Initiation of Antidumping Duty Investigations: Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure Pipe From Argentina, Brazil, Germany and Italy

DEPARTMENT OF COMMERCE

International Trade Administration

[A-357-809; A-351-826; A-428-820; and A-475-814]

Initiation of Antidumping Duty Investigations: Small Diameter

Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure

Pipe From Argentina, Brazil, Germany and Italy

AGENCY: Import Administration, International Trade Administration,

Commerce.

EFFECTIVE DATE: July 20, 1994.

FOR FURTHER INFORMATION CONTACT: Kimberly Hardin, Office of Antidumping

Investigations, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-

0371.

INITIATION OF INVESTIGATIONS:

The Petition

On June 23, 1994, we received four petitions filed in proper form

by Gulf States Tube Division of Quanex Corporation (petitioner). In

accordance with section 732(b) of the Tariff Act of 1930, as amended

(the Act) and 19 CFR 353.12 (1994), the petitioner alleges that small

diameter circular seamless carbon and alloy steel standard, line and

pressure pipe (seamless pipe) from Argentina, Brazil, Germany and Italy

is being, or is likely to be, sold in the United States at less than

fair value within the meaning of section 731 of the Act, and that these

imports are materially injuring, or threaten material injury to, a U.S.

industry.

Petitioner has stated that it has standing to file the petitions

because it is an interested party, as defined under section 771(9)(C)

of the Act, and because the petitions were filed on behalf of the U.S.

industry producing the product subject to these investigations. If any

interested party, as described under paragraphs (C), (D), (E), or (F)

of section 771(9) of the Act, wishes to register support for, or

opposition to, these petitions, it should file a written notification

with the Assistant Secretary for Import Administration.

Scope of Investigations

For purposes of these investigations, seamless pipes are seamless

carbon and alloy (other than stainless) steel pipes, of circular cross-

section, not more than 114.3mm (4.5 inches) in outside diameter,

regardless of wall thickness, manufacturing process (hot-finished or

cold-drawn), end finish (plain end, bevelled end, upset end, threaded,

or threaded and coupled), or surface finish. These pipes are commonly

known as standard pipe, line pipe or pressure pipe, depending upon the

application. They may also be used in structural applications.

The seamless pipes subject to these investigations are currently

classifiable under subheadings 7304.10.10.20, 7304.10.50.20,

7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,

7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,

7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and

7304.59.80.25 of the Harmonized Tariff Schedule of the United States

(HTSUS).

The following information further defines the scope of these

investigations, which covers pipes meeting the physical parameters

described above:

Specifications, Characteristics and Uses: Seamless pressure pipes

are intended for the conveyance of water, steam, petrochemicals,

chemicals, oil products, natural gas and other liquids and gasses in

industrial piping systems. They may carry these substances at elevated

pressures and temperatures and may be subject to the application of

external heat. Seamless carbon steel pressure pipe meeting the American

Society for Testing and Materials (ASTM) standard A-106 may be used in

temperatures of up to 1000 degrees fahrenheit, at various American

Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes

made to ASTM standard A-335 must be used if temperatures and stress

levels exceed those allowed for A-106 and the ASME codes. Seamless

pressure pipes sold in the United States are commonly produced to the

ASTM A-106 standard.

Seamless standard pipes are most commonly produced to the ASTM A-53

specification and generally are not intended for high temperature

service. They are intended for the low temperature and pressure

conveyance of water, steam, natural gas, air and other liquids and

gasses in plumbing and heating systems, air conditioning units,

automatic sprinkler systems, and other related uses. Standard pipes

(depending on type and code) may carry liquids at elevated temperatures

but must not exceed relevant ASME code requirements.

Seamless line pipes are intended for the conveyance of oil and

natural gas or other fluids in pipe lines. Seamless line pipes are

produced to the API 5L specification.

Seamless pipes are commonly produced and certified to meet ASTM A-

106, ASTM A-53 and API 5L specifications. Such triple certification of

pipes is common because all pipes meeting the stringent A-106

specification necessarily meet the API 5L and ASTM A-53 specifications.

Pipes meeting the API 5L specification necessarily meet the ASTM A-53

specification. However, pipes meeting the A-53 or API 5L specifications

do not necessarily meet the A-106 specification. To avoid maintaining

separate production runs and separate inventories, manufacturers triple

certify the pipes. Since distributors sell the vast majority of this

product, they can thereby maintain a single inventory to service all

customers.

The primary application of ASTM A-106 pressure pipes and triple

certified pipes is in pressure piping systems by refineries,

petrochemical plants and chemical plants. Other applications are in

power generation plants (electrical-fossil fuel or nuclear), and in

some oil field uses (on shore and off shore) such as for separator

lines, gathering lines and metering runs. A minor application of this

product is for use as oil and gas distribution lines for commercial

applications. These applications constitute the majority of the market

for the subject seamless pipes. However, A-106 pipes may be used in

some boiler applications.

The scope of these investigations includes all multiple-stenciled

seamless pipe meeting the physical parameters described above and

produced to one of the specifications listed above, whether or not also

certified to a non-covered specification. Standard, line and pressure

applications are defining characteristics of the scope of these

investigations. Therefore, seamless pipes meeting the physical

description above, but not produced to the A-106, A-53, or API 5L

standards shall be covered if used in an A-106, A-335, A-53 or API 5L

application.

For example, there are certain other ASTM specifications of pipe

which, because of overlapping characteristics, could potentially be

used in A-106 applications. These specifications include A-162, A-192,

A-210, A-333, and A-524. When such pipes are used in a standard, line

or pressure pipe application, such products are covered by the scope of

these investigations.

Specifically excluded from these investigations are boiler tubing,

mechanical tubing and oil country tubular goods except when used in a

standard, line or pressure pipe application. Also excluded from these

investigations are redraw hollows for cold-drawing when used in the

production of cold-drawn pipe or tube.

Although the HTS subheadings are provided for convenience and

customs purposes, our written description of the scope of these

investigations is dispositive.

Request for Comments From Interested Parties

The scope contained in the petitions, which has been slightly

clarified in the above ``Scope of Investigations'' section, contains

the clause that products used in standard, line or pressure pipe

applications be included in the scope, regardless of whether they meet

A-106, A-335, A-53 or API 5L standards. Implementing this clause would

require some type of end-use certification. Given the burden on Customs

and the difficulty involved in administering end-use certifications,

the Department generally avoids end-use as a scope criterion. See Final

Determination of Sales at Less Than Fair Value: Certain Alloy and

Carbon Hot-Rolled Bars, Rods, and Semifinished Products of Special Bar

Quality Engineered Steel from Brazil, 58 FR 31496 (June 3, 1993).

However, because petitioner has alleged that circumvention may occur if

end-use is not part of any order resulting from these investigations,

we are requesting comments regarding end-use as a criterion for the

scope of these investigations. Petitioner has based its allegation on

circumstances that occurred in the investigations of Preliminary

Affirmative Determination of Scope Inquiry on Antidumping Duty Orders

on Certain Circular Welded Non-Alloy Steel Pipe from Brazil, the

Republic of Korea, and Mexico, 59 FR 1929 (January 13, 1994).

Petitioner has identified specific possible substitution products for

the scope merchandise. Petitioner has also indicated that, while it is

not aware at this time of substitution occurring, it may occur in the

future should antidumping duties be assessed on seamless standard, line

and pressure pipe. Therefore, we are including end-use in the scope for

purposes of initiation; however, we intend to consider its

appropriateness further and we invite comments from interested parties

regarding the scope information presented above under the ``Scope of

Investigations'' section of this notice. Specifically, we will examine

comments that address ``end-use'' as a scope criterion. Interested

parties are invited to comment on the following: (1) Whether or not

end-use is an appropriate criterion for the merchandise described in

the ``Scope of Investigations'' section of this notice; (2) how the

Department would be informed when substitution is occurring, i.e., a

trigger mechanism; (3) at what point the Department should implement

suspension of liquidation and use of end-use certificates for products

meeting the physical parameters described in the scope other than those

stenciled A-106, A-335, A-53 and/or API 5L; (4) what specific

characteristics or factors the Department should evaluate regarding

end-use as a scope criterion; (5) what information should be provided

on an end-use certificate; (6) precise details as to how the Department

and Customs should administer any antidumping duty orders that result

from these investigations given end-use as a scope criterion; and (7)

the universe of products that could possibly be substituted for the

subject merchandise.

Finally, we invite comments from parties on whether the products

within the scope of these investigations constitute more than one class

or kind of merchandise. Parties should include an analysis using the

following factors: (1) The physical characteristics of the merchandise;

(2) the expectations of the ultimate purchaser; (3) the channels of

trade; (4) the ultimate use of the product; and (5) the cost.

Parties interested in commenting on the items mentioned above

should submit their comments no later than close of business October

21, 1994. Rebuttal comments will be accepted no later than close of

business October 31, 1994.

United States Price and Foreign Market Value

For purposes of these initiations, no adjustments were made to

petitioner's calculations. If it becomes necessary at a later date to

consider these petitions as a source of best information available

(BIA), we may review all of the bases for the petitioner's estimated

dumping margins in determining BIA.

Argentina

For Argentina, petitioner based United States price (USP) on U.S.

price quotes to an end-user. Petitioner made adjustments for

transportation and insurance charges, port and handling charges, and

U.S. duties paid. Petitioner adjusted USP to account for the tax levied

on seamless pipe in the home market. Petitioner also calculated the

amount of the tax adjustment that was due solely to the inclusion of

price deductions in the original tax base.

Petitioner based foreign market value (FMV) on home market prices

to end-users. Petitioner made adjustments for distributor mark-up,

transportation, home market taxes, and a tax offset to account for the

amount of tax that was due solely to the inclusion of price deductions

in the original tax base.

The range of dumping margins of seamless pipe from Argentina based

on a comparison of USP to FMV alleged by petitioner is 66.57 percent to

108.13 percent.

Brazil

For Brazil, petitioner based USP on U.S. price quotes to a

distributor. Petitioner made adjustments for freight and insurance,

port and handling charges and U.S. duties paid. Petitioner adjusted USP

to account for the tax levied on seamless pipe in the home market.

Petitioner also calculated the amount of the tax adjustment that was

due solely to the inclusion of price deductions in the original tax

base. Finally, petitioner adjusted USP to account for the difference in

level of trade between the home market and U.S. market.

Petitioner based FMV on home market price quotes to an end-user.

Petitioner adjusted the prices for home market taxes not included in

the prices. Petitioner made a tax offset for the amount of tax that was

due solely to the inclusion of price deductions in the original tax

base.

The range of dumping margins of seamless pipe from Brazil based on

a comparison of USP to FMV alleged by petitioner is 79.83 percent to

130.08 percent.

Germany

For Germany, petitioner based USP on U.S. price quotes to an end-

user. Petitioner made adjustments for distributor mark-up, freight and

insurance, port and handling charges and U.S. duties paid.

Petitioner was unable to obtain home market prices. Moreover,

petitioner was unable to develop a meaningful constructed value as

petitioner claims it operates a substantially different production

process than the German manufacturer of the subject merchandise.

Therefore, petitioner based FMV on third country prices in Britain,

which was the only information reasonably available to it. Petitioner

obtained ex-warehouse and delivered prices from three British

distributors of subject merchandise from Germany. Petitioner made

adjustments for the distributor mark-up, delivery charges, where

appropriate, and transportation charges.

The range of dumping margins of seamless pipe from Germany based on

a comparison of USP to FMV alleged by petitioner is 11.67 percent to

57.72 percent.

Italy

For Italy, petitioner based USP on U.S. price quotes to an end-

user. Petitioner made adjustments for distributor mark-up,

transportation and insurance charges, port and handling charges, and

U.S. duties paid. Petitioner adjusted the prices for home market taxes.

Petitioner made a tax offset for the amount of tax that was due solely

to the inclusion of price deductions in the original tax base.

Petitioner based FMV on home market price quotes to an end-user.

Petitioner made adjustments for discounts on cash sales, distributor

mark-up and freight charges. Petitioner adjusted the prices for home

market taxes and made a tax offset for the amount of tax that was due

solely to the inclusion of price deductions in the original tax base.

The range of dumping margins of seamless pipe from Italy based on a

comparison of USP to FMV alleged by petitioner is 4.57 percent to 11.26

percent.

Initiation of Investigations

We have examined the petitions on seamless pipe from Argentina,

Brazil, Germany and Italy, and have found that these petitions meet the

requirements of section 732(b) of the Act and 19 C.F.R. 353.12.

Therefore, we are initiating antidumping duty investigations to

determine whether imports of seamless pipe from Argentina, Brazil,

Germany and Italy are being, or are likely to be, sold in the United

States at less than fair value.

Preliminary Determination by the International Trade Commission

The International Trade Commission (ITC) will determine by August

8, 1994, whether there is a reasonable indication that imports of

seamless pipe from Argentina, Brazil, Germany and Italy are materially

injuring, or threaten material injury to, a U.S. industry. A negative

ITC determination will result in the investigations being terminated;

otherwise, the investigations will proceed according to statutory and

regulatory time limits.

This notice is published pursuant to section 732(c)(2) of the Act

and 19 CFR 353.13(b).

Dated: July 13, 1994.

Barbara R. Stafford,

Deputy Assistant Secretary for Investigations.

[FR Doc. 94-17680 Filed 7-19-94; 8:45 am]

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