E9-7093. Certain Circular Welded Carbon Quality Steel Line Pipe from the People's Republic of China: Final Determination of Sales at Less Than Fair Value

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

March 31, 2009.

SUMMARY:

The Department of Commerce (Department) has determined that circular welded carbon quality steel line pipe (welded line pipe) from the People's Republic of China (PRC) is being, or is likely to be, sold in the United States at less than fair value (LTFV) as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The final dumping margins for this investigation are listed in the “Final Determination Margins” section below. The period covered by the investigation is October 1, 2007, through March 31, 2008.

FOR FURTHER INFORMATION CONTACT:

Jeff Pedersen or Rebecca Pandolph, AD/CVD Operations, Office 4, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC, 20230; telephone: [phone] and 482-3627, respectively.

SUPPLEMENTARY INFORMATION:

Background

The Department published its preliminary determination of sales at LTFV on November 6, 2008. See Certain Circular Welded Carbon Quality Steel Line Pipe from the People's Republic of China: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 73 FR 66012 (November 6, 2008) (Preliminary Determination). On November 5, 2008, Shanghai Metals & Minerals Import & Export Corp. d/b/a Shanghai Minmetals Materials & Products Corp. (Shanghai Metals) informed the Department that it would not participate in the verification of its information and withdrew from the investigation. See Letter to Secretary of Commerce, Shanghai Metals' Notice of Withdrawal from Investigation and Certification of APO Compliance and Destruction of APO Materials at 1 (November 5, 2008). On November 6, 2008, Benxi Northern Steel Pipes Co., Ltd. (Benxi) also informed the Department that it would not participate in the verification of its information and withdrew from the investigation. See Letter to Secretary of Commerce, Benxi's Notice of Withdrawal from Investigation (November 6, 2008). From November 13, 2008, through November 21, 2008, the Department conducted a verification of information submitted by Huludao Steel Pipe Industrial Co., Ltd. (Huludao Pipe). See the “Verification” section below for additional information. On December 16, 2008, Huludao Pipe and United States Steel Corporation (U.S. Steel), one of the petitioning companies, submitted comments on, and calculations of, various surrogate values. In response to the Department's invitation to comment on the Preliminary Determination, on January 5, 2009, U.S. Steel, Maverick Tube Corporation (Maverick), a petitioner, Huludao Pipe, and the Bureau of Fair Trade, Imports and Exports, Ministry of Commerce of the PRC filed case briefs. Maverick, U.S. Steel and Huludao Pipe filed rebuttal briefs on January 12, 2009.

Analysis of Comments Received

All of the issues that were raised in the case and rebuttal briefs that were submitted in this investigation, and to which we have responded, are addressed in the “Issues and Decision Memorandum for the Final Determination in the Antidumping Duty Investigation of Certain Circular Welded Carbon Quality Steel Line Pipe from the People's Republic of China,” dated March 23, 2009, which is hereby adopted by this notice (Issues and Decision Memorandum). Appendix I to this notice contains a list of the issues that are addressed in the Issues and Decision Memorandum. The Issues and Decision Memorandum, which is a public document, is on file in the Central Records Unit, at the main Commerce Building, Room 1117, and is accessible on the Web at http://ia.ita.doc.gov/​frn. The paper copy and electronic version of the memorandum are identical in content.

Changes Since the Preliminary Determination

We have made the following changes to our calculations in the Preliminary Determination:

1. We based our determination with respect to Shanghai Metals and Benxi on total adverse facts available (AFA) because these companies refused to allow the Department to verify the information submitted in the investigation and failed to cooperate to the best of their abilities. As total AFA, we found Shanghai Metals and Benxi to be part of the PRC-wide entity. 2. We have reduced the grace period used in calculating warehouse expenses to seven days. 3. We have applied new surrogate values for ocean freight based on corrections to the departure and destination ports made at verification. 4. We have recalculated the reported per-unit volume of subject merchandise warehoused based on verification findings. 5. We have recalculated the cost of paint and thinner based on corrections to consumption reported by Huludao Pipe at verification. 6. We have recalculated labor costs based on corrections to consumption reported by Huludao Pipe at verification. 7. We have recalculated transportation costs for material inputs based on corrections to the distance from the supplier to the factory reported by Huludao Pipe at verification. 8. We have used new surrogate financial statements to calculate financial ratios.

Scope of the Investigation

The merchandise covered by this investigation is circular welded carbon quality steel pipe of a kind used for oil and gas pipelines (welded line pipe), not more than 406.4 mm (16 inches) in outside diameter, regardless of wall thickness, length, surface finish, end finish or stenciling.

The term “carbon quality steel” includes both carbon steel and carbon steel mixed with small amounts of alloying elements that may exceed the individual weight limits for nonalloy steels imposed in the Harmonized Tariff Schedule of the United States (HTSUS). Specifically, the term “carbon quality” includes products in which (1) iron predominates by weight over each of the other contained elements, (2) the carbon content is 2 percent or less by weight and (3) none of the elements listed below exceeds the quantity by weight respectively indicated:

(i) 2.00 percent of manganese,

(ii) 2.25 percent of silicon,

(iii) 1.00 percent of copper,

(iv) 0.50 percent of aluminum,

(v) 1.25 percent of chromium,

(vi) 0.30 percent of cobalt,

(vii) 0.40 percent of lead,

(viii) 1.25 percent of nickel,

(ix) 0.30 percent of tungsten,

(x) 0.012 percent of boron,

(xi) 0.50 percent of molybdenum,

(xii) 0.15 percent of niobium,

(xiii) 0.41 percent of titanium,

(xiv) 0.15 percent of vanadium, or

(xv) 0.15 percent of zirconium.

Welded line pipe is normally produced to specifications published by the American Petroleum Institute (API) (or comparable foreign specifications) including API A-25, 5LA, 5LB, and X grades from 42 and above, and/or any other proprietary grades or non-graded material. Nevertheless, all pipe meeting the physical description set forth above that is of a kind used in oil and gas pipelines, including all multiple-stenciled pipe with an API welded line pipe stencil is covered by the scope of this investigation.

Excluded from this scope are pipes of a kind used for oil and gas pipelines that are multiple-stenciled to a standard and/or structural specification and have one or more of the following characteristics: is 32 feet in length or less; is less than 2.0 inches (50 mm) in outside diameter; has a galvanized and/or painted surface finish; or has a threaded and/or coupled end finish. (The term “painted” does not include coatings to inhibit rust in transit, such as varnish, but includes coatings such as polyester.)

The welded line pipe products that are the subject of this investigation are currently classifiable in the HTSUS under subheadings 7306.19.10.10, 7306.19.10.50, 7306.19.51.10, and 7306.19.51.50. While HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive.

Scope Comments

Since the Preliminary Determination no one has submitted comments on the scope of this investigation.

Adverse Facts Available

As noted in the “Background” section above, Shanghai Metals and Benxi withdrew from the investigation and refused to allow the Department to verify the information they had submitted in this proceeding.

Section 776(a)(2) of the Act provides that, if an interested party (C) significantly impedes a proceeding, or (D) provides information that cannot be verified, the Department shall use facts otherwise available in reaching the applicable determination.

Section 776(b) of the Act authorizes the Department to use an adverse inference with respect to an interested party if the Department finds that the party failed to cooperate by not acting to the best of its ability to comply with a request for information.

Therefore, pursuant to sections 776(a)(2)(C) and (D) and 776(b) of the Act, we have, decided to base Shanghai Metals and Benxi's dumping margins on AFA. As AFA, we have treated Shanghai Metals and Benxi as part of the PRC-wide entity and assigned Shanghai Metals and Benxi the PRC-wide rate of 101.10 percent. See Issues and Decision Memorandum at Comment 12.

Verification

As provided in section 782(i) of the Act, we conducted verification in the PRC of the information submitted by Huludao Pipe for use in our final determination. See the Memorandum from Jeff Pedersen and Rebecca Pandolph, through Howard Smith, to the file regarding Verification of the Questionnaire Responses of Huludao Pipe Steel Pipe Industrial Co., Ltd. (December 11, 2008). In conducting the verification, we used standard verification procedures, including examination of relevant accounting, sales, and production records, as well as original source documents provided by Huludao Pipe.

Surrogate Country

In the Preliminary Determination, we selected India as the appropriate surrogate country noting that India was on the Department's list of countries that are at a level of economic development comparable to the PRC and that: (1) India is a significant producer of merchandise comparable to the subject merchandise; and, (2) reliable Indian data for valuing factors of production are readily available. See Preliminary Determination, 73 FR at 66014. No party has commented on our selection of India as the appropriate surrogate country. For the final determination, we continue to find India to be the appropriate surrogate country in this investigation.

Separate Rates

In proceedings involving non-market-economy (NME) countries, the Department begins with a rebuttable presumption that all companies within the country are subject to government control and, thus, should be assigned a single antidumping duty deposit rate. It is the Department's policy to assign all exporters of merchandise subject to an investigation in an NME country this single rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a separate rate. See Final Determination of Sales at Less Than Fair Value: Sparklers From the People's Republic of China, 56 FR 20588 (May 6, 1991), as amplified by N otice of Final Determination of Sales at Less Than Fair Value: Silicon Carbide From the People's Republic of China, 59 FR 22585 (May 2, 1994); see also 19 CFR 351.107(d).

In the Preliminary Determination, the Department granted separate-rate status to Benxi; Huludao Pipe; Pangang Group Beihai Pipe Corporation (Pangang Beihai); Shanghai Metals; Tianjin Xingyuda Import and Export Company (Tianjin); and Jiangsu Yulong Steel Pipe Co., Ltd. (Jiangsu Yulong). As discussed above, the Department has decided, as AFA, to treat Shanghai Metals and Benxi as part of the PRC-wide entity. Moreover, we note that the information that Shanghai Metals and Benxi provided to the Department to demonstrate the absence of de facto and de jure control could not be verified due to their failure to cooperate. Consequently we have not granted Shanghai Metals and Benxi separate rates.

While U.S. Steel argued in its case brief that Pangang Beihai should not be granted a separate rate, we continue to find that Pangang Beihai qualifies for a separate rate. See Issues and Decision Memorandum at Comment 11. No other parties commented on the separate-rate status granted to companies in the Preliminary Determination. For this final determination we have continued to grant the following companies separate-rate status: Huludao Pipe, Pangang Beihai, Tianjin, and Jiangsu Yulong. We have assigned the separate-rate companies the dumping margin that we calculated for Huludao Pipe.

The PRC-Wide Rate

In the Preliminary Determination, the Department found that certain companies did not respond to our requests for information. See Preliminary Determination, 73 FR at 66016. We treated these PRC producers/exporters as part of the PRC-wide entity because they did not demonstrate that they operate free of government control over their export activities. Id. No additional information was placed on the record with respect to any of these companies after the Preliminary Determination. Moreover, for the reasons noted above, we also consider Shanghai Metals and Benxi to be part of the PRC-wide entity.

As noted above, section 776(a)(2) of the Act provides that, if an interested party or any other person withholds information that has been requested by the administering authority, significantly impedes a proceeding under this title, or provides such information but the information cannot be verified as provided in section 782(i) of the Act, the administering authority shall, subject to section 782(d) of the Act, use facts otherwise available in reaching the applicable determination. Because the PRC-wide entity did not respond to our requests for information and because companies within the PRC-wide entity withheld information requested by the Department, and Shanghai Metals and Benxi, which are part of the PRC-wide entity, did not allow their information to be verified, pursuant to sections 776(a)(2)(A), (C), and (D) of the Act, we determine, as in the Preliminary Determination, that the use of facts otherwise available is appropriate to determine the PRC-wide rate.

As stated above, section 776(b) of the Act provides that, in selecting from among the facts otherwise available, the Department may employ an adverse inference if an interested party fails to cooperate by not acting to the best of its ability to comply with requests for information. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From the Russian Federation, 65 FR 5510, 5518 (February 4, 2000). See also Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, Vol. 1 (1994), at 870. We determine that, because the PRC-wide entity did not respond to our requests for information, and Shanghai Metals and Benxi prevented the Department from verifying its information, the PRC-wide entity has failed to cooperate to the best of its ability. Therefore, the Department finds that, in selecting a dumping margin from among the facts otherwise available, an adverse inference is appropriate for the PRC-wide entity.

In this final determination, we have assigned the PRC-wide entity the highest CONNUM-specific dumping margin, i.e., 101.10 percent, calculated for Shanghai Metals. See Issues and Decision Memorandum at Comment 10. No corroboration of this rate is necessary because we are relying on information obtained in the course of this investigation, rather than secondary information.

Since we begin with the presumption that all companies within an NME country are subject to government control, and only the exporters listed under the “Final Determination Margins” section below have overcome that presumption, we are applying a single antidumping rate (i.e., the PRC-wide rate) to all exporters of subject merchandise from the PRC, other than the exporters listed in the “Final Determination Margins” sections. See, e.g., Synthetic Indigo From the People's Republic of China; Notice of Final Determination of Sales at Less Than Fair Value, 65 FR 25706 (May 3, 2000).

Combination Rates

In the Initiation Notice, the Department stated that it would calculate combination rates for certain respondents that are eligible for a separate rate in this investigation. See Certain Circular Welded Carbon Quality Steel Line Pipe From the Republic of Korea and the People's Republic of China: Initiation of Antidumping Duty Investigations, 73 FR 23188 (April 29, 2008) (Initiation Notice). This change in practice is described in Policy Bulletin 05.1:

§w§hile continuing the practice of assigning separate rates only to exporters, all separate rates that the Department will now assign in its NME investigations will be specific to those producers that supplied the exporter during the period of investigation. Note, however, that one rate is calculated for the exporter and all of the producers which supplied subject merchandise to it during the period of investigation. This practice applies both to mandatory respondents receiving an individually calculated separate rate as well as the pool of non-investigated firms receiving the weighted-average of the individually calculated rates. This practice is referred to as the application of “combination rates” because such rates apply to specific combinations of exporters and one or more producers. The cash-deposit rate assigned to an exporter will apply only to merchandise both exported by the firm in question and produced by a firm that supplied the exporter during the period of investigation.”

See Policy Bulletin 05.1, “Separate Rates Practice and Application of Combination Rates in Antidumping Investigations Involving Non-Market Economy Countries” available on the Import Administration's website at http://ia.ita.doc.gov/​policy/​index.html.

Final Determination Margins

We determine that the following weighted-average dumping margins exist for the period October 1, 2007, through March 31, 2008:

Exporter & Producer	Weighted-Average Margin
Huludao Steel Pipe Industrial Co., Ltd.
Huludao City Steel Pipe Industrial Co., Ltd.	73.87%
Produced by: Huludao Steel Pipe Industrial Co., Ltd.
Huludao City Steel Pipe Industrial Co., Ltd.
Pangang Group Beihai Steel Pipe Corporation	73.87%
Produced by: Pangang Group Beihai Steel Pipe Corporation
Jiangsu Yulong Steel Pipe Co., Ltd.	73.87%
Produced by: Jiangsu Yulong Steel Pipe Co., Ltd.
Tianjin Xingyuda Import and Export Co., Ltd.	73.87%
Produced by: Tianjin Lifengyuanda Steel Pipe Group Co., Ltd.
PRC-Wide Rate	101.10%

Disclosure

We will disclose to parties the calculations performed within five days of the date of public announcement of this determination in accordance with 19 CFR 351.224(b). The Department has determined in Circular Welded Carbon Quality Steel Line Pipe from the People's Republic of China: Notice of Amended Final Affirmative Countervailing Duty Determination and Notice of Countervailing Duty Order, 74 FR 4136 (January 23, 2009) (Line Pipe CVD Final) that the product under investigation, exported and produced by Huludao Pipe, benefitted from export subsidies. Normally, where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct U.S. Customs and Border Protection (CBP) to require an antidumping cash deposit or posting of a bond equal to the weighted-average amount by which the normal value (NV) exceeds the export price, as indicated above, minus the amount determined to constitute an export subsidy. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Carbazole Violet Pigment 23 From India, 69 FR 67306, 67307 (November 17, 2004). Therefore, for merchandise under consideration, exported and produced by Huludao Pipe, and entered, or withdrawn from warehouse, for consumption on or after the publication date of this final determination, we will instruct CBP to require an antidumping cash deposit or the posting of a bond for each entry equal to the weighted-average margin indicated above, reduced by the export subsidy rate determined in the Line Pipe CVD Final for Huludao Pipe. For merchandise under consideration from the other exporter producer combinations, listed in the table above, that have been granted separate rates, we have assigned the rate calculated for Huludao Pipe in this antidumping investigation. Additionally, this merchandise is subject to countervailing duties to offset export subsidies equal to or greater than the export subsidy rate determined for Huludao Pipe. Therefore, for merchandise under consideration from these exporter producer combinations, entered, or withdrawn from warehouse, for consumption on or after the publication date of this final determination, we will instruct CBP to require an antidumping cash deposit or the posting of a bond for each entry equal to the weighted-average margin indicated above, reduced by the export subsidy rate determined for Huludao Pipe in the Line Pipe CVD Final. The adjusted cash deposit rate for Huludao Pipe and the other exporter-producer combinations listed above is 73.44 percent.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(B) of the Act, we are directing CBP to continue to suspend liquidation of all imports of subject merchandise as described in the “Scope of the Investigation” section, that are entered or withdrawn from warehouse, for consumption on or after November 6, 2008, which is the date of publication of the Preliminary Determination in the Federal Register. We will instruct CBP to require a cash deposit or the posting of a bond equal to the weighted-average dumping margin amount by which the NV exceeds U.S. price, as follows: (1) the rate for the exporter/producer combination listed in the chart above will be the rate we have determined in this final determination; (2) for all PRC exporters of subject merchandise which have not received their own rate, the cash-deposit rate will be the PRC-wide entity rate; and (3) for all non-PRC exporters of subject merchandise which have not received their own rate, the cash-deposit rate will be the rate applicable to the PRC exporter/producer combination that supplied that non-PRC exporter. These suspension-of-liquidation instructions will remain in effect until further notice.

International Trade Commission Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (ITC) of our final determination of sales at LTFV. As our final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will determine whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports or sales (or the likelihood of sales) for importation of the subject merchandise within 45 days of this final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess upon further instruction by the Department antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

Notification Regarding APO

This notice also serves as a reminder to the parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation. This determination and notice are issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

Dated: March 23, 2009.

Ronald K. Lorentzen,

Acting Assistant Secretary for Import Administration.

Appendix I

Parties' Comments

Comment 1: Whether Huludao Pipe Could Have Reported Steel Consumption on a More Product-Specific Basis

Comment 2: Whether Huludao Pipe Could Have Reported the Consumption of Paint, Thinner, and Packing Labor on a More Product-Specific Basis

Comment 3: The Department's Valuation of Huludao Pipe's Water Consumption

Comment 4: Huludao Pipe's Reported Steel By-Product Quantity

Comment 5: Whether Huludao Pipe's Reported Scrap Steel Offset Should be Reduced by Transportation Costs

Comment 6: Application of Warehousing Grace Period

Comment 7: Reported Days in Warehouse

Comment 8: Calculation of Warehousing Volume

Comment 9: Whether the Date of the Commercial Invoice Is the Proper Date of Sale

Comment 10: Scrap Surrogate Value

Comment 11: Eligibility of Pangang Group Beihai Steel Pipe Corporation for a Separate Rate

Comment 12: Applying Adverse Facts Available to Non-Responsive Companies

Comment 13: Selection of Surrogate Financial Statements

Comment 14: Whether the Imposition of Both Countervailing and Antidumping Duties Constitutes the Double Counting of Duties