents Mueller Comercial de Mexico, S. de R.L. de C.V. (Mueller) 
and Ternium Mexico, S.A. de C.V. (Ternium). Tuberia Nacional, S.A. de 
C.V. (TUNA) is subject to a concurrent changed circumstances review of 
this order; in its changed circumstances review, the Department has 
preliminarily determined that Lamina y Placa Comercial, S.A. de C.V. 
(Lamina) is the successor-in-interest to TUNA. See Preliminary Results 
of Antidumping Duty Changed Circumstances Review: Certain Circular 
Welded Non-Alloy Steel Pipe and Tube from Mexico, 75 FR 67685 (November 
3, 2010). Therefore, we are continuing to refer to this entity as TUNA 
for these preliminary results, pending a final determination. The 
period of review (POR) is November 1, 2008, through October 31, 2009.
    We preliminarily determine that sales of subject merchandise have 
been made at less than normal value (NV). One of the companies, 
Ternium, refused to cooperate with the Department in this 
administrative review. We have calculated a dumping margin for Mueller. 
We preliminarily determine that TUNA had no reviewable sales, 
shipments, or entries during the POR. The Department's review of import 
data supported TUNA's claim (see ``TUNA's No-Shipment Claim'' section 
of this notice for further explanation). Interested parties are invited 
to comment on these preliminary results.

DATES:  Effective Date: December 15, 2010.

FOR FURTHER INFORMATION CONTACT: Mark Flessner or Robert James, 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-
6312 or (202) 482-0469, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 2, 1992, the Department published the antidumping duty 
order on certain circular welded non-alloy steel pipe from Mexico. See 
Notice of Antidumping Duty Orders: Certain Circular Welded Non-Alloy 
Steel Pipe from Brazil, the Republic of Korea (Korea), Mexico, and 
Venezuela and Amendment to Final Determination of Sales at Less Than 
Fair Value: Certain Welded Non-Alloy Steel Pipe from Korea, 57 FR 49453 
(November 2, 1992) (Antidumping Duty Order). On November 2, 2009, the 
Department published a notice of opportunity to request an 
administrative review in the Federal Register. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 74 FR 56573 (November 2, 
2009). On November 30, 2009, the Department received requests for 
administrative review of Ternium (including its affiliates Hylsa, 
Ternium Grupo IMSA, and Galvak), TUNA, and Mueller from petitioners 
Allied Tube and Conduit Corp. (Allied) and TMK IPSCO; respondents 
Mueller and TUNA also submitted requests for administrative review on 
that day. On December 23, 2009, the Department published a Federal 
Register notice initiating an antidumping administrative review. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Request for Revocation in Part, 74 FR 68229 (December 23, 
2009). On December 28, 2009, TUNA withdrew its request for an 
administrative review. However, the Department did not terminate the 
review with regard to TUNA because petitioners had timely requested a 
review of TUNA. On January 6, 2010, the Department issued its 
antidumping questionnaire to Mueller, TUNA, and Ternium.
    On February 5, 2010, Ternium and TUNA notified the Department that 
they would not submit responses to the Department's questionnaire; TUNA 
did so with a no-shipments claim. With regard to TUNA's no-shipments 
claim, on February 17, 2010, petitioners Allied and TMK IPSCO submitted 
comments; on August 4, 2010, they submitted further comments. On August 
16, 2010, TUNA replied to the petitioner's comments. On August 31, 
2010, the Department issued a supplemental questionnaire to TUNA 
concerning its U.S. sales of mechanical tubing. On September 8, 2010, 
TUNA submitted its response to the supplemental questionnaire 
concerning mechanical tubing.
    With respect to sales data, on February 26, 2010, Mueller submitted 
its response to section A of the questionnaire; on March 19, 2010, 
Mueller submitted its sections B and C response to the questionnaire. 
On May 25, 2010, the Department issued its first supplemental section 
A, B, and C questionnaire to Mueller. On June 4, 2010, Mueller 
submitted its responses to the first supplemental section A, B, and C 
questionnaire. On June 24, 2010, Mueller submitted a clarification of 
its first supplemental section A questionnaire response. On June 17, 
2010, the Department issued its second supplemental section A, B, and C 
questionnaire to Mueller. On July 14, 2010, Mueller submitted its 
response to the second supplemental section A questionnaire; on July 
16, 2010, Mueller submitted its response to the second supplemental 
sections B and C questionnaire. On July 19, 2010, Mueller submitted 
corrections to its response to the second supplemental sections B and C 
questionnaire. On December 1, 2010, Mueller submitted revised home and 
U.S. market databases in response to the Department's request made at 
the end of verification (see ``Verification'' section below).
    On April 8, 2010, petitioner U.S. Steel alleged that Mueller had 
made sales below the cost of production (COP) during the POR. On June 
30, 2010, the Department required both TUNA and Ternium \1\ to submit 
COP data. See the memorandum from Maryanne Burke to the file entitled 
``Administrative Review of Circular Welded Non-Alloy Steel Pipe from 
Mexico: Mueller Comercial de Mexico, S. de R.L. de C.V. and Southland 
Pipe Nipples Company, Inc.,'' dated June 30, 2010. On July 13, 2010, 
the Department issued supplemental section D questionnaires to Ternium, 
TUNA, and Mueller. On August 20, 2010, Ternium, TUNA, and Mueller each 
submitted a response to the section

[[Page 78217]]

D questionnaire. On October 1, 2010, U.S. Steel submitted comments on 
the respondents' cost data submissions. On October 12, 2010, the 
Department issued supplemental section D questionnaires to TUNA and 
Mueller; on October 13, 2010, the Department issued a supplemental 
section D questionnaire to Ternium. On November 8, 2010, TUNA, Mueller, 
and Ternium submitted their responses to the Department's first 
supplemental section D questionnaires. On November 24, 2010, U.S. Steel 
submitted comments with regard to the section D responses of Mueller, 
TUNA, and Ternium. On December 1, 2010, Mueller submitted a response to 
U.S. Steel's comments with regard to the section D responses of 
Mueller, TUNA, and Ternium.
---------------------------------------------------------------------------

    \1\ Though U.S. Steel's April 8, 2010, allegation was directed 
at Mueller, we required Mueller to obtain and report COP information 
from TUNA and Ternium because these suppliers produced subject 
merchandise sold by Mueller.
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    On July 29, 2010, the Department extended the deadline for the 
preliminary results of this review from August 9, 2010, to December 7, 
2010. See Certain Circular Welded Non-Alloy Steel Pipe From Mexico; 
Extension of Time Limit for Preliminary Results of Antidumping Duty 
Administrative Review, 75 FR 44763 (July 29, 2010).

Verification

    As provided in section 782(i) of the Act, and 19 CFR 351.307, we 
conducted a verification of Mueller's sales responses on October 25-29, 
2010, in Monterrey, Mexico. We conducted a verification of TUNA's no-
shipment claim on November 1-3, 2010, in Monterrey, Mexico. We used 
standard verification procedures, including on-site inspection of both 
companies' facilities. Because there was insufficient time to complete 
the verification report for the preliminary results of review, we are 
unable to consider verification report findings for purposes of these 
preliminary results but intend to consider them in the final results. 
However, Mueller submitted sales data on December 1, 2010, based on 
revisions discussed at the verifications; we have used this data in our 
margin calculations for Mueller. Interested parties will have an 
opportunity to comment on the verification memoranda in their case 
briefs. See ``Disclosure and Public Comment'' section below.

Scope of the Order

    The products covered by this order are circular welded non-alloy 
steel pipes and tubes, of circular cross-section, not more than 406.4 
millimeters (16 inches) in outside diameter, regardless of wall 
thickness, surface finish (black, galvanized, or painted), or end 
finish (plain end, beveled end, threaded, or threaded and coupled). 
These pipes and tubes are generally known as standard pipes and tubes 
and are intended for the low pressure conveyance of water, steam, 
natural gas, and other liquids and gases in plumbing and heating 
systems, air conditioning units, automatic sprinkler systems, and other 
related uses, and generally meet ASTM A-53 specifications. Standard 
pipe may also be used for light load-bearing applications, such as for 
fence tubing, and as structural pipe tubing used for framing and 
support members for reconstruction or load-bearing purposes in the 
construction, shipbuilding, trucking, farm equipment, and related 
industries. Unfinished conduit pipe is also included in these orders. 
All carbon steel pipes and tubes within the physical description 
outlined above are included within the scope of this order, except line 
pipe, oil country tubular goods, boiler tubing, mechanical tubing, pipe 
and tube hollows for redraws, finished scaffolding, and finished 
conduit. Standard pipe that is dual or triple certified/stenciled that 
enters the U.S. as line pipe of a kind used for oil or gas pipelines is 
also not included in this order.
    The merchandise covered by the order and subject to this review are 
currently classified in the Harmonized Tariff Schedule of the United 
States (HTSUS) at subheadings: 7306.30.10.00, 7306.30.50.25, 
7306.30.50.32, 7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and 
7306.30.50.90. Although the HTSUS subheadings are provided for 
convenience and customs purposes, our written description of the scope 
of these proceedings is dispositive.

Date of Sale

    The Department's regulations state that it will normally use the 
date of invoice, as recorded in the exporter's or producer's records 
kept in the ordinary course of business, as the date of sale. See 19 
CFR 351.401(i). However, if the Department is satisfied that ``a 
different date * * * better reflects the date on which the exporter or 
producer establishes the material terms of sale,'' the Department may 
choose a different date. Id. Mueller has reported the invoice date as 
the sale date. In Mueller's normal books and records, invoice date is 
recorded as the date of sale. However, changes in prices or quantities 
do occur. See Mueller's July 16, 2010, supplemental questionnaire 
response at 21-22. Therefore, the Department preliminarily determines 
that the invoice date is the date of sale provided that the invoice is 
issued on or before the shipment date; the shipment date will be used 
as the date of sale where the invoice is issued after the shipment 
date. See Certain Circular Welded Non-Alloy Steel Pipe from Mexico: 
Preliminary Results Analysis Memorandum for Mueller Comercial de 
Mexico, S. de R.L., dated December 7, 2010 (Analysis Memorandum), for 
further discussion of date of sale. A public version of this memorandum 
is on file in the Department's Central Records Unit (CRU) located in 
Room 7046 of the main Department of Commerce Building, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Sales Made Through Affiliated Resellers

    Mueller has two U.S. affiliates who sold subject merchandise in the 
United States during the POR to unaffiliated customers. The first is 
Southland Pipe and Nipples Company, Inc. (Southland), which is 
Mueller's importer-of-record for direct sales in the United States. See 
``Export Price'' section, below; see also Mueller's section A response 
at 3-4. The second is Mueller Streamline Co. (Streamline). Streamline 
sells Mueller's subject merchandise to unaffiliated customers in the 
United States out of inventory maintained in warehouses in the United 
States for many of its sales; for others, it makes sales in which 
Mueller's subject merchandise is shipped directly from Mueller's 
facilities in Mexico (``indent sales''). Id. See ``Constructed Export 
Price'' section, below. Mueller, Southland, and Streamline are wholly-
owned subsidiaries of Mueller Industries, Inc. Id. For these 
preliminary results of review, we have included both Southland's and 
Streamline's sales of subject merchandise to unaffiliated customers in 
the United States in our margin calculation. Mueller made no sales to 
affiliates in the home market. See Mueller's section A response at 14.

Fair Value Comparisons

    To determine whether sales of circular welded non-alloy steel pipe 
and tube from Mexico to the United States were made at less than fair 
value (LTFV), we compared EP and CEP sales made in the United States by 
Mueller, Southland, and Streamline to unaffiliated purchasers to NV as 
described in the ``Constructed Export Price'' and ``Normal Value'' 
sections of this notice, below. In accordance with section 777A(d)(2) 
of the Tariff Act of 1930, as amended (the Act), we compared individual 
EP and CEP sales prices to monthly weighted-average NVs.

[[Page 78218]]

Product Comparisons

    In accordance with section 771(16) of the Act we considered all 
products produced by Mueller covered by the description in the ``Scope 
of the Order'' section above, and sold in the home market during the 
POR, to be foreign like product for purposes of determining appropriate 
product comparisons to U.S. sales. We relied on five characteristics to 
match U.S. sales of subject merchandise to comparison sales of the 
foreign like product (listed in order of priority): (1) Grade; (2) 
nominal pipe size; (3) wall thickness; (4) surface coating; and (5) 
end-finish. Where there were no sales of identical merchandise in the 
home market to compare to U.S. sales, we compared U.S. sales to the 
next most similar foreign like product on the basis of the 
characteristics and reporting instructions listed in the Department's 
original January 6, 2010, questionnaire.

Export Price (EP)

    Section 772(a) of the Act defines EP 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 section 772(c) of the Act. In accordance 
with section 772(a) of the Act, we used EP for a number of Mueller's 
U.S. sales because these sales were made before the date of importation 
and were sales directly to unaffiliated customers in the United States, 
and because CEP methodology was not otherwise indicated.
    As mentioned above, Southland is Mueller's importer-of-record for 
direct sales in the United States. See Mueller's section A response at 
3-4. These sales are made prior to importation and shipped directly 
from Mueller's facilities to the unaffiliated U.S. customer. Mueller 
therefore treated these sales as EP sales. Id.
    We based EP on the packed, delivered duty paid, cost and freight 
(C&F) or free on board (FOB) prices to unaffiliated customers in the 
United States. Mueller reported discounts for which we accounted in the 
margin program. See Analysis Memorandum. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act, 
which included, where appropriate, foreign inland freight from the mill 
to the U.S. border, inland freight from the border to the customer or 
warehouse, and U.S. brokerage and handling. In addition, we made 
adjustments for differences in circumstances of sale in accordance with 
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(c) by deducting 
direct selling expenses incurred on home market sales (credit expenses) 
and adding U.S. direct selling expenses (credit expenses).

Constructed Export Price

    Mueller stated it made CEP sales through its U.S. affiliate, 
Streamline, by two methods during the POR. The first was sales of 
Mueller subject merchandise by Streamline from Streamline's U.S. 
warehouses (``warehouse sales''). The second was sales of Mueller 
subject merchandise by Streamline in which Mueller shipped its product 
directly to the Streamline customer (``indent sales''). For all sales 
under each method, Southland was the actual seller to Streamline. See 
Mueller's section A response at pages 3-4.
    In accordance with section 772(b) of the Act, CEP is the price at 
which the subject merchandise is first sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise, or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter. We preliminarily find Mueller properly 
classified all of its U.S. sales of subject merchandise through its 
U.S. affiliate Streamline as CEP transactions because such sales were 
made in the United States to unaffiliated purchasers. We based CEP on 
packed prices to unaffiliated purchasers in the United States sold by 
Streamline. We made adjustments for billing adjustments, discounts and 
rebates, where applicable. We also made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Act, including 
foreign inland freight, foreign brokerage and handling, inland 
insurance, U.S. customs duties, U.S. inland freight, U.S. brokerage and 
handling, and U.S. warehousing expenses. As directed by section 
772(d)(1) of the Act, we deducted those selling expenses associated 
with economic activities occurring in the United States, including 
direct selling expenses (i.e., credit expenses and warranty expenses), 
inventory carrying costs, packing costs, and other indirect selling 
expenses. We also made an adjustment for profit in accordance with 
section 772(d)(3) of the Act. See Analysis Memorandum.
    Because Streamline neither segregates product in its warehouses 
according to manufacturer, nor records the manufacturer when the 
subject merchandise is entered into its warehouses, Streamline and 
Mueller are unable to state with certainty which of Mueller's suppliers 
manufactured the particular subject merchandise in any given Streamline 
``warehouse sale.'' However, Mueller is able to report the percentage 
manufactured by its suppliers (for each diameter and surface coating) 
which it shipped to Streamline warehouses. Applying these percentages, 
a percentage for each manufacturer can be assigned for each such sale. 
We preliminarily determine that this methodology is the best available 
and have used it in the margin program.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we base NV on sales made in the comparison market 
at the same level of trade (LOT) as the export transaction. The NV LOT 
is based on the starting price of sales in the home market or, when NV 
is based on CV, on the LOT of the sales from which SG&A expenses and 
profit are derived. With respect to CEP transactions in the U.S. 
market, the CEP LOT is defined as the level of the constructed sale 
from the exporter to the importer. See 19 CFR 351.412(c)(1)(ii).
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the customer. 
See 19 CFR 351.412(c)(2). If the comparison-market sales are at a 
different LOT, 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 LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. For CEP sales, if the NV level is more remote 
from the factory than the CEP level and there is no basis for 
determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See, e.g., Certain Hot-Rolled Flat-
Rolled Carbon Quality Steel Products from Brazil; Preliminary Results 
of Antidumping Duty Administrative Review, 70 FR 17406, 17410 (April 6, 
2005), results unchanged in Notice of Final Results of Antidumping Duty 
Administrative Review: Certain Hot-Rolled Flat-Rolled Carbon Quality 
Steel Products from Brazil, 70 FR 58683 (October 7, 2005); see also 
Final Determination of Sales at Less Than Fair Value: Greenhouse 
Tomatoes From

[[Page 78219]]

Canada, 67 FR 8781 (February 26, 2002) and accompanying Issues and 
Decisions Memorandum at Comment 8. For CEP sales, we consider only the 
selling activities reflected in the price after the deduction of 
expenses and CEP profit under section 772(d)(3) of the Act. See Micron 
Technology, Inc. v. United States, 243 F.3d 1301, 1314-15 (Fed. Cir. 
2001). We expect that if the claimed LOTs are the same, the functions 
and activities of the seller should be similar. Conversely, if a party 
claims that the LOTs are different for different groups of sales, the 
functions and activities of the seller should be dissimilar. See 
Porcelain-on-Steel Cookware from Mexico: Final Results of Antidumping 
Duty Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying 
Issues and Decisions Memorandum at Comment 6.
    Mueller reported it sold circular welded non-alloy steel pipe and 
tube to end-users and distributors in the home market and to end-users 
in the United States. For the home market, Mueller identified two 
channels of distribution: Direct shipments (channel 1) and warehouse 
shipments (channel 2). See Mueller's section A response at 14-15 and 
Exhibit A-5. For the U.S. market, Mueller identified two channels of 
distribution: Direct sales (channel 1) and indirect sales (channel 2). 
Id. Mueller stated that ``a level-of-trade adjustment cannot be 
established;'' rather, a CEP offset was requested. See Mueller's 
section B response at 28.
    We obtained information from Mueller regarding the marketing stages 
involved in making its reported home market and U.S. sales. See 
Mueller's July 16, 2010, supplemental questionnaire response at 13-19. 
We reviewed Mueller's claims concerning the intensity to which all 
selling functions were performed for each home market channel of 
distribution and customer category. Based on our analysis of all of 
Mueller's home market selling functions, we agree with Mueller's 
conclusion that a level-of-trade adjustment cannot be established. We 
further conclude that there is a single level of trade in the home 
market.
    In the U.S. market, Mueller did not report multiple levels of trade 
for EP sales. Accordingly, we agree with Mueller and preliminarily 
determine that all EP sales were made at the same LOT.
    We compared Mueller's EP level of trade to the single NV level of 
trade found in the home market. While we find differences in the levels 
of intensity performed for some of these functions between the home 
market NV level of trade and the EP level of trade, such differences 
are minor and do not establish distinct levels of trade between the 
home market and the U.S. market. Based on our analysis of all of 
Mueller's home market and EP selling functions, we find these sales 
were made at the same level of trade.
    For CEP sales, Mueller claims that the number and intensity of 
selling functions performed by Mueller in making its sales to 
Streamline are lower than the number and intensity of selling functions 
Mueller performed for its EP sales, and further claims that CEP sales 
are at a less advanced stage than home market sales. See Mueller's July 
16, 2010, supplemental questionnaire response at 13-19.
    We compared the NV LOT (based on the selling activities associated 
with the transactions between Mueller and its customers in the home 
market) to the CEP LOT (which is based on the selling activities 
associated with the transaction between Mueller and its affiliated 
importer, Streamline). Our analysis indicates the selling functions 
performed for home market customers are either performed at a higher 
degree of intensity or are greater in number than the selling functions 
performed for Streamline. For example, in comparing Mueller's selling 
activities, we find many of the reported selling functions performed in 
the home market are not performed with respect to CEP sales in the U.S. 
market. For those selling activities performed for both home market 
sales and CEP sales, Mueller reported it performed each activity at 
either the same or at a higher level of intensity in one or both of the 
home market channels of distribution. See Mueller's July 16, 2010 
supplemental questionnaire response at Exhibit SA-10. Based on the 
foregoing, we conclude that the NV LOT is at a more advanced stage than 
the CEP LOT.
    Because we found the home market and U.S. CEP sales were made at 
different LOTs, we examined whether a LOT adjustment or a CEP offset 
may be appropriate in this review. As we found only one LOT in the home 
market, it was not possible to make a LOT adjustment to home market 
sales, because such an adjustment is dependent on our ability to 
identify a pattern of consistent price differences between the home 
market sales on which NV is based and home market sales at the LOT of 
the U.S. sales. See 19 CFR 351.412(d)(1)(ii). Furthermore, we have no 
other information that provides an appropriate basis for determining a 
LOT adjustment. Because the data available do not form an appropriate 
basis for making a LOT adjustment, and because the NV LOT is at a more 
advanced stage of distribution than the CEP LOT, we have made a CEP 
offset to NV in accordance with section 773(a)(7)(B) of the Act.

Normal Value

A. Selection of Comparison Market

    To determine whether there is a sufficient volume of sales in the 
home market to serve as a viable basis for calculating NV (i.e., the 
aggregate volume of home market sales of the foreign like product is 
greater than five percent of the aggregate volume of U.S. sales), we 
compared Mueller's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. Because Mueller's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of its aggregate volume of U.S. sales for 
subject merchandise, we determined the home market was viable. See, 
e.g., Mueller's July 16, 2010, supplemental questionnaire response 
(revised home market and U.S. sales databases).

B. Cost of Production Analysis

    In response to a timely allegation from U.S. Steel, and in 
accordance with section 773(b)(1) of the Act, we initiated an 
investigation to determine whether Mueller made home market sales of 
the foreign like product at prices below its cost of production during 
the POR. Because Mueller is a re-seller of pipe, and not a 
manufacturer, we solicited COP data from its two principal suppliers, 
TUNA and Ternium. We also requested that Mueller report its costs for 
the further processing it performs (e.g., threading or cutting to 
length) on the pipe it purchases from TUNA and Ternium.
    In accordance with section 773(b)(3)(A) of the Act, we calculated 
COP based on the sum of the supplier's cost of materials, fabrication 
or other processing employed in producing the foreign like product. In 
accordance with section 773(b)(3)(B) and (C) of the Act, we included 
amounts for SG&A expenses and packing costs. For pipe further processed 
by Mueller, we added the costs of materials, direct labor and variable 
overhead incurred by Mueller. We also included amounts for Mueller's 
SG&A expenses and packing costs, if any. Based on the review of record 
evidence, Mueller did not appear to experience significant changes in 
cost of manufacturing during the period of review. Therefore, we 
followed our normal methodology of calculating an annual weighted-
average cost. We relied

[[Page 78220]]

on home market sales and COP information provided by Mueller, TUNA and 
Ternium in their respective section D questionnaire responses, except 
as noted below:
    For Mueller, we adjusted the reported depreciation, G&A, and 
financial expenses. For additional details, see the memorandum from 
Heidi K. Schriefer to Neal M. Halper entitled ``Cost of Production 
Adjustments for the Preliminary Results--Mueller Comercial de Mexico, 
S. de R.L. de C.V.'' dated December 7, 2010.
    For TUNA, we adjusted the reported hot-rolled coil, G&A and 
financial expenses. For additional details, see the memorandum from 
Heidi K. Schriefer to Neal M. Halper entitled ``Cost of Production 
Adjustments for the Preliminary Results--Tuberia Nacional, S.A. de 
C.V.'' dated December 7, 2010.
    For Ternium, we adjusted the reported G&A and financial expenses. 
Due to time constraints, the Department has accepted Ternium's 
submissions, as adjusted, for the preliminary results. However, we note 
that there are several outstanding issues which include Ternium's 
failure to provide an overall reconciliation and to account for the 
cost differences associated with dimensional physical characteristics 
which will need to be resolved for the final results. For additional 
details on the adjustments made to Ternium's submissions for the 
preliminary results, see the memorandum from Heidi K. Schriefer to Neal 
M. Halper entitled ``Cost of Production Adjustments for the Preliminary 
Results--Ternium Mexico, S.A. de C.V.'' dated December 7, 2010.
    In determining whether to disregard home market sales made at 
prices below the COP, we examine, in accordance with sections 
773(b)(1)(A) and (B) of the Act, whether such sales were made within an 
extended period of time and in substantial quantities, and 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. As 
noted in section 773(b)(2)(D) of the Act, prices are considered to 
provide for recovery of costs if such prices are above the weighted 
average per-unit COP for the period of investigation or review.
    Where less than 20 percent of the respondent's home market sales of 
a given model are at prices below the COP, we do not disregard any 
below-cost sales of that model because we determine that the below-cost 
sales are not made within an extended period of time and in 
``substantial quantities.'' Where 20 percent or more of the 
respondent's home market sales of a given model are at prices less than 
the COP, we disregarded the below-cost sales; because: (1) They were 
made within an extended period of time in ``substantial quantities,'' 
in accordance with sections 773(b)(2)(B) and (C) of the Act; and (2) 
based on our comparison of prices to the weighted-average COPs for the 
POR, they were at prices which would not permit the recovery of all 
costs within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act.
    Our cost test for Mueller revealed that, for home market sales of 
certain models, less than 20 percent of the sales of those models were 
at prices below the COP. We therefore retained all such sales in our 
analysis and used them as the basis for determining NV. Our cost test 
also indicated that for home market sales of other models, more than 20 
percent were sold at prices below the COP within an extended period of 
time and at prices which would not permit the recovery of all costs 
within a reasonable period of time. Thus, in accordance with section 
773(b)(1) of the Act, we excluded these below-cost sales from our 
analysis and used the remaining above-cost sales as the basis for 
determining NV.

C. Affiliated Party Transactions and Arm's-Length Test

    Mueller made no sales to affiliates in the home market. See 
Mueller's section A response at 14.

D. Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV as 
described above in the ``Cost of Production Analysis'' section of this 
notice, plus 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 the respondent in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade, for consumption in the foreign country.

E. Price-to-Price Comparisons

    We calculated NV based on prices to unaffiliated customers. Mueller 
reported home market sales in Mexican pesos during the POR. See 
Mueller's section B response at Exhibit B-1. We accounted for billing 
adjustments, discounts, and rebates, and advertising expenses where 
appropriate. We also made deductions, where appropriate, for foreign 
inland freight, insurance, handling, and warehousing, pursuant to 
section 773(a)(6)(B) of the Act. In addition, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise compared pursuant to section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We also made 
adjustments for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. In particular, we made COS adjustments for imputed credit 
expenses and warranty expenses. 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.

F. Price-to-CV Comparisons

    Where we were unable to find a home market match of such or similar 
merchandise, in accordance with section 773(a)(4) of the Act, we based 
NV on CV. Where appropriate, we made adjustments to CV in accordance 
with section 773(a)(8) of the Act.

TUNA's No-Shipment Claim

    TUNA maintains that while the CBP data placed on the record 
indicate there were shipments of the subject merchandise manufactured 
by TUNA during the POR, in fact, it was not the exporter for any 
entries. TUNA originally submitted a ``no-shipment'' letter, dated 
February 5, 2010, in which the company claimed it did not have exports, 
sales, or entries of subject merchandise to the United States during 
the POR. Rather, TUNA asserts it made sales of subject merchandise to 
unaffiliated companies in the Mexican home market and believes some of 
those home market customers export the subject merchandise to the 
United States. However, TUNA insists it did not know where the material 
was destined at the time of TUNA's sale to its customers. TUNA explains 
the sales in question were ``co-export'' sales and, thus, exempt from 
the value-added tax (VAT) normally collected on sales in the domestic 
market. However, TUNA insists that at the time of sale, it has no idea 
which shipments of pipe are actually destined for the United States. 
Accordingly, TUNA requests, pursuant to 19 CFR 351.213(d)(3), that we 
rescind this administrative review with respect to TUNA.
    Meanwhile, on February 17, 2010, Allied and TMK IPSCO submitted 
comments arguing TUNA's ``no-shipment'' claims are not supported by 
record evidence. Allied and TMK IPSCO urged the Department to gather 
more information regarding TUNA's sales to an unaffiliated exporter. 
According to Allied and TMK IPSCO, the nature of TUNA's home market 
sales pursuant to Mexico's IMMEX ``co-export'' program made it highly 
probable TUNA knew at the time of the sale that its merchandise

[[Page 78221]]

was destined for the United States. Allied and TMK IPSCO also urged the 
Department to gather more information from U.S. Customs and Border 
Protection (CBP), such as Customs Forms 7501 and other import 
documentation. See Allied and TMK IPSCO's letter dated February 17, 
2010.
    The Department did, in fact, solicit additional information from 
both TUNA and CBP. See, e.g., Memorandum from Richard Weible, Director, 
Office 7 to Michael Walsh, Director, AD/CVD Revenue Policy & Programs, 
U.S. Customs and Border Protection, dated May 3, 2010 (entering on the 
record entry documentation for selected TUNA entries). In addition, 
between November 1 and November 3, 2010, the Department conducted an 
on-site verification of TUNA's no shipment claims.
    From our examination of the customs entry documentation, we saw no 
evidence to suggest TUNA had made any reviewable entries of subject 
merchandise to the United States. Rather, the documentation indicated 
sales were made to a certain home market customer under Mexico's IMMEX 
co-export program. See Mueller's July 14, 2010, supplemental 
questionnaire response at Exhibit S-5. While TUNA had a general 
knowledge that some of its pipe would be exported--perhaps to the 
United States or elsewhere--it did not know which specific pipes would 
be exported to the United States at the time of its sale to its 
customer. See Mueller's section A response at 5. Therefore, we find the 
record provides no information to contradict TUNA's claim that, at the 
time of its sales to the home market customer, it did not have 
knowledge its merchandise would be exported to the United States. As a 
result, we preliminarily find TUNA had no knowledge its merchandise 
entered the United States and is, therefore, not properly subject to 
review.

Use of Facts Available

    Section 776(a)(2) of the Act, provides that if an interested party 
withholds information requested by the administering authority, or 
fails to provide such information by the deadlines for submission of 
the information and in the form or manner requested (subject to 
subsections (c)(1) and (e) of section 782 of the Act), or significantly 
impedes a proceeding under this title, or provides such information but 
the information cannot be verified as provided in section 782(i) of the 
Act, then the administering authority shall use (subject to section 
782(d) of the Act) facts otherwise available in reaching the applicable 
determination. Section 782(d) of the Act provides that if the 
administering authority determines that a response to a request for 
information does not comply with the request, the administering 
authority shall promptly inform the responding party and provide an 
opportunity to remedy the deficient submission. Section 782(e) of the 
Act states further that the Department shall not decline to consider 
submitted information if all of the following requirements are met: (1) 
The information is submitted by the established deadline; (2) the 
information can be verified; (3) the information is not so incomplete 
that it cannot serve as a reliable basis for reaching the applicable 
determination; (4) the interested party has demonstrated that it acted 
to the best of its ability; and (5) the information can be used without 
undue difficulties.
    Because Ternium has not responded to sections A, B, or C of the 
Department's original questionnaire in the instant administrative 
review, its actions constitute a refusal to provide information 
necessary to conduct the Department's antidumping analysis under 
sections 776(a)(2)(A) and (B) of the Act. Thus, Ternium withheld 
information requested by the Department's original questionnaire and 
significantly impeded the administrative review. See section 
776(a)(2)(A) and (C) of the Act. Therefore, we preliminarily determine 
to base the margin for Ternium on facts otherwise available, pursuant 
to sections 776(a)(2)(A) and (C) of the Act.

Application of Adverse Inferences for Facts Available

    In applying the facts otherwise available, section 776(b) of the 
Act provides that--if the Department finds an interested party has 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information--in reaching the applicable 
determination under this title, the Department may use an inference 
adverse to the interests of that party in selecting from among the 
facts otherwise available.
    Adverse inferences are appropriate ``to ensure that the party does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully.'' See Statement of Administrative Action 
accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, 
vol. 1 (1994) at 870 (SAA). Further, ``affirmative evidence of bad 
faith on the part of a respondent is not required before the Department 
may make an adverse inference.'' See Antidumping Duties; Countervailing 
Duties, 62 FR 27296, 27340 (May 19, 1997). Ternium failed to cooperate 
to the best of its ability by failing to answer sections A, B, or C of 
the Department's questionnaire. As a result, we determine that Ternium 
failed to cooperate by not acting to the best of its ability to comply 
with the Department's request for information. Therefore, pursuant to 
section 776(b) of the Act, the Department has preliminarily determined 
that in selecting from among the facts otherwise available, an adverse 
inference is warranted. See, e.g., Notice of Final Determination of 
Sales at Less Than Fair Value: Circular Seamless Stainless Steel Hollow 
Products From Japan, 65 FR 42985, 42986 (July 12, 2000) (the Department 
applied total AFA where a respondent failed to respond to subsequent 
antidumping questionnaires).\2\
---------------------------------------------------------------------------

    \2\ Ternium submitted no response to the Department's section A, 
B, or C questionnaires during the course of this review. Ternium 
did, however, submit a response to the Department's section D 
questionnaire with respect to subject merchandise manufactured by 
Ternium which was exported to the United States by Mueller. Sales by 
Mueller or its affiliates will be assessed at the Mueller rate 
without the use of adverse inferences; otherwise, sales of subject 
merchandise manufactured by Ternium will be assessed at a rate 
determined from facts available. See ``Preliminary Results of 
Review'' and ``Assessment'' sections below.
---------------------------------------------------------------------------

Selection and Corroboration of Information Used as Facts Available

    Section 776(b) of the Act provides that the Department may use as 
AFA information derived from the petition, the final determination in 
the investigation, any previous review, or any other information placed 
on the record. When selecting an AFA rate from among the possible 
sources of information, the Department's practice has been to ensure 
the margin is sufficiently adverse to induce respondents to provide the 
Department with complete and accurate information in a timely manner. 
See, e.g., Certain Steel Concrete Reinforcing Bars From Turkey; Final 
Results and Rescission of Antidumping Duty Administrative Review in 
Part, 71 FR 65082, 65084 (November 7, 2006).
    Accordingly, as total AFA, we have assigned Ternium the rate of 
48.33 percent, which is the highest calculated transaction-specific 
margin from the most recently-completed administrative review of this 
antidumping duty order in which a rate was calculated. See Circular 
Welded Non-Alloy Steel Pipe From Mexico: Amended Final Results of 
Antidumping Duty Administrative Review, 66 FR 37454 (July 18, 2001); 
see

[[Page 78222]]

also Magnesium Metal From the Russian Federation: Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 74 FR 
39919 (August 10, 2009) (single-highest transaction margin assigned as 
AFA to respondent AVISMA). See Memorandum from Christian Marsh to Paul 
Piquado entitled ``Certain Circular Welded Non-Alloy Steel Pipe from 
Mexico: Use of Facts Available for Ternium and the Corroboration of 
Secondary Information,'' dated December 7, 2010 (Facts Available 
Memorandum). We find this rate is sufficiently adverse to serve the 
purpose of facts available and is appropriate, as it is the highest 
transaction-specific margin determined in the most recently completed 
review in which a rate was calculated.
    Section 776(c) of the Act provides that, to the extent practicable, 
the Department shall corroborate secondary information used for facts 
available by reviewing independent sources reasonably at its disposal. 
Information from a prior segment of the proceeding constitutes 
secondary information. See SAA at 870; Antifriction Bearings and Parts 
Thereof From France, et al.: Final Results of Antidumping Duty 
Administrative Reviews, Rescission of Administrative Reviews in Part, 
and Determination To Revoke Order in Part, 69 FR 55574, 55577 
(September 15, 2004). The word ``corroborate'' means the Department 
will satisfy itself that the secondary information to be used has 
probative value. See SAA at 870; see also Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, From Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, From Japan; Preliminary Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996). To corroborate 
secondary information, the Department will examine, to the extent 
practicable, the reliability and relevance of the information used.
    As fully explained in the Facts Available Memorandum, the 
Department finds the rate of 48.33 percent to be reliable and relevant 
for use as AFA. See Facts Available Memorandum at 7-8. As such, the 
Department finds this rate to be corroborated to the extent practicable 
consistent with section 776(c) of Act. We have, therefore, selected the 
rate of 48.33 percent to apply as an AFA rate to Ternium and consider 
it to be sufficiently high so as to encourage participation in future 
segments of this proceeding.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the following 
weighted-average dumping margins exist for the period November 1, 2008, 
through October 31, 2009:

------------------------------------------------------------------------
                                                            Weighted-
                 Manufacturer/exporter                   average margin
                                                          (percentage)
------------------------------------------------------------------------
Ternium (formerly known as Hylsa \3\).................             48.33
Mueller...............................................              4.81
------------------------------------------------------------------------

Disclosure and Public Comment

    We will disclose pertinent memoranda concerning these preliminary 
results to parties in this review within five days of the date of 
publication of this notice in accordance with 19 CFR 351.224(b). We 
shall be releasing the sales verification reports from this 
administrative review with sufficient time to allow parties to comment 
upon their contents. Any interested party may request a hearing within 
30 days of the publication of this notice in the Federal Register. See 
19 CFR 351.310(c). If a hearing is requested, the Department will 
notify interested parties of the hearing schedule.
---------------------------------------------------------------------------

    \3\ Ternium is the successor in interest to Hylsa, S.A. de C.V. 
See Final Results of Antidumping Duty Changed Circumstances Review: 
Certain Circular Welded Non-Alloy Steel Pipe and Tube from Mexico, 
74 FR 41681 (August 18, 2009).
---------------------------------------------------------------------------

    Interested parties are invited to comment on the preliminary 
results of this review. The Department will consider case briefs filed 
by interested parties within 30 days after the date of publication of 
this notice in the Federal Register. See 19 CFR 351.309(c). Interested 
parties may file rebuttal briefs, limited to issues raised in the case 
briefs. See 19 CFR 351.309(d). Any hearing, if requested, will be held 
two days after the deadline for submission of rebuttal briefs. See 19 
CFR 351.310(d). Parties who submit arguments are requested to submit 
with each argument: (1) A statement of the issue, (2) a brief summary 
of the argument, and (3) a table of authorities cited. Further, we 
request that parties submitting written comments provide the Department 
with an electronic copy of the public version of such comments. We 
intend to issue the final results of this administrative review, 
including the results of our analysis of issues in any such case 
briefs, rebuttal briefs, and written comments or at a hearing, within 
120 days of publication of these preliminary results in the Federal 
Register.

Assessment

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. Upon completion of this 
administrative review, pursuant to 19 CFR 351.212(b), the Department 
will calculate an assessment rate on all appropriate entries. Mueller 
has reported entered values for all of its sales of subject merchandise 
to the United States during the POR. Therefore, in accordance with 19 
CFR 351.212(b)(1), we will calculate importer-specific duty assessment 
rates on the basis of the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
the examined sales of that importer. These rates will be assessed 
uniformly on all entries the respective importers made during the POR 
if these preliminary results are adopted in the final results of 
review. Where the assessment rate is above de minimis, we will instruct 
CBP to assess duties on all entries of subject merchandise by that 
importer. Because we are relying on total AFA to establish Ternium's 
dumping margin, we will instruct CBP to apply a dumping margin of 48.33 
percent ad valorem to all entries of subject merchandise during the POR 
that was produced and/or exported by Ternium (except those entries 
produced by Ternium and exported by Mueller, to which the Mueller 
assessment will apply). In accordance with 19 CFR 356.8(a), the 
Department intends to issue appropriate assessment instructions 
directly to CBP on or after 41 days following the publication of the 
final results of review.

Cash Deposit Requirements

    If these preliminary results are adopted in the final results of 
review, the following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Act: (1) The cash-deposit rate for Mueller and Ternium will be 
the rate established in the final results of this review; (2) for 
previously reviewed or investigated companies not covered in this 
review, 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 prior review, or the less-than-fair-
value (LTFV) investigation but the manufacturer is, the cash-deposit 
rate

[[Page 78223]]

will be the rate established for the most recent period for the 
manufacturer of the subject merchandise; (4) if neither the exporter 
nor the manufacturer is a firm covered in this or any previous segment 
of the proceeding, the cash-deposit rate will continue to be the all-
others rate established in the LTFV investigation which is 32.62 
percent. See Antidumping Duty Order. These cash-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.
    The preliminary results of administrative review and this notice 
are issued and published in accordance with sections 751(a)(1) and 
777(i)(1) of the Act.

    Dated: December 7, 2010.
Paul Piquado,
Acting Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-31517 Filed 12-14-10; 8:45 am]
BILLING CODE 3510-DS-P
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