Court Opinion

ID: 820073
Source: CourtListenerOpinion
Date Created: 2013-02-10 19:35:48.804291+00
Date Added: 2024-06-11T12:33:18.959204
License: Public Domain

Slip Op. 12-139

           UNITED STATES COURT OF INTERNATIONAL TRADE

            Before: Nicholas Tsoucalas, Senior Judge

AK STEEL CORP., ALLEGHENY LUDLUM   :
CORP, and NORTH AMERICAN STAINLESS,:
                                   :
          Plaintiffs,              :
                                   :
     v.                            :      Court No.: 11-00366
                                   :
UNITED STATES,                     :      PUBLIC VERSION
                                   :
          Defendant,               :
                                   :
          and                      :
                                   :
THYSSENKRUPP MEXINOX S.A. de C.V., :
and MEXINOX USA, Inc.,             :
                                   :
          Defendant-Intervenors.   :
                                   :

                        OPINION and ORDER
Held: Plaintiffs’ Motion for Judgment on the Agency Record is
denied because the International Trade Commission’s second sunset
review determinations regarding cumulation, likely volume effect,
and likely price effect was based on substantial evidence.
                                          Dated: November 15, 2012
     Kelley Drye & Warren LLP, (Daved A. Hartquist, Kathleen W.
Cannon, and R. Alan Luberda) for AK Steel Corp., Allegheny Ludlum
Corp., and North American Stainless, Plaintiffs.
     James M. Lyons, General Counsel; Neal J. Reynolds, Assistant
General Counsel; Karl Von Schriltz, Office of the General Counsel,
U. S. International Trade Commission, for Defendant, United States.
     Hogan Lovells US LLP, (Lewis E. Leibowitz, Craig A. Lewis,
Brian S. Janovitz, and Wesley V. Carrington) for Thyssenkrupp
Mexinox S.A. de C.V. and Mexinox USA, Inc., Defendant-Intervenors.

     TSOUCALAS, Senior Judge: Plaintiffs AK Steel Corp., Allegheny

Ludlum Corp., and North American Stainless (collectively “domestic

industry” or “plaintiffs”) move pursuant to USCIT Rule 56.2 for
Court No. 11-00366                                                   Page 2

judgment upon the agency record challenging the determination of

the United States International Trade Commission (“Commission”) in

Stainless Steel Sheet and Strip from Germany, Italy, Japan, Korea,

Mexico and Taiwan, USITC Pub. 4244, Inv. Nos. 701-TA-382 and 731-

TA-798-803, 76 Fed. Reg. 46,323 (2011) (second sunset review)

(“Views”).      The Commission and defendant-intervenors ThyssenKrupp

Mexinox S.A. de C.V. (“Mexinox”) and Mexinox USA, Inc. oppose the

motion.

                                   BACKGROUND

      In 1999, the Commission determined that certain imports of

stainless steel sheet and strip (“SSSS”) from France, Germany,

Italy, Japan, Korea, Mexico, Taiwan, and the United Kingdom had

materially injured an industry in the U.S., Certain SSSS from

France, Germany, Italy, Japan, Korea, Mexico, and the United

Kingdom, USITC Pub. 3208, Inv. Nos. 701-TA-380-382 and 731-TA-797-

804   (1999),    resulting    in    the   imposition   of   antidumping   and

countervailing duty orders on August 6, 1999.           Views, at 3–4.     In

2005, the Commission completed its first five-year review of those

orders.      Id. at 4.       Based on the Commission’s findings, the

Department of Commerce revoked the orders as to France and the

United Kingdom. Id. at 4–5. As a result of changed circumstances,

Commerce also revoked the orders as to Italy in 2006.              Id.    The

Commission initiated its second five-year review of the remaining

orders on September 1, 2010, id. at 5, the results of which
Court No. 11-00366                                                      Page 3

domestic industry appeals to this court. See Pls.’ Mem. Supp. Mot.

J. Agency R. (“Pls.’ Br.”) at 1–4.

     Mexinox is one of several affiliated steel producers subject

to the antidumping and countervailing duty orders in question.

Respondents    below     also   included   German    producers   ThyssenKrupp

Nirosta    GmbH    and     ThyssenKrupp    VDM     GmbH,    Italian    producer

ThyssenKrupp      Acciai   Speciali   Terni      S.p.A.,    domestic   producer

ThyssenKrupp Stainless USA LLC (“SL-USA”), and several affiliated

importers.     Views, at 5.        The multinational ThyssenKrupp group

(collectively, including other unlisted corporate affiliates, “TK”)

is responsible for [[              ]] of SSSS production in Germany and

Italy, and [[        ]] of SSSS production in Mexico.          Id. at 6.

     Since the last review, TK has contracted $1.2 billion and

spent $950 million on a new production facility in Greenfield,

Alabama.   Id. at 26–27 & n.127.       TK plans to spend $1.4 billion on

the new Alabama facility in total, id., with the goal of adding two

additional cold rolling mills, a hot-annealing and pickling line,

a hot-rolling mill, and a melt shop to increase production capacity

substantially over the next several years.                 Id. at 48–49.   The

Commission found that the facility’s SSSS production capacity “[[

                                                                       ]]” and

that its projected production is “[[
Court No. 11-00366                                                  Page 4

                       ]].”    Id. at 49.     SL-USA has control over the

Alabama facility.     Id. at 27.

     In   its    responses    to   the   Commission’s   questionnaires,   TK

explained that it made its investment in SL-USA pursuant to its new

“local supply strategy.”           Response of SL-USA to U.S. Producers’

Questionnaire (Mar. 9, 2011) Conf. Rec. 85 App’x at 10, 14–18.1

Under the local supply strategy, TK plans to serve the North

American market with SSSS produced by Mexinox and SL-USA “almost

exclusively[,] . . . while [TK’s] German and Italian operations

focus on serving the European market.”         Views, at 26–27; see CR 96

at 7–8.   TK plans to limit imports from Germany and Italy to “small

quantities of niche products not produced by SL-USA or Mexinox,

such as certain embossed or pattern surfaced SSSS.”          Views, at 49.

As SL-USA increases its 300-series SSSS production, Mexinox will

shift its focus onto production of 400-series SSSS.          Id. at 56; CR

96 at 7–8.      In addition to contracting $1.2 billion in developing

SL-USA’s capacity, TK reconfigured its corporate hierarchy and

consolidated its steel marketing divisions under the vice president

for sales at SL-USA in furtherance of this strategy.          Views, at 48;

see Intervenor-Def.’s Mem. Opp’n Pls.’ Br. at 15–16 (detailing

uncontroverted administrative changes). Lastly, TK vested SL-USA’s

     1
       Hereinafter all documents in the public record will be
designated “PR” and all documents in the confidential record
designated “CR” without further specification except where
relevant.
Court No. 11-00366                                                    Page 5

vice president for sales with the authority to “veto” any imports

from TK’s international production facilities with instructions “to

wield such authority to safeguard [TK’s] substantial investment in

SL-USA.”    Views, at 50; see PR 102 at 161 (“SL-USA will not permit

any   action”   by   an   affiliated   foreign    producer    “that   could

potentially harm the economic viability of its operations and

jeopardize the billions that we have invested in the Alabama

mill.”).

      TK also explained that it adopted its local supply strategy in

response to a series of changes in the domestic and international

SSSS market arising since the last review.            PR 102 at 143–44.

Customers in the U.S. began to demand shorter “lead times” for SSSS

products, now expecting delivery in as little as four to six weeks

where they had previously tolerated six to eight weeks.           Views at

44–45.     Domestic producers were able to meet this expectation by

increasing inventories, id. at 45, but TK found it “impossible” to

do the same with its German and Italian production.          Id. at 44, 50.

Furthermore, logistical costs for ocean transport and raw materials

increased over the period of review, rendering importation from

Europe generally less feasible.        Id. at 50.   Lastly, the relative

weakness of the U.S. dollar over the period of review resulted in

higher costs for all of TK’s foreign goods sold in the U.S.            Id.

      The Commission recognized two additional changes in the SSSS

market during the last period of review.         First, domestic industry
Court No. 11-00366                                            Page 6

reorganized substantially and expanded its production capacity,

leading the Commission to find that it stood at a much stronger

competitive posture than in previous reviews. Id. at 38–41, 58–62.

Second, although U.S. demand for SSSS dipped at the end of the

review period due to a recession, world demand for SSSS was at its

highest level of the period of review in 2010.    Id. at 42–43.   U.S.

and world demand for SSSS is expected to increase significantly

over the next several years, Mexico and Latin America included.

Id.; CR 96 at 8.

     After the period of review, TK announced its intention to sell

its entire SSSS production unit.   In a statement to the Commission

regarding the planned sale, Clemens Iller, Chairman of TK’s SSSS

Marketing Board, wrote that the sale represents “a chance for [the]

stainless [unit] to further develop its strength as a manufacturer

of high-quality stainless steel and high performance alloys on an

independent basis.”    PR 108 Ex. 3 at 2.        TK offered evidence

indicating that it would assemble a set of possible separation

plans by January, 2012, including “an IPO[,] Spin-Off[,] . . .

[and] possible strategic partnerships.”    Id. 2–3; see PR 102 at

206–07.   Nevertheless, Chairman Iller affirmed that “there are no

intentions to break the current stainless activities apart,” as TK

intended to sell “the stainless activities in total.”     PR 108 Ex.

3 at 3; see PR 102 at 206–07.

     The Commission made three determinations relevant to the
Court No. 11-00366                                                 Page 7

present appeal.      First, based on the implications of TK’s common

ownership and the local supply strategy, the Commission cumulated

subject imports from Mexico, Germany and Italy together on the one

hand, and cumulated those from Japan, Korea, and Taiwan on the

other.    Views, at 14, 26–32.     Second, relying on TK’s historical

practices, the likely effect of the local supply strategy, and

current SSSS market conditions, the Commission found that the

cumulated volume of imports from Mexico, Germany, and Italy were

not likely to increase substantially in the event of revocation.

Id. at 46–54.     Lastly, the Commission relied on TK’s historical

sales and the local supply strategy to conclude that the cumulated

effect of Mexican, German, and Italian imports on prices would not

be   substantially    depressive   or   suppressive   in   the   event   of

revocation.   Id. at 54–64.

                              JURISDICTION

      The court has jurisdiction over this matter pursuant to 28

U.S.C. § 1581(c) and section 516A(a)(2)(B)(iii) of the Tariff Act

of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006).2

                           STANDARD OF REVIEW

      Under 19 U.S.C. § 1516a, “[t]he court shall hold unlawful any

determination, finding or conclusion found . . . to be unsupported

by substantial evidence, or otherwise not in accord with the law.”

      2
       All further citations to the Tariff Act of 1930 are to the
relevant provisions of Title 19 of the United States Code, 2006
edition, and all applicable supplements thereto.
Court No. 11-00366                                                        Page 8

19 U.S.C. § 1516a(b)(1)(B)(i).           “Substantial evidence is ‘such

relevant evidence as a reasonable mind might accept as adequate to

support a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United

States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).                    Substantial

evidence     “can    be   translated    roughly   to    mean[:]    [I]s     [the

determination] unreasonable?”          Globe Metallurgical Inc. v. United

States, 32 CIT 274, 275, 547 F. Supp. 2d 1371, 1374 (2008) (quoting

Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed. Cir.

2006)) (alteration in Nippon).

     Challenging a Commission determination under the substantial

evidence standard is “a course with a high barrier to reversal.”

Mitsubishi Heavy Indus., Ltd. v. United States, 275 F.3d 1056, 1060

(Fed. Cir. 2001).         The Commission’s factual determinations “are

presumed to be correct,” and “[t]he burden of proving otherwise .

. . rest[s] upon the party challenging such a decision.”            28 U.S.C.

§ 2639(a)(1).       The Commission’s determination can be supported by

substantial       evidence   despite   the   “possibility    of   drawing    two

inconsistent conclusions from the evidence.”           Nevinnomyssikiy Azot

v. United States, 31 CIT 1373, 1379 (2007) (not published in the

Federal Supplement) (quoting Consolo v. Fed. Mar. Comm’n, 383 U.S.

607, 620 (1966)).         “When ‘the totality of the evidence does not

illuminate    a     black-and-white    answer,’   it   is   the role   of    the

[Commission] as the ‘expert factfinder’ to decide which side is
Court No. 11-00366                                                       Page 9

most likely accurate.”        Id. (quoting Nippon, 458 F.3d at 1359).

Consequently, the court “may not ‘displace the [Commission’s]

choice between two fairly conflicting views,’” U.S. Steel Corp. v.

United States, 36 CIT        ,      , 856 F. Supp. 2d 1318, 1321 (2012)

(quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)),

and it may not “‘reweigh the evidence or substitute its own

judgment for that of the agency.’”          Id. (quoting Usinor v. United

States, 28 CIT 1107, 1111, 342 F. Supp. 2d 1267, 1272 (2004)).

                                 DISCUSSION

     Domestic industry objects to the Commission’s cumulation,

volume,   and     price   effects   determinations     —     as   well   as   the

Commission’s decision to rely on TK’s local supply strategy in

making    those    determinations     —   on   the   basis    that    they    are

unsupported by substantial evidence.

     “The [Commission] is required to conduct a sunset review every

five years after publication of an antidumping duty order, a

countervailing duty order, or a prior sunset review.”                Nucor Corp.

v. United States, 32 CIT 1380, 1385, 594 F. Supp. 2d 1320, 1333

(2008), aff’d, 601 F.3d 1291 (Fed. Cir. 2010) (citing 19 U.S.C. §

1675(c)(1)).      In such a review, the Commission is charged with

determining “whether revocation of an order . . . would be likely

to lead to continuation or recurrence of material injury within a

reasonably foreseeable time.”             19 U.S.C. § 1675a(a)(1).            The

likelihood of continuation or recurrence of material injury depends
Court No. 11-00366                                                   Page 10

on “the likely volume, price effect, and impact of imports of the

subject merchandise on the industry if the order is revoked.”           Id.

Furthermore, in analyzing the potential for injury, the ITC has the

discretion to “cumulatively assess the volume and effect of imports

of the subject merchandise” from a set of countries to better

assess the effect of revocation, so long as certain requirements

are met.      Nucor, 32 CIT at 1385–86, 594 F. Supp. 2d at 1320

(quoting 19 U.S.C. § 1675a(a)(7)).

                      I. The Local Supply Strategy

     As a preliminary matter, domestic industry argues that the

Commission’s reliance on TK’s local supply strategy in support of

its cumulation, volume, and price determinations renders each

unsupported    by   substantial   evidence   because   the   local   supply

strategy has limited predictive value. Pls.’ Br. at 9–13.            “[T]he

statutory term ‘likely’ . . . is the fulcrum upon which most of the

determinations that the [Commission] is required to make in a

sunset review turn.”     Siderca, S.A.I.C. v. United States, 29 CIT

572, 574, 374 F. Supp. 2d 1285, 1288 (2005).           Courts understand

“likely” to mean “‘probable,’ or, to put it another way, ‘more

likely than not.’”     Id. (citing A.G. der Dillinger Huttenwerke v.

United States, 26 CIT 1091, 1101 n.14, 193 F. Supp. 2d 1339 n.14

(2002); Usinor Industeel, S.A. v. United States, 26 CIT 813,

813–14, 215 F. Supp. 2d 1356, 1357–58 (2002); Usinor Industeel,

S.A. v. United States, 26 CIT 1402, 1403–04 (2002) (not published
Court No. 11-00366                                                    Page 11

in Federal Supplement)).       “‘[U]nder the likelihood standard, the

Commission will engage in a counter-factual analysis: it must

decide   the    likely   impact    [of   revocation]    in   the   reasonably

foreseeable future.’”       Consol. Fibers, Inc. v. United States, 32

CIT 820, 829–30, 571 F. Supp. 2d 1355, 1365 (2008) (quoting Uruguay

Round Amendments Act, Statement of Administrative Action, H.R. Doc.

No. 103-316, vol. 1, at 884 (1994), reprinted in 1994 U.S.C.C.A.N.

4040, 4209).

     The first prong of domestic industry’s argument in opposition

to the Commission’s reliance on the local supply strategy is that

the strategy “was only in the process of being implemented, there

was no evidence of actual application of that policy, and the new

policy was a departure from TK’s historical sales policy.”                Pls.’

Br. at 12.     In support of its contentions, domestic industry cites

uncontroverted evidence tending to show that the Alabama facility

[[

                                         ]].    Pls.’ Br. at 10–11 (citing

CR 135 Ex. 6).      Domestic industry also asserts that “there is no

record   evidence    that   [SL-USA]     had   ever   exercised    [its   veto]

authority as to Mexinox.”         Pls.’ Br. at 12.     In essence, domestic

industry suggests that it was unreasonable for the Commission to

rely on the local supply strategy in determining the likely effects

of revocation because TK would not actually pursue it.

     Contrary to domestic industry’s assertion, the Commission
Court No. 11-00366                                                  Page 12

cited    substantial,   uncontroverted     evidence    demonstrating     TK’s

actual dedication to the local supply strategy.            The Commission

found that “[TK’s] investment of $1.4 billion in SL-USA — $1.2

billion of which has been contracted and $950 million of which has

been spent — is compelling evidence of the company’s commitment to

this strategy.”     Views at 50 (emphasis added).          In addition to

providing SL-USA with unequivocal “veto power” over imports from

other TK producers, including Mexinox, TK consolidated its “North

American administration and marketing in[to] SL-USA” and placed

responsibility of U.S. and Canadian sales in the hands of the vice

president for sales of SL-USA.          Id. at 27.    This organizational

shift corroborates TK’s numerous statements before the Commission

affirming its commitment to the local supply strategy.            Id. at 27;

e.g., PR 102 at 143–47 (“[TK] has recognized for a long time that

the local supply strategy is a competitive necessity.”); CR 96 at

8 (“[[

                         ]].”); CR 135 Ex. 1 at 10–18 ([[

                    ]]).

     Furthermore, although domestic industry establishes that the

local supply strategy is relatively new, it does not and cannot

dispute    the   existence   of   new   economic     conditions   that   the

Commission also relied upon to conclude that TK would likely follow
Court No. 11-00366                                                      Page 13

through with    its    plan.     Unlike    domestic     producers,    TK found

customer demands for shorter lead times “impossible to satisfy

[when importing] from Germany and Italy,” Views, at 50, given the

“financial risks associated with maintaining large inventories of

subject imports” so far from the point of production.                Id. at 45;

see PR 102 at 143–44.          “[I]ncreased logistical costs for ocean

transport and raw materials” coupled with “the weakness of the

dollar relative to the euro” further strained TK’s ability to

import from abroad.      Views, at 50.       Domestic industry’s “neither

surprising nor persuasive” alternative interpretation of evidence

regarding     SSSS    market    conditions       does    not    undermine    the

Commission’s own reasonable interpretation.                See Nevinnomysskiy

Azot, 31 CIT at 1379 (quoting Matsushita Elec. Indus. Co. v. United

States, 750 F.2d 927, 936 (Fed. Cir. 1984)).                    The Commission

reasonably concluded and explained TK’s new local supply strategy

was a commercially “logical approach” to new economic conditions,

Views, at 50, and corroborated its conclusion with uncontroverted

evidence on    the    record   showing    that    TK    made   substantial   new

investments    and    established    new     hierarchical       structures    in

implementing that strategy.        Id. at 27.

     Second, domestic industry argues that because TK “intended to

sell a majority stake in its stainless steel business,” Pls.’ Br.

at 14–18 (quoting PR 107 Ex. 2), “there is no reason to anticipate

that the TK strategies and plans would be followed by the new
Court No. 11-00366                                                          Page 14

owner, who would then have operational control.”                     Id. at 15–17.

Domestic industry objects to the Commission’s finding that the SSSS

unit would remain intact after the sale, or at least that the new

“single owner would continue to operate those facilities as a

group.”     Id. at 16.       “[W]hether or not TK’s facility [would be]

sold   intact,”     domestic       industry     continues,    “the    Commission’s

presumption that the local supply strategy would be adopted by a

new owner     based    on    the   ‘strong rationale’         for    pursuing that

strategy is without merit” because there are “other rational

strategies for selling products.”             Id. at 17.

       Domestic     industry’s      arguments     are    again   insufficient   to

undermine the Commission’s reasonable reliance on the local supply

strategy.    The Commission must predict the outcome of revocation

for the “foreseeable future,” Consol. Fibers, 32 CIT at 829–30, 571

F. Supp. 2d at 1365 (quoting 1994 U.S.C.C.A.N. at 4209), which

domestic industry argues is “behavior projected over roughly two

years.”     Pls.’ Br. at 13 n.4 (citing Magnesium from China and

Russia,     USITC     Pub.    4214    at   31     n.176,     Inv.    Nos.   731-TA-

10701–1072(2011) (second sunset review); SSSS from France, Germany,

Italy, Japan, Korea, Mexico, Taiwan, and the United Kingdom, USITC

Pub. No. 3788 at 48 & n.56, Inv. Nos. 701-TA-380-382 and 731-TA-

797-804 (2005) (first sunset review)).                  The Commission commenced

the second sunset review in 2010 and published the results in 2011,

well before the January 2012 target TK set as a deadline to develop
Court No. 11-00366                                                            Page 15

several different plans for selling its SSSS unit.                       Views, at 29

(citing PR 102 at 207).          As the record indicates little likelihood

that       TK   would   have   selected    a    strategy,   found    a    buyer,   and

completed        the    sale   within     the   foreseeable    future,       domestic

industry’s doubts regarding the continued application of the local

supply strategy for the foreseeable future are not persuasive.3

Furthermore,        the   Commission      reasonably    relied      on    unambiguous

evidence indicating TK would sell its SSSS unit as a whole,4 see PR

       3
       Domestic industry repeatedly characterizes TK’s sale of
the SSSS unit as imminent, even going so far as to say that the
sale would occur in January, 2012. See Pls.’ Br. at 15 (the
local supply strategy “could not be presumed to continue in 2012
following the ownership change” and the sale “was planned to
occur in less than a year”); Pls.’ Reply Supp. Mot. J. Agency R.
at 4 (“TK planned to sell its stainless operations in both the
United States and Mexico by January 2012.”). The record does not
support this interpretation, as it is clear that TK only intended
to prepare plans by January, 2012. Views, at 29; see Pls.’ Br. at
14 (quoting PR 102 at 207) (“[TK] also said that it would decide
in January 2012 how exactly it would go about spinning off its
stainless steel operations, following a review by a group that
had ‘just recently started’ to study the issue, that would
present several ‘options,’ and ‘then a decision will be taken
which way to go.’”).
       4
       Domestic industry selectively quotes statements from
Chairman Iller to imply that TK is considering selling its SSSS
entities piecemeal. Pls.’ Br. at 14; Pls.’ Reply at 3. As the
Commission correctly noted at oral argument, the quotations at
issue actually refer to TK’s openness to the variety of methods
of sale, not whether the sale would include each of TK’s SSSS
producers. Immediately following the text domestic industry
quotes, Chairman Iller states: “I would like to point out that
there are no intentions to break the current stainless activities
apart, but rather bring forward the stainless activities in
total.” PR 108 Ex. 3 at 3 (emphasis added). Chairman Iller was
no less clear during a hearing before the Commission, stating
that TK wants “to separate the whole [SSSS] business” such that
“all of the [SSSS] units” would be part of the deal. PR 102 at
Court No. 11-00366                                            Page 16

102 at 207; PR 108 Ex. 3 at 2–3, and as above, reasonably concluded

that “short lead times[,] . . . increased logistical costs, and

exchange rate volatility” would provide any future owner of the

SSSS unit with a “strong rationale” to pursue the same local supply

strategy.   Views, at 29–30.

     This court owes “the expert factfinder — here the majority of

the Presidentially-appointed, Senate-approved Commissioners” — a

considerable amount of deference in using its expertise to make

such predictions, and as such, domestic industry has a high burden

to overcome. Nippon, 458 F.3d at 1352, 1359.   The Commission cited

record evidence in support of its determinations concerning new

economic realities of the SSSS market, which domestic industry

either fails to dispute or fails to explain using more than an

alternative, equally viable interpretation.        Consequently, the

Commission’s reliance on the local supply strategy to buttress its

cumulation, volume, and price determinations was reasonable.     See

Nucor Corp. v. United States, 34 CIT    ,   , 675 F. Supp. 2d 1340,

1350 (2010) (“While it is true . . . that there are circumstances

under which [a foreign producer would increase imports] . . . even

if doing so caused harm to [its domestic producer], the mere

plausibility of a set of given circumstances is insufficient to

overcome    the   high   barrier   to   reversal    of   an   agency

determination.”).

207–08 (emphasis added).
Court No. 11-00366                                                         Page 17

                                    II. Cumulation

     “In    a    sunset    review,”     the   Commission      has    discretion   to

“cumulate   unfairly       traded      imports    from    multiple    countries   to

adequately capture the goods’ simultaneous injurious effects on the

domestic industry that might otherwise be obscured in the agency’s

country-by-country review of the subject imports.”                    NSK Corp. v.

United States, 34 CIT           ,     , 712 F. Supp. 2d 1356, 1360–61 (2010).

Under 19 U.S.C. § 1675a(a)(7), the Commission “may cumulatively

assess the volume and effects of imports of the subject merchandise

from all countries” subject to a sunset review if (1) the reviews

of each country began on the same day,5 (2) imports from each

country would be likely to compete with each other and domestic

like products, and (3) such imports would likely have a discernible

adverse impact on the domestic industry.                 19 U.S.C. § 1675a(a)(7);

see NSK Corp., 34 CIT at               , 712 F. Supp. 2d at 1361.           “[T]he

Commission has wide latitude in selecting the types of factors it

considers       relevant   in       undertaking    its    cumulation    analysis.”

Allegheny Ludlum Corp. v. United States, 30 CIT 1995, 2005, 475 F.

Supp. 2d 1370, 1380 (2006).

     Domestic industry’s primary argument is that TK’s imports from

Mexico would not compete under similar conditions with its imports

     5
       There is no dispute that this statutory requirement is
satisfied because the Commission initiated sunset reviews with
respect to all countries subject to the orders on June 1, 2010.
Views, at 5.
Court No. 11-00366                                                         Page 18

from Italy and Germany because the record demonstrates that TK will

limit       imports     from    Italy   and    Germany     while     maintaining

“substantial” imports from Mexico.               Pls.’ Br. at 21–23.           As

domestic industry puts it, “TK announced a coordinated program

whereby Mexinox — which already accounted for a substantial market

share — would continue to export sizeable volumes of SSSS, while

imports      from     Germany   and   Italy   would   be   limited    to   ‘small

quantities of niche products.’”6          Id. at 22 (quoting Views, at 49).

Because “the projected volumes of imports from Mexico would be akin

to those from Japan, Korea, and Taiwan, in arriving in the U.S.

market in significant volumes,” domestic industry concludes, the

Commission should have cumulated Mexican SSSS imports with those

from Japan, Korea, and Taiwan.           Id. at 23.

     Although domestic industry demonstrates that the volume of

        6
       The fundamental structure of TK’s local supply strategy is
to use Mexinox and SL-USA instead of its European producers to
supply U.S. markets. PR 102 at 143–47; Views, at 26–27.
Consequently, the “coordinated program” TK “announced” is none
other than the local supply strategy domestic industry urges this
court to ignore above. See Pls.’ Br. at 18–24. Domestic
industry also relies on the local supply strategy elsewhere in
its briefs as convenience dictates. See, e.g., Pls.’ Br. at 26
(imploring the court to evaluate its position on the Commission’s
volume determination while “assuming for the sake of argument
that it was proper for the Commission to rely on . . . [the]
local supply policy”). Unsurprisingly, domestic industry does
not explain how it would fashion a remand simultaneously
instructing the Commission to disregard TK’s local supply
strategy and to use a critical component of that strategy in
crafting revised cumulation, price, and volume determinations.
Because the Commission grounded its determinations on substantial
evidence, however, the court need not undertake this challenge
itself.
Court No. 11-00366                                                  Page 19

subject Mexican imports would differ from the volume of subject

Italian and German imports, this fact alone is insufficient to

overcome the Commission’s wide latitude in using its discretion to

cumulate imports from those countries based on the substantive

implications of TK’s common ownership.          See U.S. Steel Corp. v.

United States, 32 CIT 832, 834–35, 572 F. Supp. 2d 1334, 1340–41

(2008) (Commission determination not to cumulate imports under

common ownership with unaffiliated imports from other countries

affirmed as reasonable where those under common ownership would

also compete with a domestic affiliate).          Domestic industry does

not and cannot argue that Japanese, Korean, and Taiwanese SSSS

producers    risked   injuring    their   own   corporate    affiliates   by

importing into the U.S. Domestic industry also does not and cannot

argue that in pursuing contracts and planning output, Korean,

Japanese, and Taiwanese producers needed to consider a possible

“veto” from a corporate affiliate.         On the other hand, domestic

industry    acknowledges   that    TK   would   coordinate    its   Mexican,

Italian, and German imports under a unified business plan, see

Pls.’ Br. at 22, and the record establishes that TK’s Mexican,

Italian, and German imports face competition and the threat of a

veto from an affiliated U.S. production facility. Views, at 26–30.

Simply put, the Commission’s decision to cumulate Mexican imports

with German and Italian imports was reasonable because the weight

of the evidence shows similar conditions of competition between
Court No. 11-00366                                                 Page 20

Mexican, German, and Italian SSSS producers.

III. Likelihood of Continuation or Recurrence of Material Injury

     “After making the threshold determination whether to cumulate,

the Commission must determine whether revocation of the order under

review would be likely to lead to continuation or recurrence of

material injury.”    Wieland-Werke AG v. United States, 31 CIT 1884,

1888–89, 525 F. Supp. 2d 1353, 1360 (2007), aff’d, 290 Fed. App’x

348 (Fed. Cir. 2008).    The Commission evaluates the likelihood of

continuation or recurrence of injury by predicting the volume,

price effects, and impact of subject imports on domestic industry.

19 U.S.C. § 1675a(a)(2)–(4).       In so doing, “[t]he Commission is

required to consider any prior injury determinations, including

volume, price effect, impact of imports before the order was in

place,   improvements   in   the   state   of   the   industry,   industry

vulnerability and Commerce’s duty absorption findings.”           Allegheny

Ludlum, 30 CIT at 2007, 475 F. Supp. 2d at 1382.         The Act provides

an outline of factors for the Commission to consider in making its

volume, price, and impact determinations, id., but “[t]he presence

or absence of any factor . . . shall not necessarily give decisive

guidance with respect to the Commission’s determination.”               19

U.S.C. § 1675a(a)(5).

                               A. Volume

     Domestic industry argues that the Commission erred in finding

that subject imports from Mexico would not likely increase above
Court No. 11-00366                                                       Page 21

historical levels because “Mexinox is becoming even more central to

TK’s coordinated plans for the U.S. market than it has been at any

time since the antidumping duty order was issued.”                Pls.’ Br. at

26.       Domestic    industry    supports    this   contention   with   record

evidence that it characterizes as demonstrating that the U.S. was

Mexinox’s “primary market,” Pls.’ Br. at 25–27, that Mexinox

intentionally increased its U.S. market share during the review

period, id. at 27–29, that Mexinox has significant excess capacity,

id. at 29–32, and that Mexinox would likely direct that excess

capacity towards the U.S.7          Id. at 32–33.

      Under 19 U.S.C. § 1675a(a)(2), the Commission determines the

likely volume of imports after revocation by evaluating (1) “any

likely     increase     in   production      capacity    or   existing   unused

production     capacity      in   the   exporting    country,”   (2)   “existing

inventories of the subject merchandise, or likely increases in

inventories,” (3) “the existence of barriers to the importation of

such merchandise into countries other than the United States,” and

      7
       Domestic industry also insists that TK intended to expand
subject capacity at Mexinox, quoting announcements from TK to the
effect that it sought to “grow with [its] customers in the months
and years ahead,” and “to support and grow with its U.S.
Customers.” Pls.’ Br. at 28 (quoting PR 93 Ex. 4). As the
Commission correctly points out in its response, TK’s statements
are actually responses to concerns about Mexinox’s ability to
maintain its sales given the antidumping duties in place, not any
declaration of an intention to expand subject capacity. Def.’s
Mem. Opp’n Pls.’ Br. (“Def.’s Br.”) at 28; see PR 93 Ex. 4
(addressing “valued customers” regarding “concerns surrounding
recent announcements in the press on the dumping margins
impacting Mexinox”).
Court No. 11-00366                                           Page 22

(4) “the potential for product-shifting if production facilities in

the foreign country, which can be used to produce the subject

merchandise, are currently being used to produce other products.”

Id. § 1675a(a)(2)(A)–(D).

     First, domestic industry cites the local supply strategy and

Mexinox’s consistent market share during prior periods of review to

argue that the U.S. was and will be its “primary market.”      Pls.’

Br. at 25–27.    This contention is unpersuasive without a corollary

explanation of how such facts demonstrate a likely increase in

import volume.    See Pls.’ Br. at 25–27.   The local supply strategy

explicitly requires Mexinox to supply the U.S. market without

harming SL-USA.    CR 96 at 8.   The 400 series grade SSSS Mexinox

sells in the U.S. affects the price of the 300 series grade SSSS

SL-USA produces, meaning that any excessive increase in export

volume from Mexinox would adversely impact SL-USA and thus would be

subject to SL-USA’s veto power.     Views, at 50–51; PR 102 at 161.

Indeed, domestic industry does not identify any evidence suggesting

that TK’s local supply strategy calls for Mexinox to increase

import volume.     See also PR 93 Ex. 3 at 23 (presentation slide

stating TK’s intention to “replace imports by new TK Stainless mill

in Alabama”).

     Second, domestic industry cites data showing that Mexinox’s

“average market share” during the current review period was [[

]] higher than its “average market share” during the investigation,
Court No. 11-00366                                                               Page 23

Pls.’ Br. at 28, and suggests that Mexinox would continue to

increase its market share. Id. at 29. Domestic industry’s figures

are   unpersuasive      in   light     of    the   Commission’s      uncontroverted

finding    that   TK’s   cumulated          U.S.   market    share   —     principally

comprised of Mexinox’s products — remained in the [[                          ]] range

since the imposition of the antidumping orders, and that its

cumulated market share is actually [[                   ]] lower in 2010 than it

was at the end of the investigation.                Def.’s Br. at 28; Views, at

46–47.     Domestic industry also fails to explain how a [[                          ]]

increase from an average [[                  ]] market share during the last

review is a “significant” increase, a telling omission given that

ongoing restructuring and sensitivity of the domestic SSSS market

could lead to frequent changes in prices and market share.                          See

Views, at 41–46, 50—51, 56–57.

      Third, domestic industry argues that Mexinox had a significant

amount    of   excess    production         capacity.        Pls.’   Br.    at   29–32.

Domestic    industry     does   not     contest       the    facts   underlying     the

Commission’s      findings      with        respect     to    Mexinox’s      capacity,

specifically that its [[               ]] capacity utilization rate left an

“[[

                                 ]].”        Views, at 47.       Instead, domestic

industry contends that Mexinox harbored the potential to shift its

production from non-subject cut-to-length stainless steel strip

(“CTLSSS”) production to subject SSSS production.                        Pls.’ Br. at
Court No. 11-00366                                                         Page 24

30–32.    Domestic industry supports its contention with evidence

showing that “subject producers can easily shift” from CTLSS

production      to    coiled   SSSS,    that   “coiled    SSSS   involves   fewer

processing steps than [CTLSS] and is easier to transport and more

flexible for customers to use,” and that “the growth in imports of

CTLSS    from   Mexico     strongly     correlates   to    the    filing   of   the

antidumping case.”         Pls.’ Br. at 30–31.

     For product shifting to evidence a likely increase in import

volume, “in addition to the physical ability to product-shift,” the

practice must “otherwise [be] a viable option.”              Siderca, S.A.I.C.

v. United States, 28 CIT 1782, 1797–99, 350 F. Supp. 2d 1223,

1237–38 (2004).         As the Commission recognized, CTLSS is a “value

added product” that demands higher prices than subject SSSS,

meaning that there is little incentive for Mexinox to abandon its

CTLSS capacity.         Views, at 54.    “Moreover, U.S. demand for [CTLSS

began to increase prior to the imposition of the orders,” contrary

to domestic industry’s assertion that Mexinox increased CTLSS

production “primarily as a means of circumventing the orders on

SSSS.”    Id.        More importantly, the local supply strategy limits

Mexinox’s ability to increase imports regardless of what type of

subject goods they produced.             CR 96 at 7–8.           Although it can

demonstrate the possibility of product shifting, domestic industry

simply does not identify evidence indicating that such a strategy

would be an economically viable option for Mexinox.                 See Siderca,
Court No. 11-00366                                                           Page 25

28 CIT at 1797–99, 350 F. Supp. 2d at 1237–38.

     In further support of its excess capacity argument, domestic

industry   suggests        that     TK    misled    the     Commission   about   its

production capacity, citing a 2008 press report indicating that “TK

planned to increase its Mexinox capacity from 295,000 short tons to

340,000 short tons,” as “corroborated by Mexinox’s own website as

well as TK’s presentation to its banks showing SL-USA supplying

Mexinox with 340,000 short tons of hot-rolled SSSS feedstock by

2012/2013.”    Pls.’ Br. at 30.            The Commission reasonably chose to

weigh the article, which is dated 2008 and appears on a Chinese

website of unclear repute, PR 93 Ex. 2 at 1–2, less heavily than

TK’s more recent and highly detailed questionnaire responses.                    See

generally,     CR    96     (TK’s        detailed     questionnaire      responses).

Furthermore, the “corroborating” evidence does not cast doubt on

TK’s questionnaire responses regarding its SSSS production capacity

because    neither        the     website     nor     the    presentation    slides

differentiate between subject and nonsubject production. See PR 93

Ex. 2 at 3 (TK webpage indicating that Mexinox has an “annual cold

rolling    capacity       of    270,000      metric    tons,”    without    further

specification); id. Ex. 3 at 21 (arrow indicating flow of 340,000

short tons of “hot rolled supply” without further specification).

The marginal probative value of this evidence is insufficient to

support domestic industry’s dubious falsification claim.

     Lastly,    domestic        industry     asserts that       Mexinox’s   alleged
Court No. 11-00366                                                              Page 26

excess capacity would be directed towards the U.S. market.                            The

Commission determined that Mexinox would not direct excess towards

the U.S. because of higher average unit prices in Mexico, a

projected     significant      increase       in       Mexican      demand,    and    the

prohibitive structure of the local supply strategy.                       Views, at 52.

Domestic industry criticizes the average unit value figure as being

based on a non-specific mix of expensive and inexpensive products,

Pls.’   Br.   at   33,   but    it    does    not      dispute      the   “significant

[projected] increase in Mexican home market demand.”                        Views, at 52

(emphasis     added);    see   PR     93    Ex.    3    at   7     (slide     from   TK’s

presentation to its creditors showing a map of North America

indicating    Mexinox     would      sell    products        made    from     additional

feedstock from SL-USA to consumers in Mexico rather than the U.S.).

In light of an uncontroverted projected increase in demand and the

probable effect of the local supply strategy, the Commission’s

finding was reasonable despite domestic industry’s objection to

average unit values.

     Domestic      industry’s       four     arguments       are     insufficient      to

unsettle the Commission’s reasonable likely volume determination,

as they are merely an invitation for this court to reweigh record

evidence in its favor.         See Nevinnomysskiy Azot, 31 CIT at 1379

(quoting    Consolo,     383   U.S.    at    620).        Consequently,        domestic

industry’s     challenge       to     the      Commission’s           likely      volume

determination must fail.
Court No. 11-00366                                                         Page 27

                                    B. Price

      In    reviewing     whether   the   continuation      or       recurrence   of

material injury is likely if an antidumping duty order is revoked,

“the Commission shall consider” the price effects of imports

without     the   order     in   place.        19   U.S.C.       §    1675a(a)(3).

Specifically, the Commission must consider whether “(A) there is

likely to be significant price underselling . . . as compared to

domestic like products, and (B) [whether] imports of the subject

merchandise are likely to enter the United States at prices that

otherwise would have a significant depressing or suppressing effect

on the price of domestic like products.”            Id.

      Domestic industry’s numerous arguments in opposition to the

Commission’s price determination follow two distinct paths, the

first      of   which     addresses   the      likelihood        of    significant

underselling.       Domestic     industry   asserts    that      the    Commission

ignored evidence showing that “Mexinox undersold the domestic

industry . . . 54 percent of the time[] during the original

investigation,” “17.2 percent” after the imposition of the order,

and then “34.3 percent” during the current period of review. Pls.’

Br. at 34–35.     Domestic industry further insists that “Mexinox . .

. used [this] underselling to increase or maintain market share,”

given that “Mexinox’s average annual U.S. market share increased”

from the first period of review to the current period of review.

Id.     Domestic industry also cites a report prepared by North
Court No. 11-00366                                                 Page 28

American Stainless, one of the plaintiffs in this action, showing

that offers for subject SSSS from Mexinox were “[[

         ]]” after SL-USA had begun production.       Id. at 36.

     The Commission did not improperly ignore evidence of past

underselling in determining that future underselling was unlikely.

The Commission    found   that   “culminated   subject imports     .   .   .

oversold the domestic like product during the period of review . .

. in 50 of 75 quarterly comparisons, or two-thirds of the time.”

Views, at 55.    As above, domestic industry’s reliance on average

market share over the investigation and each period of review

obscures the Commission’s reasonable finding that TK’s cumulated

market share remained consistently within the [[           ]] range from

the investigation through the second sunset review.        Id. at 46–47.

Domestic industry relies on the same figures to color Mexinox’s

behavior in the most advantageous light, and therefore its argument

here is nothing more than an alternative interpretation of evidence

on the record.    See Nevinnomysskiy Azot, 31 CIT at 1379 (quoting

Consolo, 383 U.S. at 620); U.S. Steel Corp., 32 CIT at 841–42, 572

F. Supp. 2d at 1345–46 (Commission’s price determination affirmed

as reasonable it was supported in part by evidence of “mixed”

overselling and underselling).

     Domestic industry’s citation to Mexinox’s alleged 2011 price

offers   are   also   insufficient   for   this   court   to   upset   the
Court No. 11-00366                                                  Page 29

Commission’s determination. As the Commission explained below, the

price offers are “contradicted by the pricing data on the record of

these reviews, showing that imports from Mexico oversold the

domestic like product in 46 of 70 quarterly comparisons.”              Views,

at 55 n.279. Furthermore, the proffered evidence did “not indicate

the product at issue or the source of the information” on some

pages, and “did not indicate the time frame” on others.            Id.; see

CR 138 Ex. 3 (chart and emails regarding alleged price offers

without verifiable source citations and dates).               Even if the

difference   between    offer   prices   and   transaction    prices    is    a

“quibble”    as   domestic   industry    claims,    the   Commission   acted

reasonably in deciding to weigh verifiable transaction prices from

the period of review more heavily than evidence of offer prices

with limited source citations compiled by an interested party.

      The second set of domestic industry’s arguments challenges the

Commission’s finding that Mexinox’s imports were not likely to have

an   otherwise    significant   depressing     or   suppressing   effect     on

domestic prices. Domestic industry claims that “[m]aintaining high

prices in the U.S. market . . . is not TK’s announced objective”

because “[a]ll of TK’s published materials emphasize its push for

volume and market share in North America.”                Pls.’ Br. at 34.

Further, “[e]ven assuming that SL-USA has an incentive to manage

its imports in a manner that will not harm its own business, it has

no incentive to manage its imports in a manner that does not harm
Court No. 11-00366                                                Page 30

the rest of the domestic SSSS industry.”         Id. at 38.      In other

words, “[t]o protect its $1.4 billion dollar investment and cover

its massive fixed costs at SL-USA, TK must first maximize its sales

volume,” in turn causing Mexinox to lower its prices in response to

an increasingly depressed U.S. SSSS market.       Id. at 34.

     Domestic industry’s argument fails to acknowledge sufficiently

one critical fact underlying the Commission’s determination: SL-USA

is a domestic producer.         Indeed, while SL-USA’s “surge in new

capacity” may depress domestic prices, id. at 39, it bears little

relevance to the likelihood of whether Mexinox’s imports will have

a “significant” depressing or suppressing effect, let alone the

likely cumulated effect of all TK’s imports.             See 19 U.S.C. §

1675a(a)(3)(B).      Under the local supply strategy, SL-USA must

carefully manage subject imports from Mexinox and TK’s European

producers regardless of what impact its own production has on the

domestic market.      The Commission found that cumulated subject

imports   would    not   cause    significant   price     depression     or

suppression,   and   domestic    industry’s   argument    here   does   not

undermine that finding.    See Views at 54–57.

     In short, domestic industry has identified no evidence in

either prong of its arguments demonstrating that TK’s cumulated

imports would cause price suppression or depression in the U.S.

SSSS market, whereas the Commission grounded its likely price

effect determination in substantial evidence.            See U.S. Steel
Court No. 11-00366                                                       Page 31

Corp., 32 CIT at 841–42, 572 F. Supp. 2d at 1345–46 (Commission

determination that revocation would not have significant depressing

or suppressing price effects reasonable where foreign producer’s

product would affect the price of affiliated domestic producer’s

similar product).

                                 CONCLUSION

      Based    on   the   foregoing,     the   court      concludes   that   the

Commission’s    determination     with    regard     to    cumulation,   volume

effects, and price effects are supported by substantial evidence

and   are   otherwise     consistent   with    the   law.      Therefore,    the

determination is hereby affirmed in its entirety and this matter is

dismissed.

                                               /s/ NICHOLAS TSOUCALAS
                                                 Nicholas Tsoucalas
                                                    Senior Judge

Dated: November 15, 2012
       New York, New York