Certain Welded Carbon Steel Pipes and Tubes From Thailand: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-502]

Certain Welded Carbon Steel Pipes and Tubes From Thailand:

Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review: Certain Welded Carbon Steel Pipes and Tubes From

Thailand.

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SUMMARY: In response to requests by two importers, Ferro Union Inc.

(``Ferro Union''), and ASOMA Corp. (``ASOMA''), and four domestic

producers, Allied Tube and Conduit Corporation, Sawhill Tubular

Division--Armco, Inc., Wheatland Tube Company, and Laclede Steel

Company (collectively, the ``domestic producers'' or ``petitioners''),

the Department of Commerce (``the Department'') is conducting an

administrative review of the antidumping duty order on certain welded

carbon steel pipes and tubes from Thailand. This review covers Saha

Thai Steel Pipe Co., Ltd. (``Saha Thai''), a Thai manufacturer and its

affiliated exporter of the subject merchandise to the United States.

The period of review (POR) is March 1, 1997 through February 28, 1998.

We have preliminarily determined that the respondent sold subject

merchandise at less than normal value (``NV'') during the POR. If these

preliminary results are adopted in our final results, we will instruct

U.S. Customs to assess antidumping duties based on the differences

between the export price and NV.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument in this proceeding should also

submit with the argument (1) a statement of the issue, and (2) a brief

summary of the argument.

EFFECTIVE DATE: April 13, 1999.

FOR FURTHER INFORMATION CONTACT: John Totaro, AD/CVD Enforcement Group

III, Office VII, Room 7866, Import Administration, International Trade

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

Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-

1374.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995,

[[Page 17999]]

the effective date of the amendments made to the Tariff Act of 1930

(``the Act'') by the Uruguay Round Agreements Act (``URAA''). In

addition, unless otherwise indicated, all citations to the Department's

regulations are to those codified at 19 CFR Part 351 (1998).

SUPPLEMENTARY INFORMATION:

Background

On March 11, 1986, the Department published in the Federal Register

an antidumping duty order on welded carbon steel pipes and tubes from

Thailand (51 FR 8341). On March 11, 1998, the Department published a

notice of opportunity to request an administrative review of this order

covering the period March 1, 1997 through February 28, 1998 (63 FR

11868).

Timely requests for an administrative review of the antidumping

order with respect to sales by Saha Thai during the POR were filed by

Ferro Union and ASOMA, and by domestic producers. The Department

published a notice of initiation of this antidumping duty

administrative review on April 24, 1998 (63 FR 20378).

Because the Department determined that it was not practicable to

complete this review within statutory time limits, on November 27,

1998, we published in the Federal Register our notice of extension of

time limits for this review (63 FR 65573). As a result, we extended the

deadline for these preliminary results. The deadline for the final

results will continue to be 120 days after publication of these

preliminary results.

Scope of the Review

The products covered by this administrative review are certain

welded carbon steel pipes and tubes from Thailand. The subject

merchandise has an outside diameter of 0.375 inches or more, but not

exceeding 16 inches. These products, which are commonly referred to in

the industry as ``standard pipe'' or ``structural tubing,'' are

hereinafter designated as ``pipe and tube.'' The merchandise is

classifiable under the Harmonized Tariff Schedule (HTS) item numbers

7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055,

7306.30.5085 and 7306.30.5090. Although the HTS subheadings are

provided for convenience and Customs purposes, our written description

of the scope of the order is dispositive. This review covers sales by

Saha Thai during the period March 1, 1997 through February 28, 1998.

Verification

As provided in section 782(i) of the Act, we verified sales

information provided by the respondent Saha Thai from January 25

through January 29, 1999, using standard verification procedures,

including examination of relevant financial records and analysis of

original documentation used by Saha Thai to prepare responses to

requests for information from the Department. Our verification results

are outlined in the public version of the verification report

(Memorandum to the File from Steve Bezirganian and Marlene Hewitt,

February 24, 1999) (``Saha Thai Verification Report'').

Tolling Operations

Saha Thai claimed that, during the POR, it converted coil into pipe

pursuant to a tolling arrangement with a home market trading company.

However, sales of the alleged tolled merchandise are not subject to

this review because entries did not occur during the POR. See

Memorandum to the File from John Totaro, March 31, 1999.

Date of Sale

As in previous segments of this proceeding, Saha Thai reported

invoice date as the date of sale. We examined whether invoice date was

the appropriate date of sale, i.e., whether the material terms of sale

were established on an earlier date. During verification, Saha Thai

officials reported that in fact price and quantity were established at

the date of the purchase order. We examined the record evidence and

found that Saha Thai's statement at verification is not entirely

supported by the record. Given the inconclusive record evidence and the

potential problems associated with changing date of sale at this

juncture in the proceeding, we find that invoice date is the

appropriate date of sale. See Preamble to the Final Regulations, 62 FR

27296, 27348-50 (May 19, 1997).

Affiliation and Collapsing Determinations

In the 1996-1997 administrative review, we found Saha Thai

affiliated under section 771(33)(F) of the Act with Thai Tube Co., Ltd.

(``Thai Tube''), Thai Hong Steel Pipe Import Export Co., Ltd (``Thai

Hong'') and the Siam Steel Group, a member of which, Siam Matsushita

Steel Co., Ltd., is a producer of PVC lined and coated steel pipes. We

examined whether it was appropriate to collapse each of these

affiliated producers with Saha Thai for margin calculation purposes, in

accordance with 19 CFR 351.401(f). We found insufficient evidence to

collapse Saha Thai with any of these affiliated producers. No new

factual information has been presented to warrant changing these

previous findings for the instant review. Saha Thai did present certain

new factual information regarding Thai Tube and Thai Hong, but it had

no impact on our findings. See Memorandum to the File from John Totaro,

(March 31, 1999) (``Thai Tube/Thai Hong Memorandum'').

Also in the previous administrative review, the Department found

that Saha Thai was affiliated under section 771(33)(F) of the Act with

three resellers of the foreign like product. The facts on the record in

the instant review relating to this affiliation determination are

unchanged from those on the record of the previous review, and support

our finding of affiliation under section 771(33)(F) of the Act between

Saha Thai and these three resellers. However, because Saha Thai's sales

to these resellers accounted for less than five percent of Saha Thai's

total home market sales, the Department did not require Saha Thai to

report the downstream sales by these resellers. See Memorandum to the

File, March 31, 1999 (``Downstream Sales Memorandum'').

Fair Value Comparisons

To determine whether sales of steel pipes and tubes from Thailand

to the United States were made at less than normal value (NV), we

compared the export price (EP) to the NV for Saha Thai as specified in

the ``Export Price'' and ``Normal Value'' sections of this notice. In

accordance with section 777A(d)(2), we calculated monthly weighted-

average prices for NV and compared these to individual U.S.

transactions.

Export Price

We classified all Saha Thai sales to United States customers as EP

sales because Saha Thai is not affiliated with its U.S. distributors,

which are the first purchasers in the United States. Certain Welded

Carbon Steel Pipes and Tubes From Thailand: Final Results of

Antidumping Duty Administrative Review, 61 FR 56515, 56517 (November 1,

1996). In this review, the record evidence presents no factual

circumstances warranting a change from this prior analysis.

Accordingly, we calculated the EP based on the price from Saha Thai to

the first unaffiliated purchaser in the United States in accordance

with section 772(a) of the Act. Where appropriate, in accordance with

section 772(c)(2) of the Act, we made deductions from the starting

price

[[Page 18000]]

for ocean freight to the U.S. port, foreign inland freight, foreign

brokerage and handling, foreign inland insurance, and bill of lading

charge. We denied Saha Thai's request for a duty drawback adjustment

because we were unable to verify that the claimed adjustment accurately

reflects the actual amount of duty drawback received.

Normal Value

In order to determine whether there is a sufficient volume of sales

in the home market to serve as a viable basis for calculating NV, we

compared the volume of Saha Thai's home market sales of the foreign

like product to the volume of U.S. sales of subject merchandise, in

accordance with section 773(a)(1) of the Act. Based on this comparison,

we determined that the aggregate volume of Saha Thai's home market

sales of the foreign like product is greater than five percent of the

aggregate volume of Saha Thai's U.S. sales. Thus, we determined that

Saha Thai had a viable home market during the POR. Consequently, we

based NV on home market sales.

As discussed above, we found Saha Thai and its three home market

resellers affiliated under section 771(33)(F) of the Act. Based on this

finding, we applied the standard arm's length test to Saha Thai's sales

to these affiliated resellers. However, as stated above, we did not

require Saha Thai to report the resellers' downstream sales. Therefore,

where Saha Thai's sales to these resellers were not made at arm's

length prices, we excluded these sales from our home market normal

value calculation. See Memorandum to File from Marlene Hewitt, March

31, 1999 (``Downstream Sales Memorandum'').

Pursuant to section 773(b)(2)(A)(ii) of the Act, there were

reasonable grounds to believe or suspect that Saha Thai had made home

market sales at prices below its cost of production (``COP'') in this

review because the Department had disregarded sales below the COP in

the 1996-1997 administrative review (i.e., the most recently completed

review at the time we issued our antidumping questionnaire). As a

result, the Department initiated an investigation to determine whether

Saha Thai made home market sales during the POR at prices below its

COP. We calculated the COP based on the sum of respondent's cost of

materials and fabrication for the foreign like product, plus amounts

for SG&A and packing costs, in accordance with section 773(b)(3) of the

Act.

We used respondent's reported COP amounts with certain adjustments

to compute weighted-average COPs during the POR. Specifically, we did

not allow Saha Thai's request to amortize certain portions of its POR

exchange rate losses over five years because these losses were incurred

on short-term foreign currency debt for terms shorter than five years

and Saha Thai booked the entire amount of these losses on its financial

statements. To incorporate this change we recalculated Saha Thai's net

interest expense rate, general and administrative expenses rate, and

materials cost calculation. In addition, we recalculated Saha Thai's

hot-rolled coil cost calculation to correct an error identified at

verification.

We compared the COP figures to home market sales of the foreign

like product as required under section 773(b) of the Act, in order to

determine whether these sales had been made at prices below the COP. On

a product-specific basis, we compared the COP to home market prices,

less any applicable movement charges, discounts and credit notes.

In determining whether to disregard home market sales made at

prices below the COP, we examined (1) whether, within an extended

period of time, such sales were made in substantial quantities, and (2)

whether such sales were made at prices which permitted the recovery of

all costs within a reasonable period of time in the normal course of

trade.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of the respondent's sales of a given product were at prices

less than the COP, we did not disregard any below-cost sales of that

product because we determined that the below-cost sales were not made

in ``substantial quantities.'' Where 20 percent or more of the

respondent's sales of a given product during the POR were at prices

less than the COP, we determined such sales to have been made in

substantial quantities within an extended period of time in accordance

with section 773(b)(1)(A) of the Act. In such cases, we also determined

that such sales were not made at prices which would permit recovery of

all costs within a reasonable period of time, in accordance with

section 773(b)(1)(B) of the Act. Therefore, we disregarded the below-

cost sales.

Where appropriate, we adjusted Saha Thai's home market sales for

discounts, credit expenses, inland freight, inland insurance, and

warehousing. We also adjusted the home market sales made by reseller

Company B for credit notes. In addition, in accordance with section

773(a)(6), we deducted home market packing costs and added U.S. packing

costs.

In accordance with section 773(e) of the Act, we calculated CV

based on the sum of Saha Thai's cost of materials, fabrication, SG&A,

profit, and U.S. packing costs. We made certain adjustments to CV which

are detailed in the COP section, above. In accordance with section

773(e)(2)(A) of the Act, we based SG&A expenses and profit on the

amounts incurred and realized by Saha Thai in connection with the

production and sale of the foreign like product in the ordinary course

of trade, for consumption in the foreign country. For selling expenses,

we used the average of the selling expenses reported for home market

sales that passed the cost test, weighted by the total quantity of

those sales. For actual profit, we first calculated the difference

between the home market sales value and home market COP, and divided

the difference by the home market COP. We then multiplied this

percentage by the COP for each U.S. model to derive an actual profit.

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA,

to the extent practicable, we determine NV based on sales in the

comparison market at the same level of trade as the EP or the CEP. The

NV level of trade is that of the starting-price sales in the comparison

market or, when NV is based on CV, that of the sales from which we

derive selling, general and administrative expenses and profit. For EP,

the U.S. level of trade is the level of the starting-price sale, which

is usually from exporter to importer.

To determine whether NV sales are at a different level of trade

than EP or CEP, we examine stages in the marketing process and selling

functions along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different level of trade, and the difference affects price

comparability, as manifested in a pattern of consistent price

differences between the sales on which NV is based and comparison-

market sales at the level of trade of the export transaction, we make a

level of trade adjustment under section 773(a)(7)(A) of the Act. See

Notice of Final Determination of Sales at Less Than Fair Value: Certain

Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731

(November 19, 1997).

For the U.S. market, Saha Thai reported only one level of trade for

its EP sales. This single level of trade represents large volume sales

to unaffiliated trading companies/distributors in the U.S. In the home

market as well, Saha Thai claimed that it made sales at one level of

trade. These sales were made to unaffiliated trading

[[Page 18001]]

companies and distributors (made at the same level of trade as U.S.

sales). There are no differences in the selling functions Saha Thai

performs for these customers in the home market or in the U.S.

Therefore, we conclude that EP and NV sales are made at the same LOT

and no adjustment is warranted.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with

section 773A of the Act, based on exchange rates in effect on the dates

of the U.S. sales as certified by the Federal Reserve Bank. Section

773A(a) of the Act directs the Department to use a daily exchange rate

in order to convert foreign currencies into U.S. dollars unless the

daily rate involves a fluctuation. It is the Department's practice to

find that a fluctuation exists when the daily exchange rate differs

from the benchmark rate by 2.25 percent. The benchmark is defined as

the moving average of rates for the past 40 business days. When we

determine a fluctuation to have existed, we substitute the benchmark

rate for the daily rate, in accordance with established practice. See

Change in Policy Regarding Currency Conversions, 61 FR 9434 (March 8,

1996).

Our preliminary analysis of Federal Reserve dollar-baht exchange

rate data shows that the value of the Thai baht in relation to the U.S.

dollar fell on July 2, 1997 by more than 18 percent from the previous

day and did not rebound significantly in a short time. This decline was

many times more severe than any single-day decline during several years

prior to that date. Had the baht rebounded quickly enough to recover

all or almost all of the loss, the Department might have been inclined

to view this decline as nothing more than a momentary drop, despite the

magnitude of that drop. However, there was no significant rebound.

Therefore, we have preliminarily determined that the decline in the

baht from July 1, 1997 to July 2, 1997 was of such a magnitude that the

dollar-baht exchange rate cannot reasonably be viewed as having simply

fluctuated at this time, i.e., as having experienced only a momentary

drop in value, relative to the normal benchmark. Therefore, for

exchange rates between July 2 and August 27, 1997, the Department

relied on the standard exchange rate model, but used as the benchmark

rate a (stationary) average of the daily rates over this period. In

this manner we used a post-precipitous drop benchmark, but at the same

time avoided undue daily fluctuations in exchange rates. For the period

after August 27, 1997, we used the standard (rolling 40-day average)

benchmark.

Preliminary Results of the Review

We preliminarily determine that the following weighted-average

dumping margins exist:

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

Margin

Manufacturer/exporter Period (percent)

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

Saha Thai................................ 3/1/97-2/28/98 12.83

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

Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. Any interested party may

request a hearing within 30 days of publication. Any hearing, if

requested, will be held 37 days after the date of publication or the

first business day thereafter. Case briefs and/or other written

comments from interested parties may be submitted not later than 30

days after the date of publication. Rebuttal briefs and rebuttals to

written comments, limited to issues raised in those comments, may be

filed not later than 35 days after the date of publication of this

notice. The Department will publish the final results of this

administrative review, which will include the results of its analysis

of issues raised in any such comments, within 120 days from the date of

publication of these preliminary results.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. In accordance

with 19 CFR 351.212(b), we calculated importer-specific ad valorem duty

assessment rates for the class or kind of merchandise based on the

ratio of the total amount of antidumping duties calculated for the

examined sales made during the POR to the total customs value of the

sales used to calculate those duties. This rate will be assessed

uniformly on all entries that particular importer made during the POR.

Upon completion of this review, the Department will issue appraisement

instructions directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon the

publication of the final results of these administrative reviews for

all shipments of circular welded carbon steel pipes and tubes from

Thailand entered, or withdrawn from warehouse, for consumption on or

after the publication date, as provided for by Section 751(a)(2)(c) of

the Act: (1) the cash deposit rate for the reviewed company will be

that established in the final results of this review; (2) for

previously reviewed or investigated companies not listed above, the

cash deposit rate will continue to be the company-specific rate

published for the most recent period; (3) if the exporter is not a firm

covered in this review, or the original LTFV investigation, but the

manufacturer is, the cash deposit rate will be the rate established for

the most recent period for the manufacturer of the merchandise; (4) the

cash deposit rate for all other manufacturers or exporters will

continue to be 15.67 percent, the ``All Others'' rate made effective by

the LTFV investigation. These requirements, when imposed, shall remain

in effect until publication of the final results of the next

administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402(f) to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

These preliminary results of review are issued and published in

accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: March 31, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-9193 Filed 4-12-99; 8:45 am]

BILLING CODE 3510-DS-P