E9-18733. Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a request from United States Steel Corporation (U.S. Steel or Petitioner), the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain hot-rolled carbon steel flat products (hot-rolled steel) from Thailand. This administrative review covers imports of subject merchandise produced and exported by respondent G Steel Public Company Limited (G Steel). The period of review is November 1, 2007 through October 31, 2008.

We preliminarily determine that: (1) G J Steel Public Company Limited (G J Steel) is the successor-in-interest to Nakornthai Strip Mill Public Company Limited (Nakornthai); (2) because of G Steel's refusal to cooperate with the Department in the conduct of this administrative review, G Steel made sales of subject merchandise at less than normal value (NV); and (3) G J Steel and G Steel constitute a single entity.

If these preliminary results are adopted in our final results, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on appropriate entries based on the difference between the export price and the NV. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

August 5, 2009.

FOR FURTHER INFORMATION CONTACT:

David Cordell or Robert James AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On November 29, 2001, the Department published the antidumping duty order on hot-rolled steel from Thailand. See Antidumping Duty Order: Certain Hot-Rolled Carbon Steel Flat Products From Thailand, 66 FR 59562 (November 29, 2001) (Antidumping Duty Order). On November 3, 2008, the Department published the opportunity to request an administrative review of, inter alia, hot-rolled steel from Thailand for the period November 1, 2007, through October 31, 2008. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 73 FR 65288 (November 3, 2008).

In accordance with 19 CFR 351.213(b)(1), on December 1, 2008, Petitioner requested an administrative review of G Steel's sales of subject merchandise. Additionally, on December 1, 2008, G Steel and G J Steel submitted a request that the Department review both G Steel and G J Steel's sales. G Steel and GJ Steel's submission further requested the Department to “treat both companies as affiliated, and as affiliated producers, as a single entity entitled to a single antidumping duty rate as a result of this administrative review.” On December 24, 2008, the Department published in the Federal Register a notice of initiation of this antidumping duty administrative review covering the period November 1, 2007, through October 31, 2008. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 73 FR 79055 (December 24, 2008).

On January 13, 2009, the Department issued its antidumping questionnaire to G Steel and G J Steel under separate cover letters. On February 1, 2009, G Steel and G J Steel submitted a combined section A questionnaire response (Section A Response). On March 12, 2009, prior to the deadlines for the remainder of their additional questionnaire responses, G Steel and G J Steel withdrew their requests for a review, and asked the Department to rescind the review with respect to G J Steel as no other party had requested a review of G J Steel. In their request for withdrawal, G Steel and G J Steel maintained they did not sell subject merchandise below normal value during this period of review, but explained that the ongoing worldwide financial crisis prevented them from continuing to participate in the review. G Steel and G J Steel also stated their request for withdrawal comes within 90 days of the publication of the notice of initiation. Finally, both companies requested the return of information disclosed under the Department's Administrative Protective Order, to which request the Department acceded in its April 9, 2009 letter to G Steel and G J Steel.

On April 7, 2009, domestic interested party Nucor Corporation (Nucor) submitted comments in which Nucor argued the Department should treat the companies' withdrawal as a refusal to cooperate and should assign both companies a margin based on adverse facts available. See Nucor's Comments on G / G J Steel's Withdrawal, dated April 7, 2009 (Nucor's Comments). Nucor also insisted the Department should not terminate the review with respect to G J Steel. Nucor maintains there is sufficient evidence on the public record of this proceeding to establish that the Department should treat G Steel and G J Steel as a single entity. To do otherwise, Nucor maintains, would lead to a significant potential for “manipulation of price or production.” On April 20, 2009, U.S. Steel submitted additional factual information for the record (U.S. Steel's Factual Information). On April 28, 2008, U.S. Steel submitted comments (U.S. Steel's Comments) arguing the Department should not rescind the review, either in whole or in part. Furthermore, U.S. Steel argued the Department should treat G Steel and G J Steel as a single entity and continue the review with respect to sales of subject merchandise by both producers.

On June 26, 2009, the Department rescinded the review with respect to G J Steel. See Certain Hot-Rolled Carbon Steel Flat Products From Thailand: Notice of Partial Rescission of Antidumping Duty Administrative Review, 74 FR 30524 (June 26, 2009) (Partial Rescission). The Department did not, however, issue liquidation instructions or cash deposit instructions with respect to G J Steel because the Department indicated it may decide to “collapse” G Steel with G J Steel pursuant to 19 CFR 351.401(f). See Partial Rescission. Accordingly, the Department has addressed the issue of G Steel and G J Steel's affiliation and the proper treatment of these firms in the context of these preliminary results.

On July 7, 2009 U.S. Steel submitted comments and recommendations for the Department to consider in reaching its preliminary results.

Period of Review

The period of review is November 1, 2007, through October 31, 2008.

Scope of the Order

For purposes of the order, the products covered are certain hot-rolled carbon steel flat products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths, of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness of not less than 4.0 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this review.

Specifically included within the scope of this review are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium or niobium (also commonly referred to as columbium), or both, added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products to be included in the scope of this review, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTSUS), are products in which: i) iron predominates, by weight, over each of the other contained elements; ii) the carbon content is 2 percent or less, by weight; and iii) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

2.25 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the physical and chemical description provided above are within the scope of this review unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this review:

- Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including, e.g., American Society for Testing and Materials (ASTM) specifications A543, A387, A514, A517, A506).

- Society of Automotive Engineers (SAE)/American Iron & Steel Institute (AISI) grades of series 2300 and higher.

- Ball bearing steels, as defined in the HTSUS.

- Tool steels, as defined in the HTSUS.

- Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 2.25 percent.

- ASTM specifications A710 and A736.

- USS abrasion-resistant steels (USS AR 400, USS AR 500).

- All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).

- Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTSUS.

The merchandise subject to this review is classified in the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel flat products covered by this review, including: vacuum degassed fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under review is dispositive.

Comments on G Steel's and G J Steel's Request for Rescission of Review

In response to the request for withdrawal from the review by G Steel and G J Steel, Nucor claims the Department should treat the two companies' withdrawal as a refusal to cooperate with the Department's administrative proceeding and, accordingly, rely upon adverse inferences in determining the antidumping duty. See Nucor's Comments at 1. Nucor further argues the Department should not terminate the review with respect to G J Steel, but instead should determine a final margin for both companies based upon adverse inferences. Id. at 3. Nucor states the Department's regulations indicate that in certain instances, the Department will treat companies as a single entity, thereby “collapsing” them for purposes of calculating or assigning a dumping margin. Id. Nucor asserts collapsed companies must be: (1) affiliated within the meaning section 771(33) of the Tariff Act of 1930, as amended (the Act)); (2) have production facilities for similar or identical products; and (3) present a significant potential for manipulation of price or production. Nucor claims all three of these criteria are satisfied.

First, Nucor claims G Steel and G J Steel are affiliated because G Steel owns more than five percent of the outstanding voting stock or shares of G J Steel, and that G Steel controls G J Steel. Id. Additionally, citing the section A response, Nucor claims G Steel treats G J Steel as a subsidiary and that G Steel's management was granted authority over the operations of G J Steel. Furthermore, Nucor cites to the preparation of consolidated financial statements, for the two companies. Nucor concludes that G Steel clearly controls G J Steel because it owns nearly half of G J Steel's stock, which is clearly more than the five percent threshold outlined in the statute. Id. at 4.

Second, Nucor contends that according to the section A response, G Steel and G J Steel are both “producers of subject merchandise” and both companies have participated as respondents in prior reviews of the order. Id. Thus, Nucor avers the second factor, namely having production facilities for similar or identical products, has been fulfilled.

Third, Nucor argues that G Steel having ownership or control over nearly half of G J Steel's stock demonstrates a significant potential for manipulation of price and/or production. Nucor notes G Steel has stated that it assumed direct managerial control and authority over G J Steel. Nucor further asserts the two companies appear to be intertwined, as G Steel directly manages G J Steel and the companies sell each other's merchandise. Nucor argues that by requesting they be treated as a single entity for purposes of calculating an antidumping duty margin, G Steel and G J Steel have acknowledged that their operations are not sufficiently separate to be assigned separate rates. Id. at 4-5.

Nucor therefore contends the Department's collapsing requirements have been met. Nucor argues that if the companies are not treated as a single entity, there is a significant potential for the resulting differences in their antidumping margins to result in manipulation of price or production by shifting production and sales to the company with the lower rate. Thus, Nucor requests that the Department treat G Steel and G J Steel as a single entity. See id. at 5.

In its April 28, 2009, comments, U.S. Steel argues the Department should not rescind the instant review, either in whole or in part. See U.S. Steel's Comments at 2. Citing Notice of Rescission of Antidumping Duty Administrative Review: Stainless Steel Sheet and Strip in Coils from Italy, 70 FR 76775, 76777 (December 28, 2005) U.S. Steel asserts it is the Department's well-established practice not to rescind a review at one party's request unless all the parties that requested a review have also withdrawn their requests. U.S. Steel further claims the Department definitely cannot rescind the review with respect to G Steel and, moreover, should continue the review for both G Steel and G J Steel because the two companies should be collapsed and treated as a single entity. Id. at 3.

With regard to collapsing G Steel and G J Steel, U.S. Steel claims the two companies' submission of a combined section A response demonstrates they intended to be treated as a single entity. Id. at 3-4. Furthermore, U.S. Steel argues that given the joint nature of G Steel and G J Steel's response, it would be impossible to calculate separate dumping margins for each producer based on the information available. Thus, U.S. Steel continues, the Department has no choice but to treat G Steel and G J Steel as a single entity. Id.

Citing the Department's regulations at 19 CFR 351.401(f)(1), U.S. Steel asserts the Department will treat two or more producers as a single entity when three criteria are satisfied: (1) the producers are affiliated; (2) the producers have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities; and (3) there is a significant potential for the manipulation of price or costs of production. Id. at 4. U.S. Steel argues that each of these criteria are met.

First, U.S. Steel argues that G Steel and G J Steel are affiliated producers within the statutory definition at section 771(33)(E) of the Act, which includes (“{a}ny person directly owning, controlling, or holding power to vote, 5 percent or more of the outstanding voting stock or shares of any organization and such organization” as “affiliated persons.”). Id. at 5. U.S. Steel contends the section A response demonstrates that G J Steel has been a subsidiary of G Steel since June 2008, with G Steel and its affiliate owning 49.66 percent of G J Steel's common shares. Id.

Second, U.S. Steel argues the section A response shows “both companies produce only hot-rolled steel,” including the subject merchandise. See id. Furthermore, U.S. Steel contends that G Steel and G J Steel use similar production processes to produce the subject merchandise. Id.

Third, with regard to the potential for manipulation, U.S. Steel states the Department's regulations at 19 CFR 351.401(f)(2) provide three considerations: (1) the level of common ownership between the two companies; (2) the extent to which managerial employees or board members of one company sit on the board of the other; and (3) whether the companies are intertwined. See id. U.S. Steel asserts that each of these considerations has been satisfied. First, citing the section A response, U.S. Steel contends G Steel and its affiliate own 49.66 percent of G J Steel's common shares and are the largest shareholders of G J Steel. Citing Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews, 71 FR 40064 (July 16, 2006) and accompanying Issues and Decision Memorandum at Comment 18 (Ball Bearings), U.S. Steel asserts the Department does not require a majority share ownership for collapsing; thus, G Steel's level of ownership is more than sufficient for collapsing purposes. Moreover, citing the section A response, U.S. Steel claims G J Steel was included in G Steel's financial statements because G Steel has had financial and operational management of G J Steel since June 2, 2008. See U.S. Steel's Comments at 6. Second, U.S. Steel avers G Steel and G J Steel share common board members. Id. Third, U.S. Steel insists the two companies have intertwined operations. Id. at 7. Citing Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Steel Concrete Reinforcing Bars From the Republic of Korea, 66 FR 8348, 8352 (January 30, 2001) (Rebar from Korea), U.S. Steel also states that G Steel and G J Steel's financial statements “show significant trade accounts receivable and payable between the two companies.” Id.

Finally, U.S. Steel claims G Steel's and G J Steel's U.S. sales of subject merchandise do not constitute large percentages of their home market sales of hot-rolled steel. See id. Citing Rebar from Korea, 66 FR at 8352, U.S. Steel states the Department has previously found this demonstrates that companies “potentially have the capacity to absorb the other's export market sales, in the event they were to shift export sales to the company with a lower margin.”

In its July 7, 2009, comments, U.S. Steel restated its argument that G Steel and G J Steel should be collapsed based upon the companies' representations to the Department in this review. Moreover, U.S. Steel assets G Steel and G J Steel have not rebutted U.S. Steel's April 28, 2009, comments demonstrating that G Steel and G J Steel should be collapsed. U.S. Steel argues the Department should base the dumping margin for G Steel and G J Steel on AFA because the companies failed to cooperate with the Department in this review. U.S. Steel argues the Department should use the petition rate of 20.30 percent because it was corroborated and used as total AFA for G Steel's predecessor, Siam Strip Mill Public Co., Ltd. (SSM), in the original investigation. U.S. Steel concludes this rate of 20.30 percent should be used so that G Steel and G J Steel do not benefit from their refusal to participate in this administrative review.

Department's Position

The Department has already determined that the review should be rescinded with respect to G J Steel. See Partial Rescission. However, pursuant to the Department's statement in the Partial Rescission that it would examine whether G Steel and G J Steel should be treated as a collapsed entity as part of the ongoing administrative review, an analysis of the governing law and parties' arguments on this issue follows here.

The Department's determination concerning collapsing, or treating two or more producers as a single entity, is governed by the Department's regulations at 19 CFR 351.401(f)(1), which states the Department will treat two or more producers as a single entity when three criteria are satisfied: (1) the producers are affiliated; (2) the producers have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities; and (3) there is a significant potential for the manipulation of price or costs of production. We preliminarily determine that each of these criteria is satisfied here.

With respect to the first criterion, namely affiliation, there is ample evidence that G Steel and G J Steel are affiliated. First, the companies' consolidated section A response states that G Steel and its affiliate own 49.66 percent of G J Steel's common shares. See Section A Response, Public Version at A-12 A-14. The antidumping statute provides numerous criteria that may indicate affiliation, including; “{a}ny person directly owning, controlling, or holding power to vote, 5 percent or more of the outstanding voting stock or shares of any organization and such organization.” See section 771(33)(E) of the Act. Thus, the substantial ownership interest in G J Steel held by G Steel and its affiliate satisfies the statutory definition for affiliation. Moreover, G Steel's request was submitted jointly with G J Steel and both companies filed a single entry of appearance. See G Steel and G J Steel's Request for Administrative Review and Entry of Appearance, dated December 1, 2008. In this document G Steel asked the Department to “treat both companies as affiliated and, as affiliated producers, as a single entity entitled to a single antidumping duty rate as a result of this administrative review.” Id. Moreover, although the Department sent two separate cover letters along with its questionnaire to G Steel and G J Steel, the two companies together submitted a joint response to the Department's section A questionnaire. See Section A Response, Public Version. As G Steel and G J Steel stated in their section A response, “G Steel and G J Steel respond to questions regarding U.S. sales collectively.” Id. at 2, n.2. In addition, the response stated, “G Steel now treats G J Steel as its subsidiary and has prepared consolidated financial statements that include the operations of G J Steel from June 2, 2008 forward.” Id. at A-14. Furthermore, as U.S. Steel pointed out in its July 7, 2009 comments, G Steel stated that it has “management authority over the financial polices and operations” of G J Steel. See U.S. Steel's July 7, 2009 comments at 3, citing Section A Response, Public Version, at Exhibit A-12 (G Steel's Consolidated Financial Statements for the Six-month Period Ending June 30, 2008, at page 3) In short, the joint submissions by G Steel and G J Steel demonstrate that the companies consider themselves to be affiliated.

With respect to the second criterion, the record demonstrates that G Steel and G J Steel have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities. G Steel and G J Steel state that both companies “only produce and sell hot-rolled coil” and that both companies “manufacture products to the specifications commonly used” in both the U.S. and home markets. See Section A Response, Public Version, at A-40. Further, the flow charts and production processes shown in Exhibit A-15 of the consolidated section A response describe a similar production process used by both companies. Id. at Exhibit A-15. Finally, the companies' product brochures describe nearly identical processes and time lengths. Id. at Exhibit A-16 (G Steel's and G J Steel's product brochures, at page 1 of each brochure). Further, neither G Steel nor G J Steel would have to substantially retool its facilities in order to shift production of subject merchandise towards the company that has been assigned the lower margin. See Section A Response, Public Version at A-7 - A-8, A-41 and Exhibit A-15.

With respect to the third criterion, the significant potential for manipulations of prices or costs of production, the Department's regulations at 19 CFR 351.401(f)(2) sets forth three considerations: (1) the level of common ownership between the two companies; (2) the extent to which managerial employees or board members of one company sit on the board of the other; and (3) whether the companies are intertwined. The Department concurs with U.S. Steel's assertion that each of these considerations has been satisfied. First, concerning the level of common ownership, G Steel and its affiliate own 49.66 percent of G J Steel's common shares and are the largest shareholders of G J Steel. See Section A Response, Public Version at A-13 A-14. As evidenced in Ball Bearings, the Department's practice is that a majority share is not required for collapsing; thus, G Steel's level of ownership is sufficient for collapsing purposes. See Ball Bearings, Issues and Decision Memorandum at Comment 18. Moreover, the record demonstrates that G J Steel was included in G Steel's financial statements because G Steel has had financial and operational management of G J Steel since June 2, 2008. See Section A Response, Public Version at Exhibit A-12. Second, the Department concurs with U.S. Steel's assertion that G Steel and G J Steel share common board members. See U.S. Steel's New Factual Information; U.S. Steel's Comments, at Exhibit B. Third, there is substantial evidence that the companies are intertwined. U.S. Steel is correct in its assertion that G Steel and G J Steel's financial statements “show significant trade accounts receivable and payable between the two companies.” See Section A Response, Public Version at Exhibit A-12 (G Steel's Consolidated Financial Statements for the year ending March 31, 2008 at 11-12). Additionally, G Steel's and G J Steel's U.S. sales of subject merchandise do not constitute large percentages of their home market sales of hot-rolled steel. See id. at Exhibit A-1. Thus, consistent with our findings in Rebar from Korea, this demonstrates that the two companies “potentially have the capacity to absorb the other's export market sales, in the event they were to shift export sales to the company with a lower margin.” Rebar from Korea, 66 FR at 8352. Further, G Steel and G J Steel sell subject merchandise to the same affiliated customers, and these affiliated customers resell both of the companies' merchandise in the home market. See Section A Response, Public Version, at Exhibit A-1. In addition, G Steel and G J Steel sell each other's merchandise in the home market. See id. at A-6 (“{S}ome home market sales made by G Steel were sold by G J Steel, and vice versa.”).

Therefore, pursuant to the Department's regulations and practice, the Department preliminarily determines that all criteria concerning the collapsing of G Steel and G J Steel have been satisfied. To treat G J Steel and G Steel as separate and independent entities would contradict the record evidence, including the companies' representations to the Department that they are affiliated.

Successor-in-Interest Determination

The Department preliminarily determines that it is necessary to conduct a successor-in-interest analysis in the context of the instant review to examine the effect of G J Steel's name change. Specifically, during the period of review, Nakornthai changed its name to G J Steel. See Section A Response, Public Version at A-1. The Department notes that if the Department were to collapse G J Steel and G Steel without examining the name change, it would be possible for G J Steel to use Nakornthai's lower rate. Therefore, the Department must determine whether G J Steel is, in fact, the successor-in-interest to Nakornthai.

In making a successor-in-interest determination, the Department examines several factors including, but not limited to, changes in: (1) management; (2) production facilities; (3) supplier relationships; and (4) customer base. See, e.g., Notice of Final Results of Changed Circumstances Antidumping Duty Administrative Review: Polychloroprene Rubber From Japan, 67 FR 58 (January 2, 2002); Brass Sheet and Strip from Canada: Final Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 1992). While no single factor or combination of factors will necessarily provide a dispositive indication of a successor-in-interest relationship, the Department will generally consider the new company to be the successor to the previous company if the new company's resulting operation is not materially dissimilar to that of its predecessor. See, e.g., Fresh and Chilled Atlantic Salmon From Norway; Final Results of Changed Circumstances Antidumping Duty Administrative Review, 64 FR 9979 (March 1, 1999); Industrial Phosphoric Acid from Israel; Final Results of Changed Circumstances Review, 59 FR 6944 (February 14, 1994). Thus, if the evidence demonstrates that with respect to the production and sale of the subject merchandise, the new company operates as the same business entity as the former company, the Department will accord the new company the same antidumping treatment as its predecessor. Successorship analyses can be carried out as part of an administrative review. See, e.g., Notice of Preliminary Results of Antidumping Duty Administrative Review, Notice of Intent to Revoke in Part: Individually Quick Frozen Raspberries from Chile, 71 FR 45000, at fn.1 (August 8, 2006); unchanged in relevant part in final results, Notice of Final Results of Antidumping Duty Administrative Review, and Final Determination to Revoke the Order In Part: Individually Quick Frozen Red Raspberries from Chile, 72 FR 70295 (December 11, 2007).

The Department preliminarily determines that G J Steel is the successor-in-interest to Nakornthai. First, with regard to management, it appears G J Steel's management is the same as Nakornthai's management. For example, Mr. Sirichai Sae-Kue was identified as Nakornthai's Vice-President - Commercial and Ms. Panee Tanaprateepkul as Nakornthai's Vice-President - Administration. See Section A Response, Public Version at Exhibit A-12 (Nakornthai Annual Report for 2007 at 86). Public records, specifically the Business Week profile for G J Steel, state that Mr. Sae-Kue now serves as the President of G J Steel and Ms. Panee Tanaprateepkul continues to serve as Vice President of Procurement, Human Resources & Admin & Logistic for G J Steel. See Business Week Profile for G J Steel Public Company Limited, available at http://investing.businessweek.com/​research/​stocks/​people/​people.asp?​ric=​GJS.BK (last accessed on July 28, 2009), which is incorporated on the record of this proceeding as a Memorandum to the File, dated July 29, 2009.

Second, with regard to production facilities, record evidence demonstrates Nakornthai used the same production facilities as G J Steel. For example, the Nakornthai Annual Report for 2007 shows Nakornthai's production facilities are located at Hermaraj Chonburi Industrial Estate in Chonburi See Section A Response, Public Version at Exhibit A-12 at 76 (Nakornthai Annual Report for 2007). The last page of the product catalog for G J Steel identifies the same location identified above for the G J Steel factory. See Section A Response, Public Version at Exhibit A-16. Furthermore, the same exhibits show the head office of Nakornthai was in the same location as the head office of G J Steel, and that Nakornthai and G J Steel produced or produce the same product, namely hot-rolled coil.

Although the Department lacks information concerning G J Steel's supplier relationships and customer base, there is additional evidence to demonstrate that G J Steel is the successor-in-interest to Nakornthai. For example, the Nakornthai Annual Report for 2007 shows that Nakornthai owned 100 percent of the shares of NSM Steel Company Limited (NSM Cayman). NSM Cayman is identified as a subsidiary of Nakornthai which was incorporated for the purpose of issuing notes and debentures and using the proceeds to make loans to Nakornthai. See id. at Exhibit A-12 at 108. The interim financial statements for G J Steel show that NSM Cayman is a subsidiary of G J Steel, and that G J Steel possesses the same relationship with NSM Cayman as did Nakornthai. See Section A Response, Public Version at Exhibit A-12, at 11 (interim financial statements for G J Steel for the three and six month periods ending June 30, 2008).

Moreover, the notes to the interim financial statements indicate that on June 5, 2008, the company changed its name from “Nakornthai Strip Mill Public Company” to “G J Steel Public Company Limited.” See Section A Response, Public Version, Exhibit A-12 at 38 n.18 (notes to the interim financial statements for the three-month and six-month periods ending June 30, 2008 (unaudited)). This company name change was registered with the Business Development Department of the Thailand Ministry of Commerce on June 5, 2008, and the Stock Exchange of Thailand was informed to “change the stock symbol from “NSM” to “GJS” in accordance with the change of the company's name at the same date.” Id. at n.18 and n. 19 (notes to the interim financial statements for the three-month and six-month periods ending September 30, 2008 (unaudited)).

Use of Facts Otherwise Available

For the reasons discussed below and in the accompanying AFA memorandum, we preliminarily determine that the use of AFA is appropriate with respect to G Steel and G J Steel.

A. Use of Facts Available

Section 776(a)(2) of the Act provides that if an interested party withholds information requested by the administering authority, fails to provide such information by the deadlines for submission of the information and in the form or manner requested, subject to subsections (c)(1) and (e) of section 782 of the Act, 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 use, subject to section 782(d) of the Act, facts otherwise available in reaching the applicable determination. Section 782(d) of the Act provides that if the administering authority determines that a response to a request for information does not comply with the request, the administering authority shall promptly inform the responding party and provide an opportunity to remedy the deficient submission. Section 782(e) of the Act states further that the Department shall not decline to consider submitted information if all of the following requirements are met: (1) the information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

On March 12, 2009, G Steel and G J Steel notified the Department that it would not continue to participate in this administrative review and requested the removal of its business-proprietary information (BPI) from the administrative record. We granted this request and have removed all of its BPI from the administrative record. We also instructed counsel for Petitioner to destroy all copies of G Steel's and G J Steel's BPI data. See Memorandum to the File, dated April 8, 2009; see also Letters from the Department to G Steel and G J Steel, dated April 8, 2009; Letters from the Department to U.S. Steel and Nucor, dated April 9, 2009.

Because G Steel ended its participation in the instant administrative review, G Steel's actions constitute a refusal to provide information necessary to conduct the Department's antidumping analysis under sections 776(a)(2)(A) and (B) of the Act. Further, due to its withdrawal from this review, G Steel has not responded to sections B, C and D of the Department's questionnaire. Thus, G Steel's withdrawal significantly impedes conduct of the administrative review. See section 776(a)(2)(C) of the Act. Therefore, we preliminarily determine to base the margin for G Steel and, accordingly G J Steel, on facts otherwise available, pursuant to sections 776(a)(2)(A), (B), and (C) of the Act. Further, absent any response on the record from G Steel, sections 782(d) and (e) of the Act do not apply.

B. Application of Adverse Inferences for Facts Available

In applying the facts otherwise available, section 776(b) of the Act provides that, if the Department finds an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information, in reaching the applicable determination under this title the Department may use an inference adverse to the interests of that party in selecting from among the facts otherwise available.

Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, vol. 1 (1994) at 870 (SAA). Further, “affirmative evidence of bad faith on the part of a respondent is not required before the Department may make an adverse inference.” See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27340 (May 19, 1997).

G Steel and G J Steel's request for withdrawal from the review and its failure to answer sections B, C and D of the Department's questionnaire constitutes a refusal to participate in the administrative review. This demonstrates that G Steel and G J Steel failed to cooperate by not acting to the best of its ability to comply with the Department's request for information. Therefore, pursuant to section 776(b) of the Act, the Department has preliminarily determined that in selecting from among the facts otherwise available, an adverse inference is warranted. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Circular Seamless Stainless Steel Hollow Products From Japan, 65 FR 42985, 42986 (July 12, 2000) (the Department applied total AFA where a respondent failed to respond to subsequent antidumping questionnaires).

C. Selection and Corroboration of Information Used as Facts Available

Section 776(b) of the Act provides that the Department may use as AFA information derived from the petition, the final determination in the investigation, any previous review, or any other information placed on the record. When selecting an AFA rate from among the possible sources of information, the Department's practice has been to ensure the margin is sufficiently adverse to induce respondents to provide the Department with complete and accurate information in a timely manner. See, e.g., Certain Steel Concrete Reinforcing Bars From Turkey; Final Results and Rescission of Antidumping Duty Administrative Review in Part, 71 FR 65082, 65084 (November 7, 2006).

As total AFA, we have assigned G Steel and G J Steel the rate of 20.30 percent which is the highest alleged margin, as recalculated by the Department, for Thailand in the original antidumping petition. See Memorandum from Joseph A. Spetrini to Bernard T. Carreau, “Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Preliminary Determination of Sales at Less Than Fair Value--The Use of Facts Available for Siam Strip Mill Public Co. Ltd, and the Corroboration of Secondary Information,” dated April 23, 2001 (Facts Available Memorandum). This rate was assigned as AFA to SSM, which was G Steel's predecessor in the investigation, and corroborated by the Department for its preliminary determination in the investigation. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From Thailand, 66 FR 22199 (May 3, 2001) (Thailand Preliminary Determination).

We find this rate is sufficiently adverse to serve the purposes of facts available and is appropriate, considering that this AFA rate is the highest rate determined for any respondent in this proceeding. In choosing the appropriate balance between providing a respondent with an incentive to cooperate to the best of its ability and imposing a rate that is reasonably related to the respondent's prior commercial activity, selecting the highest margin “reflects a common sense inference that the highest prior margin is the most probative evidence of current margins, because, if it were not so, the importer, knowing of the rule, would have produced current information showing the margin to be less.” See Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1190 (Fed. Cir. 1990).

Section 776(c) of the Act provides that, to the extent practicable, the Department shall corroborate secondary information used for facts available by reviewing independent sources reasonably at its disposal. Information from a prior segment of the proceeding constitutes secondary information. See SAA at 870; see also Antifriction Bearings and Parts Thereof From France, et al.: Final Results of Antidumping Duty Administrative Reviews, Rescission of Administrative Reviews in Part, and Determination To Revoke Order in Part, 69 FR 55574, 55577 (September 15, 2004). The word “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value. See SAA at 870; see also Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996). To corroborate secondary information, the Department will examine, to the extent practicable, the reliability and relevance of the information used.

With respect to the reliability aspect of corroboration, the Department found the rate of 20.30 percent to be reliable in the investigation. See Thailand Preliminary Determination. There, the Department pointed out that the export prices in the petition were based on import values compiled by the U.S. Customs Service. See Thailand Preliminary Determination, 66 FR at 22202. These data were from publicly available sources (i.e., official U.S. government statistics). The Department also compared the prices and expenses of export sales to the United States by Sahaviriya Steel Industries Public Co., Ltd. (Sahaviriya), a respondent in the investigation, to corroborate the information submitted in the petition. See Facts Available Memorandum. This memorandum was moved to this segment of the proceeding in the “Memorandum to the File, Transfer of Certain Documents from Past Segments of Proceeding in the Current Administrative Review of Certain Hot-Rolled Carbon Steel Flat Products from Thailand (A-549-917)”, dated July 29, 2009 (Document Transfer Memorandum). Therefore, we found the U.S. price from the petition margin was sufficiently corroborated.

For the NV calculation, Petitioner relied upon constructed value, consisting of cost of manufacture (COM), selling, general, administrative expenses (SG&A), interest expenses, and profit. Petitioner based depreciation, SG&A, interest, and profit on Sahaviriya's publicly available financial statements. Therefore, because these data were based on publicly available financial statements, we found them to be sufficiently corroborated. Petitioner calculated COM based on its own production experience, adjusted for known differences between costs incurred to produce hot rolled steel in the United States and Thailand using publicly available data. To corroborate these data, the Department compared them to the reported COM of Sahaviriya and its affiliates. Our analysis showed the petitioner's reported costs were reasonably close to the data submitted by Sahaviriya and its affiliates. Based on this analysis, we found that the COM data used in the antidumping petition have probative value. See Facts Available Memorandum at 5 and 6.

With respect to the relevance aspect of corroboration, the Department will consider information reasonably at its disposal to determine whether a margin continues to have relevance. In the investigation, the Department determined that in the absence of verifiable data provided by the non-responding company, the petition information was the best approximation available to the Department of that company's pricing and selling behavior in the U.S. market. This information was relevant to the mandatory respondent which refused to participate in the investigation. See Facts Available Memorandum. No party contested the application of that rate in the investigation. See Notice of Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Carbon Steel Flat Products From Thailand, 66 FR 49622 (September 28, 2001).

To further corroborate the rate, the Department examined the final results of the most recent segment of this proceeding, which is the changed circumstances review. We note the rate of 20.30 percent is corroborated by margins calculated for individual transactions in the changed circumstances review. See Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Final Results of Antidumping Duty Changed Circumstances Review and Reinstatement in the Antidumping Duty Order, 74 FR 22885 (May 15, 2009); and Document Transfer Memorandum. As certain of the calculations are based on proprietary information, see also “Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Corroboration of Total Adverse Facts Available for G Steel Public Company Limited (G Steel) and G J Steel Public Company Limited (formerly Nakornthai Strip Mill Public Company, Ltd.)” dated July 29, 2009, for further discussion.

Because the AFA rate of 20.30 percent is the highest rate assigned to any company in the history of this order, we find the rate is relevant for use in this administrative review and, therefore, it has probative value for use as AFA. As such, the Department finds this rate to be corroborated to the extent practicable, consistent with section 776(c) of Act. We have, therefore, selected the rate of 20.30 percent for G Steel and G J Steel as this rate is the highest margin assigned to any company in the history of this order. Thus, we consider the 20.30 percent rate to be sufficiently high so as to encourage participation in future segments of this proceeding.

Preliminary Results of Review

As a result of our review, we preliminarily determine that the dumping margin for G Steel and G J Steel (formerly known as Nakornthai Strip Mill Public Company Limited) is 20.30 percent for the period November 1, 2007, through October 31, 2008.

Disclosure and Public Comment

We will disclose pertinent memoranda concerning these preliminary results to parties in this review within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of the publication of this notice in the Federal Register. See 19 CFR 351.310(c). If a hearing is requested, the Department will notify interested parties of the hearing schedule.

Interested parties are invited to comment on the preliminary results of this review. The Department will consider case briefs filed by interested parties within 30 days after the date of publication of this notice in the Federal Register. See 19 CFR 351.309(c). Interested parties may file rebuttal briefs, limited to issues raised in the case briefs, no later than 35 days after the publication of these preliminary results. See 19 CFR 351.309(d). Any hearing, if requested, will be held two days after the deadline for submission of rebuttal briefs. See 19 CFR 351.310(d). Parties who submit arguments are requested to submit with each argument a statement of the issue, a brief summary of the argument, and a table of authorities cited. Further, we request that parties submitting written comments provide the Department with a diskette containing an electronic copy of the public version of such comments.

We intend to issue the final results of this administrative review, including the results of our analysis of issues raised in any written comments, within 120 days of publication of these preliminary results in the Federal Register.

Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. Because we are relying on total AFA to establish G Steel and G J Steel's dumping margin, we will instruct CBP to apply a dumping margin of 20.30 percent ad valorem to all entries of subject merchandise during the POR that was produced and/or exported by G Steel and G J Steel (formerly known as Nakornthai Strip Mill Public Company Limited). The Department intends to issue instructions to CBP 15 days after the publication of the final results of review.

Cash Deposit Requirements

If these preliminary results are adopted in the final results of review, the following deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication of the final results of this administrative review, as provided in section 751(a)(1) of the Act: (1) the cash-deposit rate for G Steel and G J Steel (formerly known as Nakornthai Strip Mill Public Company Limited) will be the rate established in the final results of this review; (2) for previously reviewed or investigated companies not covered in this review, 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, a prior review, or the less-than-fair-value (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 subject merchandise; (4) if neither the exporter nor the manufacturer is a firm covered in this or any previous segment of the proceeding, the cash-deposit rate will continue to be the all-others rate established in the LTFV investigation which is 4.44 percent. See Antidumping Duty Order. These cash-deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) 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. The preliminary results of administrative review and this notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: July 29, 2009.

Ronald K. Lorentzen,

Acting Assistant Secretary for Import Administration.