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[Federal Register Volume 74, Number 116 (Thursday, June 18, 2009)]
[Notices]
[Pages 28883-28886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-14366]

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DEPARTMENT OF COMMERCE

International Trade Administration

A-201-805

Preliminary Results of Antidumping Duty Changed Circumstances 
Review: Certain Circular Welded Non-Alloy Steel Pipe and Tube From 
Mexico

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

SUMMARY:  On October 27, 2008, the Department of Commerce (the 
Department) published in the Federal Register a notice of initiation of 
a changed circumstances review of the antidumping duty order on certain 
circular welded non-alloy steel pipe and tube (standard pipe and tube) 
from Mexico in order to determine whether Ternium Mexico, S.A. de C.V. 
(Ternium) is the successor-in-interest to Hylsa S.A. de C.V. (Hylsa) 
for purposes of determining antidumping duty liability. See Notice of 
Initiation of Antidumping Duty Changed Circumstances Review: Circular 
Welded Non-Alloy Steel Pipe and Tube, 73 FR 63682 (October 27, 2008) 
(Notice of Initiation). We have preliminarily determined that Ternium 
is the successor-in-interest to Hylsa for purposes of determining 
antidumping duty liability in this proceeding. Interested parties are 
invited to comment on these preliminary results.

EFFECTIVE DATE: June 18, 2009.

FOR FURTHER INFORMATION CONTACT: John Drury or Brian Davis, 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-
0195 or (202) 482-7924, respectively.

SUPPLEMENTARY INFORMATION:

Background

    The Department published an antidumping duty order on standard pipe 
and tube from Mexico on November 2, 1992. 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 Circular 
Welded Non-Alloy Steel Pipe from Korea, 57 FR 49453 (November 2, 1992).
    On September 3, 2008, Ternium filed a request for a changed 
circumstances review of the antidumping duty order on standard pipe and 
tube from Mexico (Initial Submission) claiming that Hylsa, a Mexican 
producer of standard pipe and tube, changed its name to Ternium. 
Ternium requested that the Department determine whether it is the 
successor-in-interest to Hylsa, in accordance with section 751(b) of 
the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.216. In 
its request, Ternium indicated that effective April 1, 2008, the 
production and sales operations of Hylsa were transferred to Ternium 
(the transfer).\1\ In response to this request the Department initiated 
a changed circumstances review of the antidumping duty order on 
standard pipe and tube from Mexico. See Notice of Initiation.
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    \1\ Prior to the reorganization effective April 1, 2008, Ternium 
was a holding company and did not have any production or sales 
operations. See Ternium's Initial Submission at page 2.
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    On September 17, 2008, Allied Tube and Conduit (petitioner) filed a 
response to Ternium's Initial Submission and on September 29, 2008, 
Ternium responded to petitioner's September 17, 2008, filing (September 
29, 2008, submission). On November 13, 2008, the Department issued a 
questionnaire to Ternium requesting additional information regarding 
Ternium's successor-in-interest changed circumstances review request. 
On December 9, 2008, Ternium submitted its response to the Department's 
questionnaire (SQR). On January 16, 2009, the Department issued a 
second supplemental questionnaire and on February 9, 2009, Ternium 
submitted its response (SSQR). On April 8, 2009, the Department issued 
a third supplemental questionnaire, and on April 22, 2009, Ternium 
submitted its response (SSSQR). In our Notice of Initiation, we invited 
interested parties to comment. We did not receive any comments other 
than those made by petitioner on September 17, 2008.

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

[[Page 28884]]

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 pipes and tubes 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 
this order. 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 and tube that is dual or triple 
certified/stenciled that enters the United States as line pipe of a 
kind used for oil or gas pipelines is also not included in this order.
    Imports of the products covered by this order are currently 
classifiable under the following Harmonized Tariff Schedule (HTS) 
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 HTS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this order is 
dispositive.

Successor-in-Interest Determination

    In making a successor-in-interest determination, the Department 
typically examines several factors including, but not limited to, 
changes in: (1) management, (2) production facilities, (3) supplier 
relationships, and (4) customer base. See, e.g., Notice of Final 
Results of Changed Circumstances Antidumping Duty Administrative 
Review: Polychloroprene Rubber from Japan, 67 FR 58 (January 2, 2002); 
Brass Sheet and Strip from Canada: Final Results of Antidumping Duty 
Administrative Review, 57 FR 20460, 20462 (May 13, 1992). While no 
single factor or combination of factors will necessarily provide a 
dispositive indication of a successor-in-interest relationship, the 
Department will generally consider the new company to be the successor 
to the previous company if the new company's resulting operation is not 
materially dissimilar to that of its predecessor. See, e.g., Fresh and 
Chilled Atlantic Salmon from Norway; Final Results of Changed 
Circumstances Antidumping Duty Administrative Review, 64 FR 9979 (March 
1, 1999); Industrial Phosphoric Acid from Israel; Final Results of 
Changed Circumstances Review, 59 FR 6944 (February 14, 1994). Thus, if 
the evidence demonstrates that, with respect to the production and sale 
of the subject merchandise, the new company operates as the same 
business entity as the former company, the Department will accord the 
new company the same antidumping treatment as its predecessor. See, 
e.g., Fresh and Chilled Atlantic Salmon from Norway: Final Results of 
Changed Circumstances Antidumping Duty Administrative Review, 64 FR 
9979-980 (March 1, 1999).

Preliminary Results

    In accordance with 19 CFR 351.221(c)(3)(i), we preliminarily 
determine that Ternium is the successor-in-interest to Hylsa. In its 
September 3, 2008, September 29, 2008, December 9, 2008, February 9, 
2009, and April 22, 2009, submissions, Ternium provided evidence 
supporting its claim to be the successor-in-interest to Hylsa.\2\ 
Documentation attached to Ternium's September 3, 2008, September 29, 
2008, December 9, 2008, February 9, 2009, and April 22, 2009, 
submissions shows that the transfer of production and sales operations 
from Hylsa to Ternium resulted in little or no change in management, 
production facilities, supplier relationships, or customer base. This 
documentation is identified and discussed further below.
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    \2\ In our Notice of Initiation, we referred to Ternium's 
request as a ``name change.'' However, as explained above it is 
related to the transfer of production and sales functions from Hylsa 
to Ternium (i.e., an acquisition). Effective April 1, 2008, Hylsa 
exists solely as a service company which employs workers at the 
former Hylsa facilities and provides its services to Ternium on a 
contract basis. See Ternium's Initial Submission at page 2.
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    In its Initial Submission, at page 2, Ternium stated that Ternium 
S.A., a Luxemburg corporation (Ternium Luxemburg), acquired ownership 
of 99.3 percent of Hylsamex S.A. de C.V.'s (Hylsamex) \3\ (and as a 
result, Hylsamex's subsidiary Hylsa) outstanding shares on August 22, 
2005. Ternium also stated that following this acquisition, Hylsa's 
operating and corporate structure were reorganized in several stages, 
the most recent of which took effect April 1, 2008, when the production 
and sales operations of Hylsa were transferred to Ternium. Id. at page 
2. Ternium also explained in its Initial Submission that the 
corporation now known as Ternium was a holding company that was 
acquired by Ternium Luxemburg in July 2007, when it acquired Grupo 
IMSA, SAB de C.V. (Grupo IMSA). Id. at page 2, footnote 1. According to 
Ternium, the name of that holding company was changed from Grupo IMSA 
to Ternium, effective December 13, 2007. Id. at page 2, footnote 1.
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    \3\ Hylsamex is the former parent company of Hylsa. On August 
22, 2005, Ternium Luxemburg (the corporate parent of Ternium (see 
Ternium's SQR at page 10)), acquired Hylsamex. See Ternium's Initial 
Submission at page 2.
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    Ternium noted in its September 29, 2008 submission, at page 2, that 
through Ternium Luxemburg's acquisition of Grupo IMSA/Ternium, Ternium 
Luxemburg also acquired ownership of Grupo IMSA's subsidiary IMSA, S.A. 
de C.V. (IMSA). In Ternium's September 29, 2008 submission, at page 2, 
Ternium explained that following Ternium Luxemburg's acquisition of 
Grupo IMSA, Ternium Luxemburg owned two separate holding companies 
(i.e., Hylsamex and Grupo IMSA) which each separately continued to hold 
the ownership of their subsidiaries (Hylsa and IMSA, respectively). 
Also in its September 29, 2008, submission, at page 3, Ternium stated 
that IMSA (1) produces little, if any, subject merchandise and (2) does 
not produce or market standard pipe and tube that is certified to meet 
ASTM specifications set for standard pipe and tube.
    The Department requested information relating to Ternium 
Luxemburg's acquisition of Grupo IMSA (and its subsidiary IMSA) 
including: (1) 2006, 2007, and 2008 annual capacity and annual 
production data for the former IMSA facility (as well as the former 
Hylsa facilities) that produces subject merchandise (see pages 2-3 and 
appendix S-1 of Ternium's SSQR),\4\ (2) the former IMSA facility's 
product brochure used by IMSA prior to the April 2008 reorganization 
(see appendix S-2 of Ternium's SQR), and (3) documentation of the 
change in corporate name from Grupo IMSA to Ternium (see Ternium's SQR 
at appendix S-4).
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    \4\ According to Ternium, production of standard pipe and tube 
at the former IMSA facility ceased in August of 2008. See page 3 at 
footnote 1of Ternium's SSQR.
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    The Department also requested that Ternium provide (1) its current 
(as of March 2009) management chart, listing the former employers of 
each director/senior management personnel and (2) a pre-transfer (June 
2007) Hylsa management chart. See Ternium's

[[Page 28885]]

SSSQR at appendices S-2 and S-1, respectively. In reviewing the March 
2009 and June 2007 management charts, we found that Ternium Luxemburg's 
acquisition of IMSA resulted in minimal changes to the composition of 
Hylsa's/Ternium's directors/senior management personnel. Specifically, 
with regard to the March 2009 chart, out of Ternium's 51 directors/
senior management personnel, 7 are former IMSA employees, 31 are former 
Hylsa employees, and the remaining 13 are former employees of other 
Ternium Luxemburg affiliates. Thus, we preliminarily find that former 
Hylsa employees occupy the majority of director/senior management 
positions at Ternium.
    Ternium presented the following documentation in support of its 
assertion that it is the successor-in-interest to Hylsa: (1) a copy of 
documentation of the acquisition of Hylsamex by Ternium Luxemburg (see 
Ternium's SQR at appendix S-5), (2) diagrams depicting Ternium 
Luxemburg's corporate structure throughout the different stages of its 
acquisition of Hylsa (see Ternium's Initial Submission at attachment 3-
A for corporate structure as of September 30, 2006 (i.e., Ternium 
Luxemburg's corporate structure prior to the transfer); see also 
Ternium's Initial Submission at attachment 3-D for corporate structure 
as of April 30, 2008 (i.e., Ternium Luxemburg's corporate structure 
post-transfer)), (3) tables depicting the management structure of Hylsa 
as of June, 2007, i.e., prior to the transfer (see Ternium's SSSQR at 
appendix S-1) and the current management structure of Ternium Luxemburg 
as of March 2009, i.e., after the transfer (see Ternium's SSSQR at 
appendix S-2), (4) listings of Hylsa's suppliers of major inputs for 
production of subject merchandise in 2007 (i.e., before the final 
transfer took place) and of Ternium's suppliers of inputs for 
production of subject merchandise in the second quarter of 2008, i.e., 
after the transfer took effect (see Ternium's Initial Submission at 
attachment 6), (5) a list of Hylsa and Ternium facilities at which 
subject merchandise is or can be produced (see Ternium's SQR at 
appendix 3), (6) data on annual capacity and actual production of 
standard pipe and tube for 2006, 2007, and 2008 (see Ternium's SSQR at 
appendix S-1) at said facilities, and (7) listings of Hylsa's standard 
pipe and tube customers in the home market and United States in 2007 
(prior to the transfer) and of Ternium's standard pipe and tube 
customers in the home market and the United States during the second 
quarter of 2008 (after the transfer took effect). See Ternium's Initial 
Submission at attachment 5.
    We examined the diagrams depicting Ternium Luxemburg's corporate 
structure throughout the different stages of its acquisition of Hylsa. 
See Ternium's Initial Submission at attachment 3 for diagrams of 
Ternium Luxemburg's corporate structure as of (1) September 2006 
(attachment 3-A), (2) September 30, 2007 (attachment 3-B), (3) December 
31, 2007 (attachment 3-C), and (4) April 30, 2008 (attachment 3-D).
    We reviewed tables depicting the management structure of Hylsa as 
of June, 2007, i.e., prior to the transfer of production and sales 
operations from Hylsa to Ternium (see Ternium's SSSQR at appendix S-1), 
and the current management structure of Ternium as of March 2009, i.e., 
after the transfer of Hylsa's production and sales operations (see 
Ternium's SSSQR at appendix S-2). As noted in Ternium's Initial 
Submission on page 2 at footnote 1, the only significant changes 
involve: (1) transfers of personnel from other Ternium Luxemburg 
affiliates, (2) the promotion of former Hylsa employees to higher 
positions, and (3) changes to the structure of the organization chart 
(i.e., the creation of new positions). Based on our examination of the 
diagrams and tables described above, we preliminarily find that 
Ternium's management structure, for the most part, resembles Hylsa's 
prior to its acquisition by Ternium Luxemburg. See Ternium's SSSQR at 
appendices S-1 and S-2.
    We also reviewed the list of major input suppliers that Ternium 
provided at attachment 6 of its Initial Submission. We compared Hylsa's 
2007 (i.e., prior to the transfer) suppliers for each input to 
Ternium's second quarter 2008 (i.e., after the transfer) suppliers for 
each input. We noted no changes in suppliers between the two lists.
    We examined the customer lists that Ternium provided in its Initial 
Submission at attachment 5. Specifically, we compared Hylsa's 2007 
(i.e., prior to the transfer) list of home and export market customers 
(including U.S. customers) for standard pipe and tube (see attachment 
5-A) to Ternium's second quarter 2008 (i.e., after the transfer) list 
of home and export market customers (including U.S. customers) (see 
attachment 5-B). Ternium affirmed in their SQR at page 14 and in their 
SSSQR at page 7, that none of the former Hylsa customers discontinued 
their relationship with Ternium due to the acquisition of Hylsamex by 
Ternium Luxemburg. The Department requested clarification as to why 
certain customer's appeared on Hylsa's 2007 customer list but did not 
appear on Ternium's second quarter 2008 customer list and vice versa. 
Ternium explained in its SSSQR at pages 6 and 7 that the customer lists 
in its Initial Submission at attachment 5 identified: (a) the home 
market and U.S. customers that actually purchased subject merchandise 
from Hylsa during 2007, and (b) the home market and U.S. customers that 
actually purchased subject merchandise from Ternium during the second 
quarter of 2008. In other words, the lists did not purport to reflect 
all of the customers that maintained relationships with Hylsa and 
Ternium during each period which is why several of the names on each 
list did not match. Ternium also explained that all former Hylsa 
customers were maintained as customers in Ternium's sales computer 
following the merger and were eligible to make purchases at any time. 
See Ternium's SSSQR at page 6. Therefore, based on record information, 
we preliminarily find that Ternium's customer base resembles Hylsa's 
prior to its acquisition by Ternium Luxemburg.
    We also examined Ternium's list of production facilities that are 
capable of producing standard pipe and tube (including merchandise that 
falls within the scope of the antidumping duty order on the subject 
pipe and tube products) provided at appendix S-3 of their SQR. Ternium 
stated in its SQR at page 3 that none of the standard pipe and tube 
produced at the facility formerly operated by IMSA is certified to meet 
any ASTM standards or any other industry specifications, and as a 
result, are not exported to the United States. Because the former IMSA 
facility is limited in its abilities to produce subject merchandise 
that is appealing to customers in the United States, i.e., not 
certified to meet ASTM, and its capacity to produce subject merchandise 
is relatively small when compared to both former Hylsa facilities, we 
preliminarily determine that although production facilities for 
standard pipe and tube have changed between pre-transfer Hylsa and 
post-transfer Ternium (which includes both the former Hylsa facilities 
and the facility formerly operated by IMSA), the post-transfer 
Ternium's production facilities are not so significantly different from 
the former Hylsa production facilities that Ternium would be precluded 
from being a successor to Hylsa.
    The documentation and analysis thereof described above, both with 
regard to the transfer of production and sales operations from Hylsa to 
Ternium as well as Ternium Luxemburg's

[[Page 28886]]

acquisition of Grupo IMSA (and its subsidiary IMSA), demonstrates that 
there was little to no change in management structure, supplier 
relationships, or customer base between pre-acquisition Hylsa and post-
acquisition (after the acquisitions of Hylsamex and Grupo IMSA) 
Ternium. For these reasons, we preliminarily find that Ternium is the 
successor-in-interest to Hylsa and, thus, should be accorded the same 
antidumping duty treatment with respect to standard pipe and tube from 
Mexico as Hylsa. If the above preliminary results are affirmed in the 
Department's final results, the cash deposit rate from this changed 
circumstances review will apply to all entries of the subject 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the date of publication of the final results of this changed 
circumstances review. See Granular Polytetrafluoroethylene Resin from 
Italy; Final Results of Antidumping Duty Changed Circumstances Review, 
68 FR 25327 (May 12, 2003).

Public Comment

    In accordance with 19 CFR 351.310(c), any interested party may 
request a hearing within 30 days of publication of this notice. Any 
hearing, if requested, will be held no later than 37 days after the 
date of publication of this notice, or the first workday thereafter. 
Case briefs from interested parties may be submitted not later than 30 
days after the date of publication of this notice, in accordance with 
19 CFR 351.309(c)(ii). Rebuttal briefs, limited to the issues raised in 
those comments, may be filed not later than 5 days after the time limit 
for filing the case brief, in accordance with 19 CFR 351.309(d). All 
written comments shall be submitted in accordance with 19 CFR 351.303. 
Persons interested in attending the hearing, if one is requested, 
should contact the Department for the date and time of the hearing. In 
accordance with 19 CFR 351.216(e), the Department will issue the final 
results of its antidumping duty changed circumstances review not later 
than 270 days after the date on which the review is initiated.
    During the course of this antidumping duty changed circumstances 
review, deposit requirements for the subject merchandise exported and 
manufactured by Ternium will continue to be the all-others rate 
established in the investigation. 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 Circular 
Welded Non-Alloy Steel Pipe from Korea, 57 FR 49453 (November 2, 1992). 
The cash deposit rate will be altered, if warranted, pursuant only to 
the final results of this review.
    We are issuing and publishing these preliminary results and notice 
in accordance with sections 751(b)(1) and 777(i)(1) and (2) of the Act 
and 19 CFR 351.216.

    Dated: June 11, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.
[FR Doc. E9-14366 Filed 6-17-09; 8:45 am]
BILLING CODE 3510-DS-S
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