[Federal Register Volume 75, Number 91 (Wednesday, May 12, 2010)]
[Notices]
[Pages 26726-26733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11342]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-838]


Seamless Refined Copper Pipe and Tube From Mexico: Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The U.S. Department of Commerce (``the Department'') 
preliminarily determines that seamless refined copper pipe and tube 
(``copper pipe and tube'') from Mexico is being, or is likely to be, 
sold in the United States at less than fair value (``LTFV''), as 
provided in section 733(b)(1)(A) of the Tariff Act of 1930, as amended 
(``the Act''). The estimated margins of sales at LTFV are listed in the 
``Suspension of Liquidation'' section of this notice. Interested 
parties are invited to comment on this preliminary determination. 
Pursuant to a request submitted on behalf of the respondents, IUSA S.A. 
de C.V. (``IUSA'') and Nacional de Cobre, S.A. de C.V. (``Nacobre''), 
we are postponing for 60 days the final determination and extending 
provisional measures from a four-month period to not more than six 
months. Accordingly, we will make our final determination not later 
than 135 days after publication of the preliminary determination.

EFFECTIVE DATE: May 12, 2010.

FOR FURTHER INFORMATION CONTACT: Joy Zhang or George McMahon, AD/CVD 
Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington DC 20230; telephone: (202) 482-1168 
or (202) 482-1167, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On October 20, 2009, the Department initiated the antidumping duty 
investigation of copper pipe and tube from Mexico. See Seamless Refined 
Copper Pipe and Tube from the People's Republic of China and Mexico: 
Initiation of Antidumping Duty Investigations, 74 FR 55194 (October 27, 
2009) (``Initiation Notice''). The petitioners in this investigation 
are Cerro Flow Products, Inc., KobeWieland Copper Products, LLC, 
Mueller Copper Tube Products, Inc., and Mueller Copper Tube Company, 
Inc. (collectively, ``Petitioners'').
    The Department set aside a period of time for parties to raise 
issues regarding product coverage and encouraged all parties to submit 
comments within 20 calendar days of publication of the Initiation 
Notice. See Initiation Notice, 74 FR at 55194. See also Antidumping 
Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997). For 
further details, see the ``Scope Comments'' section of this notice, 
below. The Department also set aside a time for parties to comment on 
product characteristics for use in the antidumping duty questionnaire. 
During November 2009, we received product characteristic comments from 
the Petitioners and the respondents, IUSA and Nacobre, Mexican 
producers and exporters of the subject merchandise. For an explanation 
of the product-comparison criteria used in this investigation, see the 
``Product Comparisons'' section of this notice, below.
    On November 30, 2009, the United States International Trade 
Commission (``ITC'') published its affirmative preliminary 
determination that that there is a reasonable indication that an 
industry in the United States is materially injured or threatened with 
material injury, by reason of imports from China and Mexico of copper 
pipe and tube, and the ITC notified the Department of its finding. See 
Seamless Refined Copper Pipe and Tube From China and Mexico, 74 FR 
62595 (November 30, 2009); see also USITC Publication 4116 (November 
2009), entitled Seamless Refined Copper Pipe and Tube from China and 
Mexico: Investigation Nos. 731-TA-1174-1175 (Preliminary).
    On December 2, 2009, we selected IUSA and Nacobre as the mandatory 
respondents in this investigation and issued the Department's 
antidumping duty questionnaire to both respondents. See Memorandum 
entitled: ``Antidumping Duty Investigation of Seamless Refined Copper 
Pipe and Tube from Mexico Selection of Respondents for Individual 
Review,'' dated December 2, 2009. IUSA and Nacobre submitted responses 
to section A (i.e., the section covering general information about the 
company) of the antidumping duty questionnaire on December 24, 2009, 
and sections B (i.e., the section covering comparison market sales), C 
(i.e., the

[[Page 26727]]

section covering U.S. sales), and D (i.e., the section covering the 
cost of production (``COP'') and constructed value (``CV'')) of the 
antidumping duty questionnaire on February 2, 2010. We issued 
supplemental section A, B, C, and D questionnaires, to which IUSA and 
Nacobre responded during February, March, and April 2010.
    As explained in the memorandum from the Deputy Assistant Secretary 
for Import Administration, the Department has exercised its discretion 
to toll deadlines for the duration of the closure of the Federal 
Government from February 5, through February 12, 2010. Thus, all 
deadlines in this segment of the proceeding have been extended by seven 
days. See Memorandum to the Record regarding ``Tolling of 
Administrative Deadlines As a Result of the Government Closure During 
the Recent Snowstorm,'' dated February 12, 2010. Accordingly, the 
revised deadline for the un-extended preliminary determination of this 
investigation was March 16, 2010.
    On February 12, 2010, the petitioners made a timely request 
pursuant to section 733(c)(1)(A) of the Act and 19 CFR 351.205(e) for a 
50-day postponement of the preliminary determination. Pursuant to 
section 733(c)(1)(A) of the Act, the Department postponed the 
preliminary determination of this investigation until May 5, 2010. See 
Seamless Refined Copper Pipe and Tube from the People's Republic of 
China and Mexico: Postponement of Preliminary Determinations of 
Antidumping Duty Investigations, 75 FR 8677 (February 25, 2010).
    On April 27, 2010, IUSA and Nacobre requested that, in the event of 
an affirmative preliminary determination in this investigation, the 
Department: 1) postpone its final determination by 60 days, in 
accordance with section 735(a)(2)(A) of the Act and 19 CFR 
351.210(b)(2)(ii); and 2) extend the application of the provisional 
measures prescribed under 19 CFR 351.210(e)(2) from a four-month period 
to a six-month period. For further discussion, see the ``Postponement 
of Final Determination and Extension of Provisional Measures'' section 
of this notice, below.

Period of Investigation

    The period of investigation (``POI'') is July 1, 2008, to June 30, 
2009. This period corresponds to the four most recent fiscal quarters 
prior to the month of the filing of the petition. See 19 CFR 
351.204(b)(1).

Scope of Investigation

    The products covered under this investigation consist of all copper 
pipe and tube, including redraw hollows, greater than or equal to 6 
inches (152.4 mm) in length and measuring less than 12.130 inches 
(308.102 mm) (actual) in outside diameter (``OD''), regardless of wall 
thickness, bore (e.g., smooth, enhanced with inner grooves or ridges), 
manufacturing process (e.g., hot finished, cold-drawn, annealed), outer 
surface (e.g., plain or enhanced with grooves, ridges, fins, or gills), 
end finish (e.g., plain end, swaged end, flared end, expanded end, 
crimped end, threaded), coating (e.g., plastic, paint), insulation, 
attachments (e.g., plain, capped, plugged, with compression or other 
fitting), or physical configuration (e.g., straight, coiled, bent, 
wound on spools).
    The scope of this investigation covers, but is not limited to, 
copper pipe and tube produced or comparable to the American Society for 
Testing and Materials (``ASTM'') ASTM-B42, ASTM-B68, ASTM-B75, ASTM-
B88, ASTM-B88M, ASTM-B188, ASTM-B251, ASTM-B251M, ASTM-B280, ASTM-B302, 
ASTM-B306, ASTM-359, ASTM-B743, ASTM-B819, and ASTM-B903 specifications 
and meeting the physical parameters described therein. Also included 
within the scope of this investigations are all sets of covered 
products, including ``line sets'' of copper pipe and tube (with or 
without fittings or insulation) suitable for connecting an outdoor air 
conditioner or heat pump to an indoor evaporator unit. The phrase ``all 
sets of covered products'' denotes any combination of items put up for 
sale that is comprised of merchandise subject to the scope.
    ``Refined copper'' is defined as: (1) metal containing at least 
99.85 percent by weight of copper; or (2) metal containing at least 
97.5 percent by weight of copper, provided that the content by weight 
of any other element does not exceed the following limits:

------------------------------------------------------------------------
                                                       LIMITING CONTENT
                       ELEMENT                         PERCENT BY WEIGHT
------------------------------------------------------------------------
Ag - Silver.........................................                0.25
As - Arsenic........................................                 0.5
Cd - Cadmium........................................                 1.3
Cr - Chromium.......................................                 1.4
Mg - Magnesium......................................                 0.8
Pb - Lead...........................................                 1.5
S - Sulfur..........................................                 0.7
Sn - Tin............................................                 0.8
Te - Tellurium......................................                 0.8
Zn - Zinc...........................................                 1.0
Zr - Zirconium......................................                 0.3
Other elements (each)...............................                 0.3
------------------------------------------------------------------------

    Excluded from the scope of this investigation are all seamless 
circular hollows of refined copper less than 12 inches in length whose 
OD (actual) exceeds its length. The products subject to this 
investigation are currently classifiable under subheadings 7411.10.1030 
and 7411.10.1090 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Products subject to this investigation may also enter 
under HTSUS subheadings 7407.10.1500, 7419.99.5050, 8415.90.8065, and 
8415.90.8085. Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the scope 
of this investigation is dispositive.

Scope Comments

    In accordance with the preamble to the Department's regulations 
(see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 
19, 1997)), in our Initiation Notice we set aside a period of time for 
parties to raise issues regarding product coverage, and encouraged all 
parties to submit comments within 20 calendar days of publication of 
the Initiation Notice. On November 12, 2009, Nacobre filed comments 
concerning the scope of this investigation.\1\ In its submission, 
Nacobre requested that the Department exclude from the scope of the 
investigation nine categories of copper pipe and tube. Nacobre asserted 
in its letter that the products covered by its exclusion request are 
not produced domestically and, therefore, should not be of interest to 
Petitioners. On January 11, 2010, Petitioners filed comments on 
Nacobre's scope exclusion request.\2\ Petitioners rebutted Nacobre's 
assertion that the products covered by its exclusion request are of no 
interest to Petitioners and that Petitioners do not and/or cannot 
produce them. Petitioners stated that they are interested in the 
categories of products as described by Nacobre. Petitioners contend 
that all nine categories of copper pipe and tube that Nacobre seeks to 
exclude fall within the scope. We do not find Nacobre's arguments made 
in its scope exclusion requests to be persuasive. Specifically, we find 
that it is not appropriate in this case to base a request

[[Page 26728]]

to exclude certain products from the scope of this investigation on an 
application or end-use, instead of the physical characteristics of the 
finished product. We have examined the nine products for which 
exclusion was proposed and have found that they all fall within the 
scope of this investigation. See Memorandum from the Team, Office 3, 
AD/CVD Operations, through James Terpstra, Program Manager, AD/CVD 
Operations, to Melissa Skinner, Office Director, AD/CVD Operations, 
entitled, ``Scope Exclusion Requests,'' dated May 5, 2010 (``Scope 
Exclusion Request Memo'').
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    \1\ See letter from Nacobre to the Department titled ``Seamless 
Refined Copper Pipe and Tube from Mexico: Comments on Scope of 
Investigation,'' dated November 12, 2009.
    \2\ See Letter from Petitioners to the Department titled, 
``Seamless Refined Copper Pipe and Tube from Mexico: Petitioners' 
Rebuttal Comments on Scope of Investigation'' (January 11, 2010). 
Note this letter was re-filed under both case numbers for the 
instant Mexico and People's Republic of China investigations. See 
Letter from Pet'' (March 30, 2010) (``Petitioners' Rebuttal to 
Nacobre'').
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    The Department also received comments submitted on behalf of 
BrassCraft Manufacturing (``BrassCraft'') and Johnson Controls, Inc. 
(``JCI''). In its letter dated March 16, 2010, BrassCraft seeks to 
exclude from the scope of the investigation cut-to-length copper tube 
under 40 inches in length.\3\ In its March 30, 2010, comments, 
Petitioners reject BrassCraft's proposed scope exclusion and reject the 
stated rationale.\4\ Based on the language of the scope of the 
investigation, the Department has determined that copper pipe and tube 
between six and 40 inches is covered by the scope of the investigation. 
Therefore, the Department is denying BrassCraft's scope exclusion 
request.
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    \3\ See letter from BrassCraft to the Department, dated March 
16, 2010, at 2.
    \4\ See letter from Petitioners to the Department titled 
``Seamless Refined Copper Pipe and Tube from Mexico: Petitioners' 
Rebuttal Comments on Scope of Investigation,'' dated January 11, 
2010. (collectively, ``Petitioners' BrassCraft/JCI Comments'') at 2-
3.
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    In its November 10, 2010, letter, JCI seeks to exclude from the 
scope of the investigation ``inner groove copper pipe and tube produced 
from the cast and roll technology.''\5\ Petitioners rebut JCI, stating 
that there are generally no differences in the resulting product from 
either the extrusion or cast and roll processes. Furthermore, 
Petitioners assert that it is incorrect for JCI to propose a product 
exclusion based on a manufacturing process instead of objective 
physical characteristics for the finished product.\6\ The scope of the 
investigation includes all seamless circular refined copper pipe and 
tube at least six inches in length, of either smooth bore or enhanced 
bore (without regard to a specific method of fabrication). Based on the 
fact that ``inner groove'' tube is considered to be an ``enhanced 
bore,'' and is defined by the scope of the investigation, the 
Department finds that the inner groove pipe and tube produced from the 
cast and roll technology referenced by JCI falls within the scope of 
the investigation.\7\
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    \5\ See letter from JCI to the Department, dated November 10, 
2010 at 6.
    \6\ See Petitioners' BrassCraft/JCI Comments at 3-4.
    \7\ See Scope Exclusion Request Memo.
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Product Comparisons

    We have taken into account the comments that were submitted by the 
interested parties concerning product-comparison criteria. In 
accordance with section 771(16) of the Act, all products produced by 
the respondent covered by the description in the ``Scope of 
Investigation'' section, above, and sold in Mexico during the POI are 
considered to be foreign like product for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied on nine 
criteria to match U.S. sales of subject merchandise to comparison-
market sales of the foreign like product: 1) type and ASTM 
specification, 2) copper alloy unified number system, 3) outer 
diameter, 4) wall thickness, 5) physical form, 6) temper designation, 
7) bore, 8) outer surface, and 9) attachments. Where there were no 
sales of identical merchandise in the home market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to 
sales of the next most similar foreign like product on the basis of the 
characteristics listed above, which were made in the ordinary course of 
trade.

Line Sets

    A line set is composed of two sections of copper tubing: a liquid 
line and a suction line. The tubes have different diameters and wall 
thicknesses and the suction line is insulated, while the liquid line is 
not. Line sets are sold as one product and there is not a separate 
price for each constituent component. See IUSA Section A questionnaire 
response dated December 24, 2009, at A-64.
    During the POI, IUSA sold line sets in the United States which were 
fully manufactured in Mexico. In order to derive price-based normal 
values for these sales, Petitioners have proposed several different 
methods for deriving a price for the constituent elements that are 
subject merchandise, e.g., allocating the total price by weight. IUSA 
has argued that it considers line sets as a distinct product, rather 
than as a collection of different types of subject merchandise. IUSA 
has also argued that there is no accurate way to derive a price for the 
constituent elements because the line set product is sold as a 
combination of two components with additional features (e.g., a liquid 
line and suction line which may have insulation added). IUSA claims 
that it would be distortive to derive a price for the constituent 
components, because the line set is a unique product which is not sold 
in the home market. Based on the data reported by IUSA, we 
preliminarily determine that line sets are sold as one product and, in 
the absence of home market sales of line sets, we are relying on 
constructed value as the basis for normal value. See sections 773(e) 
and (f) of the Act; see also 19 CFR 351.405.
    IUSA sells to its U.S. affiliate, Cambridge-Lee Industries 
(``CLI''), level wound coil, which is further processed in the United 
States and sold as a line set. See IUSA Section A questionnaire 
response (revised bracketed version), dated February 19, 2010, at A-67. 
IUSA also reported that it sells line sets which are made of imported 
subject merchandise and further processed in the United States. IUSA 
asked to be excused from reporting further manufacturing costs for the 
small portion of its line sets that are assembled in the United States 
by its affiliate. Because the further manufactured sales account for a 
small portion of IUSA's total U.S. sales, we granted IUSA's request not 
to respond to Section E (Cost of Further Manufacture or Assembly 
Performed in the United States) of the Department's questionnaire.\8\
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    \8\ See, e.g., Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Canned 
Pineapple Fruit From Thailand, 60 FR 2734 (January 11, 1995) at 
2734-2735. See also; Final Determination of Sales at Less Than Fair 
Value: Coated Groundwood Paper from Finland, 56 FR 56363 (November 
4, 1991). See also the Department's antidumping duty questionnaire 
issued to IUSA and Nacobre on December 2, 2009.
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    In similar cases where we allow respondents not to report certain 
information in investigations to simplify reporting, the U.S. sales 
involved are normally not reported. This case is unique because the 
affected sales were reported by IUSA.\9\ IUSA indicated that its 
accounting records do not allow it to identify whether the line sets 
sold in the

[[Page 26729]]

United States were manufactured in Mexico or further processed in the 
United States because they are commingled in inventory by its U.S. 
affiliate, CLI.\10\ Therefore, IUSA stated that where products 
identical to subject merchandise were commingled in CLI's inventory, 
IUSA reported all CLI sales of the commingled products during the POI. 
As a result, IUSA's reported U.S. sales database includes all line sets 
sold, a portion of which are the line sets further manufactured in the 
United States. Thus, we have some U.S. sales that were further 
manufactured in the United States but we do not have the relevant costs 
that would normally be deducted.
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    \9\ IUSA explained that, in addition to the merchandise under 
investigation manufactured by IUSA in Mexico, IUSA's affiliate, CLI, 
manufactures copper tube in the United States. CLI also purchases 
limited quantities of non-subject copper tube from third party 
producers. Some of the non-subject tube manufactured by CLI or 
obtained from third party producers is physically identical to 
subject merchandise manufactured by IUSA and purchased by and added 
to CLI's inventory. In those instances, the CLI or third party-
produced non-subject merchandise is commingled in CLI warehouses 
with the imports of subject merchandise produced by IUSA in Mexico. 
See submission from IUSA to Department titled, ``Seamless Refined 
Copper Pipe and Tube from Mexico: Treatment of Commingled Inventory 
of Non-Subject Merchandise,'' dated April 27, 2010.
    \10\ See IUSA's April 12, 2010 submission at 2-3.
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    IUSA proposed that the sales quantity, for sales of commingled 
products during the POI, should be based on the ratio of imports of 
IUSA's merchandise into the United States into CLI's inventory of each 
Mexican-produced commingled product during the POI to total additions 
to CLI's inventory of each such commingled product during the POI. For 
purposes of the preliminary determination, we have accounted for U.S. 
further manufactured line sets by reducing U.S. sales of line sets by 
the ratio of sales of further manufactured lines sets to total sales of 
line sets.\11\ See the memorandum titled, ``Calculation Memorandum for 
IUSA, S.A. de C.V. and its affiliates (``IUSA''), for the Preliminary 
Determination of Antidumping Investigation of Seamless Refined Copper 
Pipe and Tube from Mexico,'' dated May 5, 2010 (``IUSA Sales 
Calculation Memo'').
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    \11\ See Final Determination of Sales at Less Than Fair Value: 
Canned Pineapple Fruit from Thailand, 60 FR 29553 (June 5, 1995) and 
accompanying Issues and Decision Memorandum at Comment 8.
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Fair Value Comparisons

    To determine whether respondents' sales of copper pipe and tube 
from Mexico to the United States were made at LTFV, we compared the 
export price (``EP'') and constructed export price (``CEP'') to normal 
value (``NV''), as described in the ``Export Price/Constructed Export 
Price'' and ``Normal Value'' sections of this notice. In accordance 
with section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-
average EPs and CEPs to POI weighted-average NVs.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, in accordance with sections 772(a) and (b) of the Act. Pursuant to 
section 772(a) of the Act, we used the EP methodology when the 
merchandise was sold by the producer or exporter outside the United 
States directly to the first unaffiliated purchaser in the United 
States prior to importation and when CEP was not otherwise warranted 
based on the facts on the record. We calculated CEP for those sales 
where a person in the United States, affiliated with the foreign 
exporter or acting for the account of the exporter, made the sale to 
the first unaffiliated purchaser in the United States of the subject 
merchandise. See section 772(b) of the Act. We based EP and CEP on the 
packed prices charged to the first unaffiliated customer in the United 
States and the applicable terms of sale.
    In accordance with section 772(c)(2) of the Act, we calculated EP 
for a number of IUSA and Nacobre'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. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act, 
which included, where appropriate, foreign inland freight to the port, 
foreign brokerage, international freight, marine insurance, U.S. inland 
freight from the port to warehouse, U.S. warehouse expenses, U.S. 
inland freight from the warehouse to the unaffiliated customer, U.S. 
brokerage and handling expenses, and U.S. customs duty.
    In accordance with section 772(b) of the Act, we calculated CEP 
where the record established that sales made by IUSA and Nacobre were 
made in the United States after the date of importation by or for the 
account of the producer or exporter, or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter. Where appropriate, we made deductions from the starting 
price for foreign inland freight to the port, foreign brokerage, 
international freight, marine insurance, U.S. inland freight from the 
port to warehouse, U.S. warehouse expenses, U.S. inland freight from 
the warehouse to the unaffiliated customer, U.S. brokerage and handling 
expenses, U.S. customs duty, credit expenses, inventory carrying costs 
incurred in the United States, and other indirect selling expenses in 
the United States associated with economic activity in the United 
States. See sections 772(c)(2)(A) and 772(d)(1) of the Act. Pursuant to 
section 772(d)(3) of the Act, we made an adjustment for CEP profit.

Normal Value

A. Home Market Viability and Comparison-Market Selection

    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 
equal to or greater than five percent of the aggregate volume of U.S. 
sales), we compared respondents' volume of home market sales of the 
foreign like product to its volume of U.S. sales of the subject 
merchandise. See section 773(a)(1)(C) of the Act. Based on this 
comparison, we determined that respondents had a viable home market 
during the POI. Consequently, we based NV on home market sales.

B. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP. Pursuant to 19 CFR 
351.412(c)(1)(iii), the NV LOT is based on the starting price of the 
sales in the comparison market or, when NV is based on constructed 
value, the starting price of the sales from which we derive selling, 
general and administrative expenses, and profit. For EP sales, the U.S. 
LOT is based on the starting price of the sales in the U.S. market, 
which is usually from exporter to importer.  See 19 CFR 
351.412(c)(1)(i). (For CEP sales, the U.S. LOT is based on the starting 
price of the U.S. sales, as adjusted under section 772(d) of the Act, 
which is 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 
unaffiliated 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 an 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 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 Notice of 
Final Determination of Sales at Less

[[Page 26730]]

Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South 
Africa, 62 FR 61731, 61732 61733 (November 19, 1997).

1. IUSA

    In this investigation, we obtained information from IUSA regarding 
the marketing stages involved in making its reported home market and 
U.S. market sales, including a description of the selling activities 
performed by the respondent and its affiliates for each channel of 
distribution. IUSA reported that it made sales to end users in the home 
market through two channels of distribution: 1) factory direct to 
customers; and 2) factory to customer via distribution center. IUSA 
made both EP sales of subject merchandise to U.S. customers and CEP 
sales of subject merchandise through its affiliate, CLI.
    We examined information from IUSA regarding the marketing stages 
involved in making its reported home market and U.S. market sales. IUSA 
described its selling activities performed, and provided a table 
comparing the selling functions performed among each channel of 
distribution for both markets. See IUSA revised Section A response at 
A-25 to A-28, and Exhibit SQ-4 (A-7). We reviewed the nature of the 
selling functions and the intensity to which all selling functions were 
performed for each home market channel of distribution and customer 
category and between IUSA's EP and home market channels of distribution 
and customer categories. We found no differences in the levels of 
intensity performed for selling functions between the two home market 
channels of distribution. Based on our analysis of all of IUSA's home 
market selling functions, we find all home market sales were made at 
the same LOT. Further, we find only minor differences between the sole 
home market LOT and that of IUSA's EP sales. Accordingly, we 
preliminarily determine IUSA's home market and EP sales were made at 
the same LOT.
    We then compared the NV LOT, based on the selling activities 
associated with the transactions between IUSA and its customers in the 
home market, to the CEP LOT, which is based on the selling activities 
associated with the transaction between IUSA and its affiliated 
importer, CLI. Our analysis indicates the selling functions performed 
for home market customers are performed at a higher degree of intensity 
than the selling functions performed for CLI. Based on the foregoing, 
we conclude that the NV LOT is at a more advanced stage than the CEP 
LOT. Due to the proprietary nature of this discussion, see IUSA Sales 
Calculation Memo.
    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 investigation. 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 CEP sales. See 19 CFR 351.412(d)(1)(ii). Furthermore, we have no 
other information that provides an appropriate basis for determining an 
LOT adjustment. Consequently, because the data available do not form an 
appropriate basis for making an LOT adjustment, even though the home 
market LOT is at a more advanced stage of distribution than the CEP 
LOT, we made a CEP offset to NV in accordance with section 773(a)(7)(B) 
of the Act. The CEP offset is calculated as the lesser of: (1) the 
indirect selling expenses incurred on the home market sales, or (2) the 
indirect selling expenses deducted from the starting price in 
calculating CEP. Id.

2. Nacobre

    We obtained information from Nacobre regarding the marketing stages 
involved in making its reported home market and U.S. sales, including a 
description of the selling activities performed by the respondent and 
its affiliates for each channel of distribution. In the home market, 
Nacobre reported that it made sales through two channels of 
distribution, in which both channels include certain activities 
performed by its affiliated company to its customers. Nacobre described 
its selling activities performed, and provided a table comparing the 
selling functions performed among each channel of distribution for both 
markets. See Nacobre's revised Section A questionnaire response 
(Nacobre's AQR), dated February 12, 2010, at A-5, A-32 to A-33, and 
Nacobre's AQR at Exhibit A-21. We reviewed the nature of the selling 
functions and the intensity to which all selling functions were 
performed for the home market channel of distribution and customer 
category. Based on our analysis of the selling functions and sales 
process, we found no appreciable differences in the functions performed 
in selling to different types of customers in the two home market 
channels of distribution. Thus, sales to these customers constitute a 
single marketing stage and, therefore, we continue to find that all of 
Nacobre's home market sales were made at one LOT.
    In the U.S. market, Nacobre reported that it made sales through two 
channels of distribution: 1) from Nacobre through its affiliated 
company to its U.S. customers; and 2) from Nacobre to its customers in 
Puerto Rico. Nacobre made EP sales of subject merchandise to U.S. 
customers and CEP sales of subject merchandise through its affiliate, 
Copper & Brass International Corporation (``CBI''). After adjusting CEP 
sales in accordance with section 772(d) of the Act, we find no 
substantial differences in selling activities between EP and CEP sales. 
Therefore, after adjusting CEP sales in accordance with section 772(d) 
of the Act, there are no appreciable differences in the functions 
performed in selling to different types of customers in the two U.S. 
channels of distribution. Thus, we find that Nacobre's U.S. sales were 
made at the same LOT.
    We then compared the NV LOT, based on the selling activities 
associated with the transactions between Nacobre and its customers in 
the home market, to the U.S. LOT, which is based on the selling 
activities associated with the transaction between Nacobre and its 
affiliated reseller, CBI. Based on our analysis, we find that the 
selling functions performed for home market customers are at a more 
advanced stage of distribution than the selling functions performed for 
CBI. Therefore, we conclude that the NV LOT is at a more advanced stage 
than the CEP LOT. Due to the proprietary nature of this discussion, see 
the memorandum titled, ``Calculation Memorandum for Nacobre, S.A. de 
C.V. and its affiliates (``Nacobre''), for the Preliminary 
Determination of Antidumping Investigation of Seamless Refined Copper 
Pipe and Tube from Mexico,'' dated May 5, 2010 (``Nacobre Sales 
Calculation Memo'').
    Because we found that the home market and U.S. sales were made at 
different LOTs, we examined whether an LOT adjustment or a CEP offset 
may be appropriate in this investigation. 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 CEP sales. See 19 CFR 351.412(d)(1)(ii). Furthermore, we have no 
other information that provides an appropriate basis for determining an 
LOT adjustment. Consequently, because the data available do not form an 
appropriate

[[Page 26731]]

basis for making an LOT adjustment, even though the home market LOT is 
at a more advanced stage of distribution than the CEP LOT, we made a 
CEP offset to NV in accordance with section 773(a)(7)(B) of the Act. 
The CEP offset is calculated as the lesser of: (1) the indirect selling 
expenses incurred on the home market sales, or (2) the indirect selling 
expenses deducted from the starting price in calculating CEP. Id.

C. Cost Reporting Period

    The Department's normal practice is to calculate an annual 
weighted-average cost for the entire period of investigation or period 
of review. See, e.g., Notice of Final Results of Antidumping Duty 
Administrative Review: Certain Pasta from Italy, 65 FR 77852 (December 
13, 2000), and accompanying Issues and Decision Memorandum at Comment 
18, and Notice of Final Results of Antidumping Duty Administrative 
Review: Carbon and Certain Alloy Steel Wire Rod from Canada, 71 FR 3822 
(January 24, 2006), and accompanying Issues and Decision Memorandum at 
Comment 5 (explaining the Department's practice of computing a single 
weighted-average cost for the entire period). This methodology is 
predictable and generally applicable in all proceedings. However, the 
Department recognizes that possible distortions may result if our 
normal annual weighted-average cost method is used during a period of 
significant cost changes.
    Under these circumstances, in determining whether to deviate from 
our normal methodology of calculating an annual weighted average cost, 
the Department has evaluated the case-specific record evidence using 
two primary factors: (1) the change in the cost of manufacturing 
(``COM'') recognized by the respondent during the POI must be deemed 
significant; and (2) the record evidence must indicate that sales 
during the shorter averaging periods could be reasonably linked with 
the cost of production (``COP'') or constructed value (``CV'') during 
the same shorter averaging periods. See, e.g., Stainless Steel Plate in 
Coils From Belgium: Final Results of Administrative Review, 73 FR 
75398, 75399 (December 11, 2008) and Stainless Steel Sheet and Strip in 
Coils from Mexico: Final Results of Administrative Review, 75 FR 6627 
(February 10, 2010).
a. Significance of Cost Changes
    Record evidence indicates that both IUSA and Nacobre experienced 
significant changes in the total COM during the POI and that the 
changes in COM are primarily attributable to the price volatility for 
copper, the main input consumed in the production of the merchandise 
under consideration. The record indicates that copper prices changed 
dramatically throughout the POI. Specifically, the record data shows 
that the percentage difference between the high and low quarterly costs 
for seamless refined copper pipe and tube products exceeded 25 percent 
during the POI. As a result, we have determined that for the 
preliminary determination the changes in COM for IUSA and Nacobre are 
significant.
b. Linkage between Cost and Sales Information
    If the Department finds cost changes to be significant in a given 
investigation or administrative review, the Department evaluates 
whether there is evidence of linkage between the cost changes and the 
sales prices for the given POI/POR. Our definition of linkage does not 
require direct traceability between specific sales and their specific 
production cost, but rather relies on whether there are elements which 
would indicate a reasonable correlation between the underlying costs 
and the final sales prices levied by the company. These correlative 
elements may be measured and defined in a number of ways depending on 
the associated industry, and the overall production and sales 
processes. See, e.g., Stainless Steel Bar from India: Preliminary 
Results of Antidumping Duty Administrative Review 75 FR 12204 (March 
15, 2010).
    In the instant case, based on record evidence we find that the cost 
changes and sales prices for IUSA and Nacobre appear to be reasonably 
correlated. Because the data on which we base our analysis contains 
business proprietary information, a detailed analysis is included in 
the Memorandum to Neal M. Halper, ``Cost of Production and Constructed 
Value Calculation Adjustments for the Preliminary Determination IUSA, 
S.A. de C.V.'' dated May 5, 2010 (``IUSA Preliminary Cost 
Memorandum''), and Memorandum to Neal M. Halper, ``Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Determination Nacional de Cobre, S.A. de C.V.'' dated May 5, 2010 
(``Nacobre Preliminary Cost Memorandum'').
    In light of the two factors discussed above, we preliminarily 
determined that it is appropriate to rely on a shorter cost periods 
with respect to IUSA and Nacobre. Thus, we used quarterly indexed 
annual average copper costs and annual weighted-average fabrication 
costs in the COP and CV calculations. See IUSA Preliminary Cost 
Memorandum and Nacobre Preliminary Cost Memorandum.

D. Cost of Production Analysis

    Based on the Department's analysis of the Petitioner's allegation 
in the petition, we initiated a sales-below-cost investigation to 
determine whether IUSA and Nacobre had sales that were made at prices 
below their COP pursuant to section 773(b) of the Act. See Initiation 
Notice at 55198.

1. Calculation of Cost of Production

    Before making any comparisons to NV, we conducted a quarterly COP 
analysis of IUSA and Nacobre's pursuant to section 773(b)(3) of the Act 
to determine whether IUSA and Nacobre's comparison market sales were 
made at prices below the COP. We calculated the COP based on the sum of 
the cost of materials and fabrication for the foreign like product, 
plus amounts for SG&A expenses and packing, in accordance with section 
773(b)(3) of the Act.
    The Department relied on the COP data submitted by IUSA and Nacobre 
and their supplemental section D questionnaire responses for the COP 
calculation, except for the following instances where the information 
was not appropriately quantified or valued:

IUSA:

    1. We adjusted IUSA's reported quarterly copper costs to reflect 
the purchases of copper scrap ingots from affiliated parties at arm's 
length prices.
    For additional details, see IUSA Preliminary Cost Memorandum.

Nacobre:

    1. We reclassified the corporate rent expense from the reported 
fixed manufacturing overhead costs to G&A expenses.
    2. We disallowed certain non-operating income offsets to the G&A 
expenses because they were inadequately supported. We reduced the 
denominator of Nacobre's G&A expense ratio by the estimated loss of 
value of inventory. This estimated loss of value of inventory was not 
included in the reported costs, however, it was included by Nacobre in 
its cost of goods sold denominator.
    3. We set the reported interest expenses to zero.
    For additional details, see Nacobre Preliminary Cost Memorandum.

2. Test of Comparison Market Prices

    As required under section 773(b)(2) of the Act, we compared the 
quarterly

[[Page 26732]]

weighted average COP to the per-unit price of the comparison market 
sales of the foreign like product to determine whether these sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. We 
determined the net comparison market prices for the below cost test by 
subtracting from the gross unit price any applicable movement charges, 
discounts, rebates, direct and indirect selling expenses (also 
subtracted from the COP), and packing expenses. See IUSA Sales 
Calculation Memo and Nacobre Sales Calculation Memo.

3. Results of COP Test

    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of the respondent's home market sales of a given model were at 
prices below the COP, we did not disregard any below-cost sales of that 
model because we determined that the below-cost sales were 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 were 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 indexed POI weighted-average COPs, 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.
    Therefore, for IUSA and Nacobre, we disregarded below-cost sales of 
a given product of 20 percent or more and used the remaining sales as 
the basis for determining NV, in accordance with section 773(b)(1) of 
the Act. See IUSA Sales Calculation Memo and Nacobre Sales Calculation 
Memo.

E. Calculation of Normal Value Based on Comparison-Market Prices

    We calculated NV for IUSA and Nacobre on the reported packed, ex-
factory or delivered prices to comparison market customers. We made 
deductions from the starting price, where appropriate, for billing 
adjustments, early payment discounts, rebates, inland freight, foreign 
inland freight and warehousing expenses where appropriate, pursuant to 
section 773(a)(6)(B)(ii) of the Act.
    Pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410(b), we made, where appropriate, circumstance-of-sale 
adjustments. We added U.S. packing costs and deducted home market 
packing costs, in accordance with sections 773(a)(6)(A) and (B)(i) of 
the Act. Finally, we made a CEP offset pursuant to section 773(a)(7)(B) 
of the Act and 19 CFR 351.412(f). We calculated the CEP offset as the 
lesser of the indirect selling expenses incurred on the home market 
sales or the indirect selling expenses deducted from the starting price 
in calculating CEP.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We based this 
adjustment on the difference in the variable cost of manufacturing for 
the foreign like product and subject merchandise. See 19 CFR 
351.411(b).

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act and 19 CFR 351.415(a) based on the exchange 
rates in effect on the dates of the U.S. sales as certified by the 
Federal Reserve Bank.

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
the information relied upon in making our final determination for IUSA 
and Nacobre.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we will direct 
U.S. Customs and Border Protection (CBP) to suspend liquidation of all 
entries of copper pipe and tube from Mexico that are entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. We will also 
instruct CBP to require a cash deposit or the posting of a bond equal 
to the weighted-average dumping margins, as indicated in the chart 
below. These suspension-of-liquidation instructions will remain in 
effect until further notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                       Weighted-Average
                Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
IUSA S.A. de C.V....................................               29.52
Nacional de Cobre, S.A. de C.V......................               32.27
All Others..........................................               30.90
------------------------------------------------------------------------

All-Others Rate

    Section 735(c)(5)(A) of the Act provides that the estimated ``All 
Others'' rate shall be an amount equal to the weighted average of the 
estimated weighted-average dumping margins established for exporters 
and producers individually investigated, excluding any zero or de 
minimis margins, and any margins determined entirely under section 776 
of the Act. IUSA and Nacobre are the only respondents in this 
investigation for which the Department has calculated a company-
specific rate that is not zero or de minimis. Therefore, for purposes 
of determining the ``all others'' rate and pursuant to section 
735(c)(5)(A) of the Act, we are using the simple average of the dumping 
margins calculated for IUSA and Nacobre for the ``all others'' rate, as 
referenced in the Suspension of Liquidation section, above.

Disclosure

    The Department will disclose to parties the calculations performed 
in connection with this preliminary determination within five days of 
the date of publication of this notice. See 19 CFR 351.224(b).

Postponement of Final Determination and Extension of Provisional 
Measures

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters, who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    On April 27, 2010, IUSA and Nacobre requested that in the event of 
an affirmative preliminary determination in this investigation, the 
Department postpone its final determination by 60 days (135 days after 
publication of the preliminary determination) and extend the 
application of the provisional measures prescribed under section 733(d) 
of the Act and 19 CFR 351.210(e)(2), from a four-month period to a six-
month period. In accordance with section 735(a)(2)(A) of the Act and 19 
CFR 351.210(b)(2)(ii), because: (1) our preliminary determination is 
affirmative; (2) the requesting producers/exporters account for a 
significant proportion of exports of the

[[Page 26733]]

subject merchandise; and (3) no compelling reasons for denial exist, we 
are granting this request and are postponing the final determination 
until no later than 135 days after the publication of this notice in 
the Federal Register. Suspension of liquidation will be extended 
accordingly.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of the Department's preliminary affirmative determination. If the 
Department's final determination is affirmative, the ITC will determine 
before the later of 120 days after the date of this preliminary 
determination or 45 days after our final determination whether imports 
of copper pipe and tube from Mexico are materially injuring, or 
threatening material injury to, the U.S. industry. See section 
735(b)(2) of the Act. Because we are postponing the deadline for our 
final determination to 135 days from the date of the publication of 
this preliminary determination, the ITC will make its final 
determination no later than 45 days after our final determination.

Public Comment

    Interested parties are invited to comment on the preliminary 
determination. Interested parties may submit case briefs to the 
Department no later than seven days after the date of the issuance of 
the last verification report in this proceeding. See 19 CFR 
351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to 
the issues raised in the case briefs, must be filed within five days 
from the deadline date for the submission of case briefs. See 19 CFR 
351.309(d)(1) and 19 CFR 351.309(d)(2). A list of authorities used, a 
table of contents, and an executive summary of issues should accompany 
any briefs submitted to the Department. Executive summaries should be 
limited to five pages total, including footnotes. Further, we request 
that parties submitting briefs and rebuttal briefs provide the 
Department with a copy of the public version of such briefs on 
diskette. In accordance with section 774(1) of the Act, the Department 
will hold a public hearing, if timely requested, to afford interested 
parties an opportunity to comment on arguments raised in case or 
rebuttal briefs, provided that such a hearing is requested by an 
interested party. See also 19 CFR 351.310. If a timely request for a 
hearing is made in this investigation, we intend to hold the hearing 
two days after the rebuttal brief deadline date at the U.S. Department 
of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230, at a time and in a room to be determined. Parties should confirm 
by telephone, the date, time, and location of the hearing 48 hours 
before the scheduled date.
    Interested parties who wish to request a hearing, or to participate 
in a hearing if one is requested, must submit a written request to the 
Assistant Secretary for Import Administration, U.S. Department of 
Commerce, Room 1870, within 30 days of the publication of this notice.
    Requests should contain: (1) the party's name, address, and 
telephone number; (2) the number of participants; and (3) a list of the 
issues to be discussed. At the hearing, oral presentations will be 
limited to issues raised in the briefs.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: May 5, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-11342 Filed 5-11-10; 8:45 am]
BILLING CODE 3510-DS-S