Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Oil Country Tubular Goods From Argentina

DEPARTMENT OF COMMERCE

International Trade Administration

[A-357-810]

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Oil Country Tubular Goods From

Argentina

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: February 2, 1995.

FOR FURTHER INFORMATION CONTACT: John Beck or Stuart Schaag, Office of

Antidumping Investigations, Import Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C.

20230; telephone (202) 482-3464 or (202) 482-0192, respectively.

Preliminary Determination

We preliminarily determine that oil country tubular goods (OCTG)

from Argentina are being, or are likely to be, sold in the United

States at less than fair value, as provided in section 733(b) of the

Tariff Act of 1930, as amended (the Act). The estimated margins are

shown in the ``Suspension of Liquidation'' section of this notice.

Case History

Since the initiation of this investigation on July 20, 1994 (59 FR

37962, July 26, 1994), the following events have occurred.

On August 15, 1994, the U.S. International Trade Commission (ITC)

issued an affirmative preliminary determination.

On August 26, 1994, the Department determined that Siderca S.A.I.C.

(Siderca), an Argentine exporter of the subject merchandise, should be

the sole recipient of the antidumping questionnaire. This company

accounted for at least 60 percent of exports of OCTG from Argentina

during the period of investigation (POI).

On August 26, 1994, the Department sent an antidumping duty

questionnaire to Siderca. The Department received initial questionnaire

responses in September, October and November 1994. The Department

received deficiency questionnaire responses in December 1994, and

January 1995.

On November 1, 1994, the Department determined that Siderca's home

market was not viable within the meaning of section 773(a)(1)(B) of the

Act and 19 CFR 353.48, and that the People's Republic of China (PRC)

was the appropriate third-country market for this investigation (see

the November 1, 1994, memorandum from David L. Binder to Richard W.

Moreland). This decision was consistent with our decision not to expand

the period of investigation to include home market sales made pursuant

to long-term contracts (see the November 3, 1994, memorandum from

Richard W. Moreland to Barbara R. Stafford).

On November 10, 1994, Koppel Steel Corporation, U.S. Steel Group (a

unit of USX Corporation) and USS/Kobe Steel Company, (the petitioners),

timely requested that the Department postpone the preliminary

determination in accordance with section 733(c)(1) of the Act (19

U.S.C. 1673b(c)(1)), and 19 CFR 353.15(c). We did so on November 15,

1994 (59 FR 60130, November 22, 1994).

On December 12, 1994, the petitioners submitted an allegation of

sales at prices below the cost of production (COP) based on Siderca's

sales to the PRC. The Department initiated a COP investigation on

January 13, 1995 (see the January 13, 1995, memorandum from Gary

Taverman to Barbara R. Stafford).

On December 16, 1994, Siderca timely requested that the final

determination be postponed in accordance with 19 CFR 353.20(b) in the

event of an affirmative preliminary determination.

Scope of Investigation

For purposes of this investigation, OCTG are hollow steel products

of circular cross-section, including oil well casing, tubing, and drill

pipe, of iron (other than cast iron) or steel (both

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carbon and alloy), whether seamless or welded, whether or not

conforming to American Petroleum Institute (API) or non-API

specifications, whether finished or unfinished (including green tubes

and limited service OCTG products). This investigation does not cover

casing, tubing, or drill pipe containing 10.5 percent or more of

chromium. The OCTG subject to this investigation is currently

classified in the Harmonized Tariff Schedule of the United States

(HTSUS) under item numbers: 7304.20.10.00, 7304.20.10.10,

7304.20.10.20, 7304.20.10.30, 7304.20.10.40, 7304.20.10.50,

7304.20.10.60, 7304.20.10.80, 7304.20.20.00, 7304.20.20.10,

7304.20.20.20, 7304.20.20.30, 7304.20.20.40, 7304.20.20.50,

7304.20.20.60, 7304.20.20.80, 7304.20.30.00, 7304.20.30.10,

7304.20.30.20, 7304.20.30.30, 7304.20.30.40, 7304.20.30.50,

7304.20.30.60, 7304.20.30.80, 7304.20.40.00, 7304.20.40.10,

7304.20.40.20, 7304.20.40.30, 7304.20.40.40, 7304.20.40.50,

7304.20.40.60, 7304.20.40.80, 7304.20.50.10, 7304.20.50.15,

7304.20.50.30, 7304.20.50.45, 7304.20.50.50, 7304.20.50.60,

7304.20.50.75, 7304.20.60.10, 7304.20.60.15, 7304.20.60.30,

7304.20.60.45, 7304.20.60.50, 7304.20.60.60, 7304.20.60.75,

7304.20.70.00, 7304.20.80.00, 7304.20.80.30, 7304.20.80.45,

7304.20.80.60, 7305.20.20.00, 7305.20.40.00, 7305.20.60.00,

7305.20.80.00, 7306.20.10.30, 7306.20.10.90, 7306.20.20.00,

7306.20.30.00, 7306.20.40.00, 7306.20.60.10, 7306.20.60.50,

7306.20.80.10, and 7306.20.80.50.

Although the HTSUS subheadings are provided for convenience and

customs purposes, our written description of the scope of this

investigation is dispositive.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Statute and to the

Department's regulations are in reference to the provisions as they

existed on December 31, 1994.

Period of Investigation

The POI is January 1, 1994, through June 30, 1994.

Such or Similar Comparisons

We have determined for purposes of the preliminary determination

that the OCTG covered by this investigation comprises a single category

of ``such or similar'' merchandise within the meaning of section

771(16) of the Act. Where there were no sales of identical merchandise

in the third country to compare to U.S. sales, we made similar

merchandise comparisons on the basis of the characteristics listed in

Appendix V of the Department's antidumping questionnaire.

The Appendix V criteria were intended to avoid matching casing and

tubing products. However, in using the product matches supplied by

Siderca, a casing product was matched to a tubing product in two

instances. Therefore, we modified the Appendix V criteria to match,

whenever possible, U.S. sales of tubing with PRC sales of tubing and

U.S. sales of casing with PRC sales of casing, by making that the

primary matching criterion.

Thus, we made similar merchandise comparisons on the basis of: (1)

Whether OCTG is casing or tubing; (2) whether OCTG is seamless or

welded; (3) the grade of OCTG finish; (4) end finish; (5) outside

diameter; (6) OCTG length; (7) full-body normalization; and 8) wall

thickness (see the January 24, 1995, memorandum from John Beck to David

L. Binder for a detailed discussion).

In certain other instances, Siderca did not follow correctly the

Department's matching hierarchy instructions. We have corrected the

product concordance for these problems (see the January 24, 1995,

memorandum from John Beck to David L. Binder for a detailed

discussion).

We made adjustments, where appropriate, for differences in the

physical characteristics of the merchandise, in accordance with section

773(a)(4)(C) of the Act.

Fair Value Comparisons

To determine whether Siderca's sales of OCTG from Argentina to the

United States were made at less than fair value, we compared the United

States price (USP) to the foreign market value (FMV), as specified in

the ``United States Price'' and ``Foreign Market Value'' sections of

this notice.

United States Price

We based USP on exporter's sales price (ESP), in accordance with

section 772(c) of the Act, because the subject merchandise was sold to

the first unrelated purchaser after importation into the United States.

For OCTG that was further manufactured in the United States, we

deducted all value added in the United States, pursuant to section

772(e)(3) of the Act. The value added consists of the costs of the

materials, fabrication, and general expenses associated with the

portion of the merchandise further manufactured in the United States,

as well as a proportional amount of profit attributable to the value

added. We accepted Siderca's cost data without making any adjustments

for purposes of the preliminary determination. We calculated profit by

deducting from the sales price of the finished product all production

and selling costs incurred by the company. We then allocated the total

profit proportionately to all components of cost. We deducted only the

profit attributable to the value added. In determining the costs

incurred to produce the finished merchandise, we included: (1)

Materials; (02) fabrication; and (3) general expenses including selling

(SG&A), and interest expenses.

We calculated ESP based on packed, delivered and ex-U.S. warehouse

prices to unrelated customers in the United States. We made deductions

from gross unit price, where appropriate, for foreign loading charges,

foreign inland freight, ocean freight, marine insurance, U.S. duty,

U.S. inland freight, U.S. handling, U.S. brokerage, credit expense and

U.S. and Argentine indirect selling expenses, including technical

services, inventory carrying costs, and other U.S. and Argentine

indirect selling expenses. Finally, we added duty drawback and duties

uncollected by reason of exportation.

For certain sales, Siderca had not yet shipped or received payment

for the sale. In order to calculate credit expenses, we assigned the

average number of credit days when shipment and payment dates were

missing, and used the date of the preliminary determination, January

26, 1995, as the assumed payment date when only payment dates were

missing (see the January 26, 1995, concurrence memorandum).

Foreign Market Value

We compared the volume of home market sales of subject merchandise

to the volume of third-country sales to determine whether there was a

sufficient volume of sales in the home market to serve as a viable

basis for calculating FMV, in accordance with section 773(a)(1)(B) of

the Act. Pursuant to 19 CFR 353.48, we found that the home market was

not viable because it represented less than five percent of the amount

sold to third countries. We therefore based FMV on third-country sales.

We determined, pursuant to 19 CFR 353.49(b), that the PRC is the

most appropriate third-country market because: (1) The volume of

Siderca's PRC sales during the POI was the largest of any third

country; (2) the merchandise exported to the PRC is

[[Page 6505]]

most similar or identical to the merchandise exported to the United

States; and (3) Siderca's sales to the PRC were to an OCTG market whose

organization and development were similar to that of the U.S. market

based on our analysis of the sales and distribution process for those

sales. However, petitioner has questioned the legitimacy of certain

sales made by Siderca to the Chinese market. The Department intends to

scrutinize these sales at verification.

Cost of Production Analysis

Based on the petitioners' allegation that Siderca is selling OCTG

in the PRC at prices below its COP, the Department initiated a COP

investigation for the PRC sales of Siderca. Although this COP

investigation was not initiated until January 13, 1995, Siderca

submitted its cost information before this date. The Department was,

therefore, able to use this information for purposes of the preliminary

determination.

In order to determine whether the third-country prices were above

the COP, we calculated the COP based on the sum of Siderca's reported

cost of materials, fabrication, general expenses, and packing. We

accepted Siderca's cost data without making any adjustments for

purposes of the preliminary determination.

Results of COP Analysis

Under our standard practice, where we find that less than 10

percent of a company's sales are at prices below the COP, we disregard

any below-cost sales because that company's below-cost sales were not

made in substantial quantities. Where we find between 10 and 90 percent

of the company's sales were at prices below the COP, and the below-cost

sales were made over an extended period of time, we disregard only the

below-cost sales. Where we find that more than 90 percent of the

company's sales were at prices below the COP, and the sales were made

over an extended period of time, we disregard all sales for that

product and calculate FMV based on constructed value (CV).

In accordance with section 773(b)(1) of the Act, in order to

determine whether below-cost sales were made over an extended period of

time, we compare the number of months in which below-cost sales

occurred for each product to the number of months in the POI in which

that product was sold. If a product was sold in three or more months of

the POI, we do not exclude below-cost sales unless there were below-

cost sales in at least three months during the POI. When we find that

sales of a product only occurred in one or two months, the number of

months in which the sales occurred constituted the extended period of

time; i.e., where sales of a product were made in only two months, the

extended period of time was two months, where sales of a product were

made in only one month, the extended period of time was one month (see

the Preliminary Results and Partial Termination of Antidumping Duty

Administrative Review: Tapered Roller Bearings, Four Inches or Less in

Outside Diameter, and Components Thereof, From Japan (58 FR 69336,

69338, December 10, 1993).

Based on this preliminary analysis, none of Siderca's PRC sales

were found to be below cost. Accordingly, we calculated FMV based on

packed, FOB and C&F prices to unrelated customers in the PRC. In light

of the Court of Appeals for the Federal Circuit's (CAFC) decision in Ad

Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.

United States, Slip. Op. 93-1239 (Fed. Cir., January 4, 1994), the

Department no longer can deduct third country market movement charges

from FMV pursuant to its inherent power to fill in gaps in the

antidumping statute. Instead, we will adjust for those expenses under

the circumstance-of sale provision of 19 CFR 353.56(a), as appropriate.

Accordingly, in the present case, we deducted from FMV the following

direct selling expenses pursuant to 19 CFR 353.56(a): foreign loading

charges, foreign inland freight and ocean freight.

We also made deductions from gross unit price, where appropriate,

for credit expense, commissions and warranties. We deducted indirect

selling expenses, including, where appropriate, technical services,

inventory carrying costs and other indirect selling expenses, up to the

amount of indirect selling expenses incurred on U.S. sales, in

accordance with 19 CFR 353.56(b)(2). We deducted third-country packing

costs and added U.S. packing costs. Finally, we added duty drawback and

duties uncollected by reason of exportation.

For certain sales, Siderca had not yet shipped or received payment

for the sale. In order to calculate credit expenses, we applied the

same methodology described above for USP.

Currency Conversion

Because certified exchange rates for Argentina were unavailable

from the Federal Reserve, we made currency conversions for expenses

denominated in Argentine pesos based on the official monthly exchange

rates in effect on the dates of the U.S. sales as published by the

International Monetary Fund.

Verification

As provided in section 776(b) of the Act, we will verify the

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(1) (19 U.S.C. 1673b(d)(1)) of the

Act, we are directing the Customs Service to suspend liquidation of all

entries of OCTG from Argentina, as defined in the ``Scope of

Investigation'' section of this notice, that are entered, or withdrawn

from warehouse, for consumption on or after the date of publication of

this notice in the Federal Register.

The Customs Service shall require a cash deposit or posting of a

bond equal to the estimated preliminary dumping margin, as shown below.

The suspension of liquidation will remain in effect until further

notice.

------------------------------------------------------------------------

Margin

Producer/manufacturer/exporter percentage

------------------------------------------------------------------------

Siderca S.A.I.C............................................. 0.61

All others.................................................. 0.61

------------------------------------------------------------------------

Postponement of Final Determination

On December 16, 1994, in accordance with 19 CFR 353.20(b), Siderca

requested that, in the event of an affirmative determination, the

Department postpone the final determination. We find no compelling

reason to deny the request. Accordingly, we are postponing the date of

the final determination until not later than 135 days after the date of

publication of this notice.

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our preliminary determination.

If our final determination is affirmative, the ITC will determine

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry before the later of 120 days after the

date of this preliminary determination or 45 days after our final

determination.

Public Comment

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies may be submitted by any interested

party to the Assistant Secretary for Import Administration no later

than April 21, 1995, and rebuttal briefs no later than April 28, 1995.

We request that parties in this case provide an executive summary of no

more than two pages in conjunction with case briefs on the major issues

to be addressed. Further, briefs should

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contain a table of authorities. Citations to Commerce determinations

and court decisions should include the page number where cited

information appears. In preparing the briefs, please begin each issue

on a separate page. In accordance with 19 CFR 353.38(b), we will hold a

public hearing, if requested, to give interested parties an opportunity

to comment on arguments raised in case or rebuttal briefs. Tentatively,

the hearing will be held on May 2, 1995, at 10:00 a.m. at the U.S.

Department of Commerce, Room 1414, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 20230. Parties should confirm the time, date,

and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing must submit a

written request to the Assistant Secretary for Import Administration,

U.S. Department of Commerce, Room B-099, within ten days of the

publication of this notice in the Federal Register. Requests should

contain: (1) The party's name, address, telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

In accordance with 19 CFR 353.38(b), oral presentations will be limited

to the issues raised in the briefs.

This determination is published pursuant to section 733(f) of the

Act (19 U.S.C. 1673b(f)) and 19 CFR 353.15(a)(4).

Dated: January 26, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-2610 Filed 2-1-95; 8:45 am]

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