[Federal Register Volume 74, Number 116 (Thursday, June 18, 2009)]
[Notices]
[Pages 28887-28890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-14369]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-836]


Preliminary Results of Antidumping Duty Changed Circumstances 
Review: Light-Walled Rectangular 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 light-
walled rectangular pipe and tube (LWRPT) 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: Light-Walled Rectangular 
Pipe and Tube from Mexico, 73 FR 63686 (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 the antidumping duty order of LWRPT from 
Mexico on August 5, 2008. See Light-Walled Rectangular Pipe and Tube 
from Mexico, the People's Republic of China, and the Republic of Korea 
(Korea): Antidumping Duty Orders; Light-Walled Rectangular Pipe and 
Tube from Korea: Notice of Amended Final Determination of Sales at Less 
Than Fair Value, 73 FR 45403 (August 5, 2008).
    On September 3, 2008, Ternium filed a request for a changed 
circumstances review of the antidumping duty order of LWRPT from Mexico 
(Initial Submission), claiming that Hylsa, a Mexican producer of LWRPT, 
changed its name to Ternium. Ternium requested

[[Page 28888]]

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 of LWRPT 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 November 13, 2008, the Department issued a questionnaire to 
Ternium requesting additional information regarding its 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.

Scope of the Order

    The merchandise subject to this order is certain welded carbon 
quality light-walled steel pipe and tube, of rectangular (including 
square) cross section, having a wall thickness of less than 4 mm.
    The term carbon-quality steel includes both carbon steel and alloy 
steel which contains only small amounts of alloying elements. 
Specifically, the term carbon-quality includes products in which none 
of the elements listed below exceeds the quantity by weight 
respectively indicated: 1.80 percent of manganese, or 2.25 percent of 
silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 
1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of 
lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 
percent of molybdenum, or 0.10 percent of niobium, or 0.15 percent 
vanadium, or 0.15 percent of zirconium.
    The description of carbon-quality is intended to identify carbon-
quality products within the scope. The welded carbon-quality 
rectangular pipe and tube subject to this order is currently classified 
under the Harmonized Tariff Schedule of the United States (HTSUS) 
subheadings 7306.61.50.00 and 7306.61.70.60. While HTSUS 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.

Preliminary Results

    In accordance with 19 CFR 351.221(c)(3)(i), we preliminarily 
determine that Ternium is the successor-in-interest to Hylsa.\2\ In its 
September 3, 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. Documentation attached to Ternium's 
September 3, 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, 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. See 
Ternium's Initial Submission at page 2. 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. 
According to Ternium, the name of that holding company was changed from 
Grupo IMSA to Ternium, effective December 13, 2007. Id. at page 2. 
Ternium stated 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), a producer of LWRPT. See 
Ternium's Initial Submission at page 2.
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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 7)), acquired Hylsamex. See Ternium's Initial 
Submission at page 2.
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    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) and (2) documentation of the change in 
corporate name from Grupo IMSA to Ternium (see Ternium's SQR at 
appendix S-2).
    The Department also requested that Ternium provide a current (as of 
March 2009) management chart of Ternium, listing the former employers 
of each director/senior management personnel as well as a pre-transfer 
(June 2007) Hylsa management chart. See Ternium's

[[Page 28889]]

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, of Ternium's 51 directors/senior 
management personnel, 7 are former IMSA employees, 31 are former Hylsa 
employees, and the remaining 13 transferred from 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-3), (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 
after the 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 of Hylsa (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 
which have the capacity to produce subject merchandise (see Ternium's 
Initial Submission at attachment 4), (6) data on annual capacity and 
actual production of LWRPT for 2006, 2007, and 2008 (see Ternium's SSQR 
at appendix S-1) at said facilities, and (7) listings of (a) Hylsa's 
LWRPT customers in the home market and United States during 2007 (prior 
to the final transfer) (see Ternium's Initial Submission at attachment 
5-A), (b) IMSA's LWRPT home market customers during 2007 (see Ternium's 
Initial Response at attachment 5-B), and (c) of Ternium's LWRPT home 
market and U.S. customers during the second quarter of 2008 (after the 
transfer took effect) (see Ternium's Initial Submission at attachment 
5-C).
    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 3 at footnote 2, 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 Hylsa and 
Ternium's lists, except changes relating to input suppliers that supply 
the former IMSA facility of Apodaca.
    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 customers 
(including U.S. customers) for LWRPT (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-C) and 
also examined IMSA's 2007 home market customer list (see attachment 5-
B). Ternium affirmed in their SQR at page 11 and in their SSSQR at page 
8, 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 and IMSA's 2007 customer lists 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: 
(1) the home market and U.S. customers that actually purchased subject 
merchandise from Hylsa during 2007 and the home market customers that 
actually purchased subject merchandise from IMSA during 2007, and (2) 
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, IMSA, 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 7. 
While we note that some of the customers from IMSA's 2007 customer list 
are present in Ternium's second quarter 2008 customer list (and were 
not present in Hylsa's 2007 list), given the overall Ternium second 
quarter 2008 customer list, we preliminarily find that Ternium's 
customer list is representative of Hylsa's prior to its acquisition by 
Ternium Luxemburg. 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 LWRPT (including merchandise that falls within the 
scope of the antidumping duty order on LWRPT) provided at attachment 4 
of its Initial Submission. Ternium stated in its SSQR at page 3 that 
none of the LWRPT produced at the facility formerly operated by IMSA is 
certified to meet any ASTM A-500 or A-513 standards for LWRPT or any 
other industry specifications for LWRPT, and as a result, are not 
exported to the United States. Because the former IMSA facility is 
limited in its abilities to produce

[[Page 28890]]

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 LWRPT 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 acquisition of Grupo IMSA (and 
its subsidiary IMSA), demonstrates that there was little to no change 
in management structure, supplier relationships, production facilities, 
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 LWRPT 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 Light-Walled Rectangular Pipe and 
Tube from Mexico, the People's Republic of China, and the Republic of 
Korea (Korea): Antidumping Duty Orders; Light-Walled Rectangular Pipe 
and Tube from Korea: Notice of Amended Final Determination of Sales at 
Less Than Fair Value, 73 FR 45403 (August 5, 2008). 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. E9-14369 Filed 6-17-09; 8:45 am]
BILLING CODE 3510-DS-S