[Federal Register Volume 69, Number 71 (Tuesday, April 13, 2004)]
[Notices]
[Pages 19400-19407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8376]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-832]


Light-Walled Rectangular Pipe and Tube from Mexico: Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary determination of sales at less than fair 
value and postponement of final determination.

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EFFECTIVE DATE: April 13, 2004.

FOR FURTHER INFORMATION CONTACT: Maisha Cryor (Prolamsa) at (202) 482-
5831, Richard Johns (Galvak/Hylsa) at (202) 482-2305, Magd Zalok (LM) 
at (202) 482-4162, or Crystal Crittenden (Regiomontana) at (202) 482-
0989; AD/CVD Enforcement, Office IV, Group II, Import Administration, 
Room 1870, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

Preliminary Determination

    We preliminarily determine that light-walled rectangular pipe and 
tube (LWRPT) from Mexico is being sold, or is likely to be sold, in the 
United States at less than fair value (LTFV), as provided in section 
733 of the Tariff Act of 1930, as amended (the Act). The estimated 
margins of sales at LTFV are shown in the Suspension of Liquidation 
section of this notice.

SUPPLEMENTARY INFORMATION:

Case History

    On September 9, 2003, the Department of Commerce (the Department) 
received a petition for the imposition of antidumping duties on LWRPT 
from Mexico, filed in proper form, by California Steel and Tube, 
Hannibal Industries, Inc., Leavitt Tube Company, LLC, Maruichi American 
Corporation, Northwest Pipe Company,

[[Page 19401]]

Searing Industries, Inc., Vest Inc., and Western Tube and Conduit 
Corporation (collectively, petitioners). See Letter from petitioners to 
Secretary Evans of the Department and Secretary Abbott of the U.S. 
International Trade Commission (ITC), ``Petition for the Imposition of 
Antidumping Duties: Light-Walled Rectangular Pipe and Tube from Mexico 
and Turkey,'' dated September 9, 2003 (Petition). The Department 
initiated this antidumping investigation of LWRPT from Mexico on 
September 29, 2003. See Notice of Initiation of Antidumping 
Investigations: Light-Walled Rectangular Pipe and Tube from Mexico and 
Turkey, 68 FR 57668 (October 6, 2003) (Initiation Notice). Since the 
initiation of the investigation, the following events have occurred.
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage of the scope of the 
investigation. See Initiation Notice, at 68 FR 57668. On October 27, 
2003, Productos Laminados de Monterrey, S.A. de C.V (Prolamsa) and 
IMSA-MEX, S.A. de C.V. and IMSA, Inc. (collectively, IMSA) submitted 
comments on product coverage. Petitioners and Prolamsa submitted 
rebuttal comments in November 2003, January 2004, and March 2004. See 
Scope Comments section below.
    On October 23, 2003, the Department selected Prolamsa, Galvak, S.A. 
de C.V. (Galvak), Perfiles y Herrajes LM, S.A. de CV (LM), and 
Regiomontana De Perfiles Y Tubos (Regiomontana) (collectively, 
respondents), as mandatory respondents in this investigation. See 
Memorandum from Maisha Cryor, Analyst, to Thomas F. Futtner, Acting 
Office Director, Re: Selection of Respondents for the Antidumping Duty 
Investigation of Light-Walled Rectangular Pipe and Tube from Mexico, 
dated October 23, 2003 (Respondent Selection Memo), on file in the 
Central Records Unit (CRU), Room B-099 of the Main Commerce Building.
    On October 24, 2003, the ITC preliminarily determined that there is 
a reasonable indication that an industry in the United States is 
materially injured by reason of LWRPT imported from Mexico that is 
alleged to be sold in the United States at LTFV. See Light-Walled 
Rectangular Pipe and Tube from Mexico and Turkey, 68 FR 61829 (October 
30, 2003).
    On October 28, 2003, the Department issued to respondents sections 
A-E of its antidumping questionnaire, which included proposed product 
characteristics that the Department intends to use to make its fair 
value comparisons.\1\ After setting aside a period of time for all 
interested parties to provide comments on the proposed product 
characteristics, the Department received comments from Galvak and 
petitioners on November 4, 2003, and from Prolamsa on November 5, 2003. 
On November 10, 2003, Galvak and petitioners submitted rebuttal 
comments.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation, and the manner in which the 
company sells that merchandise in all markets. Section B requests a 
complete listing of all of the company's home market sales on the 
foreign like product or, if the home market is not viable, sales of 
the foreign like product in the most appropriate third-country 
market (this section is not applicable to respondents in non-market 
economy cases). Section C requests a complete listing of the 
company's U.S. sales of subject merchandise. Section D requests 
information on the cost of production of the foreign like product 
and the constructed value of the merchandise under investigation. 
Section E requests information on further manufacturing.
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    After reviewing interested parties' comments, the Department 
revised the proposed product characteristics and instructed Prolamsa, 
Galvak, LM, and Regiomontana, to report their product characteristics 
according to the revised requirements for sections B and C of the 
Department's questionnaire. See Memorandum from Maisha Cryor, Analyst, 
to the File, RE: Revision to Product Characteristics, dated November 
21, 2003.
    In December 2003, we received responses to sections A-C of the 
antidumping questionnaire from all of the respondents. We issued 
supplemental questionnaires, pertaining to sections A, B, and C of the 
questionnaire, in December 2003, January 2004 and February 2004. 
Respondents replied to these supplemental questionnaires in January, 
February, and March of 2004. On January 9, 2004, in accordance with 19 
CFR 351.301(d)(2)(i)(B), petitioners submitted allegations that home 
market sales were made at prices below the cost of production (COP) by 
each respondent in this investigation. After reviewing petitioners' 
allegations, the Department, in accordance with section 773(b)(2)(A)(i) 
of the Act, concluded that there was a reasonable basis to suspect that 
each respondent is selling LWRPT in Mexico at prices below the COP and 
initiated cost investigations on February 2, 2004, (Prolamsa)\2\, 
February 3, 2004 (Regiomontana)\3\, and February 4, 2004, (Galvak/Hylsa 
\4\ and LM\5\).
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    \2\ See Memo to Howard Smith from Maisha Cryor, James Balog and 
Gina Lee regarding Light-walled Rectangular Pipe and Tube from 
Mexico, RE: Petitioners' Allegation of Sales Below the Cost of 
Production for Productos Laminados de Monterrey, S.A. de C.V. 
(Prolamsa Cost Memo).
    \3\ See Memo to Thomas Futtner from Crystal Crittenden, Trinette 
Ruffin, and Gina Lee regarding Light-walled Rectangular Pipe and 
Tube from Mexico, RE: Petitioners' Allegation of Sales Below the 
Cost of Production for Regiomontana de Perfiles y Tubos, S.A. de 
C.V. (Regiomontana Cost Memo).
    \4\ See Memo to Thomas Futtner from magd Zalok, Richard Johns, 
Gina Lee, and James Balog regarding Light-walled Rectangular Pipe 
and Tube from Mexico, RE: Petitioners' Allegation of Sales Below the 
Cost of Production for Galvak, S.A. de C.V. and Hylsa, S.A. de C.V. 
(Galvak/Hylsa Cost Memo).
    \5\ See Memo to Thomas Futtner from Magd Zalok, Trinette 
Ruffin,k and Gina Lee regarding Light-walled Rectangular Pipe and 
Tube from Mexico, RE: Petitioners' Allegation of Sales Below the 
Cost of Production for Perfiles y Herrajes L.M., S.A. de C.V. (LM 
Cost Memo).
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    On January 28, 2004, petitioners submitted a letter in support of 
the postponement of the preliminary determination. On February 5, 2004, 
pursuant to section 733(c)(1)(B) of the Act, the Department postponed 
the preliminary determination of this investigation by 50 days, from 
February 16, 2004, until April 6, 2004. See Light-Walled Rectangular 
Pipe and Tube from Mexico and Turkey: Notice of Postponement of 
Preliminary Antidumping Duty Determinations, 69 FR 5487 (February 5, 
2004).
    On February 23, 2004, all of the respondents submitted responses to 
section D of the Department's antidumping questionnaire. The Department 
issued supplemental section D questionnaires to respondents, and 
received timely responses in March of 2004.

Postponement of the Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for an extension of the 
provisional measures from a four-month period to not more than six 
months.
    On March 15, 2004, Galvak/Hysla requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department postpone its final determination until

[[Page 19402]]

135 days after the publication of the preliminary determination. 
Galvak/Hylsa also included a request to extend the provisional measures 
to not more than 135 days after the publication of the preliminary 
determination. Accordingly, because we have made an affirmative 
preliminary determination, and the requesting party accounts for a 
significant proportion of exports of the subject merchandise, we have 
postponed the final determination until not later than 135 days after 
the date of the publication of the preliminary determination.

Period of Investigation

    The period of investigation (POI) is July 1, 2002, through June 30, 
2003. See 19 CFR 351.204(b)(1).

Scope Comments

    In accordance with the preamble to the Department's regulations 
(see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 
19, 1997) (Preamble)), in the Initiation Notice, we set aside a period 
of time for parties to raise issues regarding the product coverage of 
the scope of the investigation and encouraged parties to submit 
comments on product coverage within 20 calendar days of publication of 
the Initiation Notice. See Initiation Notice, 68 FR at 57668. On 
October 27, 2003, Prolamsa requested that the Department exclude pre-
primered products from the scope of the investigation because it claims 
that petitioners do not produce pre-primered products and, therefore, 
they do not have a legitimate interest in including such items in the 
scope of this investigation. Further, Prolamsa argued that pre-primered 
LWRPT should be excluded from the scope because the unique properties 
of the production process ensure that it is only purchased by a 
particular customer type. In addition, Prolamsa requested that the 
Department expressly state whether the subject merchandise includes all 
specifications and product categories of LWRPT (i.e., mechanical, 
ornamental, etc.).
    On October 27, 2003, IMSA requested that the Department exclude 
galvanized LWRPT from the scope of the investigation because it claims 
that petitioners do not produce such products and that the unique 
properties of galvanized LWRPT limit its interchangeability with 
respect to other products.
    On November 3, 2003, petitioners requested that the scope of the 
investigation not exclude those products specified by Prolamsa and 
IMSA. Specifically, petitioners contend that domestic petitioning firms 
produce both pre-primered and galvanized LWRPT and, therefore, they 
have a legitimate interest in including such products within the scope 
of this investigation. Petitioners also argue that exclusion of pre-
primered LWRPT would enable respondents to circumvent any antidumping 
order on LWRPT simply by applying a primer coat to un-coated LWRPT.
    Prolamsa rebutted petitioners comments in a January 23, 2004, 
submission, by stating that one of the petitioning domestic producers, 
identified in petitioners' rebuttal comments as a producer of pre-
primered LWRPT (Searing Industries), did not, in fact, produce pre-
primered LWRPT during the POI. In addition, Prolamsa included an 
affidavit from a non-petitioning domestic producer, who opposes the 
inclusion of pre-primered LWRPT in this investigation. See Prolamsa's 
January 23, 2004, rebuttal comments at Exhibit 1. On March 4, 2004, 
petitioners submitted an affidavit from petitioning producer Searing 
Industries, stating that Searing Industries does, in fact, produce and 
sell pre-primered LWRPT in the normal course of business.
    On March 24, 2004, Prolamsa rebutted petitioners comments and 
argued that the affidavit submitted by petitioners fails to establish 
that Searing Industries has or is currently producing pre-primered 
LWRPT in the United States. In addition, Prolamsa countered petitioners 
argument that exclusion of pre-primered LWRPT from the scope of the 
investigation would result in circumvention of any antidumping order.
    We have not adopted the change to the scope of the investigation 
proposed by Prolamsa. Prolamsa argues that pre-primered LWRPT should be 
excluded from the scope of the investigation because petitioners do not 
manufacture the product and because the unique properties of the pre-
priming production process dictate that only particular customers will 
purchase it. However, petitioners submitted an affidavit by a 
petitioning domestic producer which states that it does produce pre-
primered LWRPT. In addition, the statute does not require that 
petitioners produce every type of product covered by the scope of the 
investigation. See Notice of Final Determination of Sales at Less Than 
Fair Value: Circular Seamless Stainless Steel Hollow Products From 
Japan, 65 FR 42985 (July 12, 2000) and accompanying Issues and Decision 
Memorandum, at Comments 1 and 2 (Hollow Products). Moreover, Prolamsa 
has not provided any basis to distinguish pre-primered LWRPT from the 
class or kind of merchandise subject to this investigation. For these 
reasons, we find no reason to exclude pre-primered LWRPT from the scope 
of this investigation. See Memorandum from Maisha Cryor, Analyst, to 
Thomas F. Futtner, Acting Office Director Re: Consideration of Scope 
Exclusion Request, dated April 6, 2004 (Scope Exclusion Request Memo).
    Similarly, we have not adopted the change to the scope of the 
investigation proposed by IMSA. IMSA also argues that galvanized LWRPT 
should be excluded from the scope of this investigation because 
petitioners do not manufacture the product and because the unique 
properties of LWRPT restricts its ability to be interchangeable with 
other products. However, also in this case, petitioners submitted 
evidence demonstrating that a petitioning domestic producer does, in 
fact, produce galvanized LWRPT. In addition, as indicated above, the 
statute does not require that petitioners produce every type of product 
covered by the scope of the investigation. See Hollow Products 65 FR 
42985 (July 12, 2000) and accompanying Issues and Decision Memorandum, 
at Comments 1 and 2. Moreover, IMSA has not provided any basis to 
distinguish galvanized LWRPT from the class or kind of merchandise 
subject to this investigation. For these reasons, we find no reason to 
exclude galvanized LWRPT from the scope of this investigation. See 
Scope Exclusion Request Memo.
    With respect to Prolamsa's request that the Department expressly 
state whether the subject merchandise includes all specifications and 
product categories of LWRPT, we note that the scope of this 
investigation reads, in relevant part, ``[t]hese LWRPT have rectangular 
cross sections ranging from 0.375 x 0.625 inches to 2 x 6 inches, or 
square cross sections ranging from 0.375 to 4 inches, regardless of 
specification.'' (emphasis added). Thus, the scope language explicitly 
states that LWRPT of a certain size is covered by this investigation, 
regardless of specification. Moreover, the phrase ``regardless of 
specification'' means that the scope covers any product meeting the 
physical characteristics described therein, regardless of product 
category. Therefore, there is no need to modify the scope language as 
suggested by Prolamsa. See Scope Exclusion Request Memo.

Scope of Investigation

    The merchandise covered by this investigation is LWRPT from Mexico,

[[Page 19403]]

which is welded carbon-quality pipe and tube of rectangular (including 
square) cross-section, having a wall thickness of less than 0.156 inch. 
These LWRPT have rectangular cross sections ranging from 0.375 x 0.625 
inches to 2 x 6 inches, or square cross sections ranging from 0.375 to 
4 inches, regardless of specification. LWRPT are currently classifiable 
under item number 7306.60.5000 of the Harmonized Tariff System of the 
United States (HTSUS). The HTSUS item number is provided for 
convenience and customs purposes only. The written product description 
of the scope is dispositive.
    The term ``carbon-quality'' applies to 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 nickle, or 0.30 percent of tungsten, or 0.10 
percent of molybdenum, or 0.10 percent of niobium (also called 
columbium), or 0.15 percent of vanadium, or 0.15 percent of zirconium.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual weighted-average dumping margins for each known exporter and 
producer of the subject merchandise. Where it is not practicable to 
examine all of the known producers/exporters of subject merchandise, 
section 777A(c)(2) of the Act permits the Department to investigate 
either (1) A sample of exporters, producers, or types of products that 
is statistically valid based on the information available at the time 
of selection, or (2) exporters and producers accounting for the largest 
volume of the subject merchandise from the exporting country that can 
reasonably be examined. The petitioners identified nine Mexican 
exporters/producers of subject merchandise. See Petition at Exhibit 7A. 
U.S. Customs and Border Protection (CBP) import statistics for the POI 
identified twenty-four exporters/producers of subject merchandise 
during the POI. Due to limited resources, we determined that we could 
investigate only the four Mexican producers/exporters that accounted 
for the largest volume of exports of subject merchandise during the 
POI. See Respondent Selection Memo. Therefore, we selected Prolamsa, 
Galvak, LM, and Regiomontana as mandatory respondents in this 
investigation.

Collapsing Affiliated Parties

    Section 771(33) of the Act defines affiliated persons. Moreover, 19
    CFR 351.401(f) identifies the criteria that must be met in order to 
treat two or more affiliated producers as a single entity (i.e., 
``collapse'' the firms) for purposes of calculating a dumping margin.
    Specifically, 19 CFR 351.401(f)(1) provides that affiliated 
producers of subject merchandise will be treated as a single entity 
(i.e., collapsed), where (1) Those producers have production facilities 
for similar or identical products that would not require substantial 
retooling in order to restructure manufacturing priorities, and (2) the 
Department concludes that there is a significant potential for 
manipulation of price or production. 19 CFR 351.401(f)(2) of the 
Department's regulations provides factors the Department may consider 
in determining whether there is significant potential for manipulation 
of price or production, namely (i) The level of common ownership; (ii) 
the extent to which managerial employees or board members of one firm 
sit on the board of directors of an affiliated firm; and (iii) whether 
operations are intertwined, such as through the sharing of sales 
information, involvement in production and pricing decisions, the 
sharing of facilities or employees, or significant transactions between 
the affiliated producers.
    Galvak and Hylsa are wholly-owned subsidiaries of Hylsamex, a 
Mexican holding company, which is 90-percent owned by Alfa, S.A. de 
C.V. Galvak and Hylsa requested that they be treated as affiliated 
parties. See Galvak/Hylsa's section A questionnaire response at 15. 
Pursuant to section 771(33)(F) of the Act, the Department has 
preliminarily determined that Galvak and Hylsa are affiliated because 
Galvak and Hylsa are both wholly-owned subsidiaries of Hylsamex, and 
thus, are ``two persons controlled by {a{time}  person.''.\6\
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    \6\ See Galvak's January 5, 2004 supplemental section A response 
at 2 (supplemental response).
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    Galvak and Hylsa also satisfy the first requirement of the 
collapsing test, as they both possess production facilities of 
identical or similar types of merchandise, and these facilities would 
not require substantial retooling to restructure manufacturing 
priorities. In addition, they also satisfy the second requirement of 
the collapsing test, because there is a significant potential for 
manipulation of price or production given that Galvak and Hylsa are 
owned by the same company, have a significant overlap of management 
positions and have intertwined operations. Therefore, we are treating 
Galvak and Hylsa as a single entity for purposes of our antidumping 
analysis. For a more detailed analysis, see Memorandum from Maisha 
Cryor and Richard Johns, Analysts, to Thomas F. Futtner, Acting Office 
Director, Regarding ``Whether to Collapse Galvak, S.A. de C.V. and 
Hylsa, S.A. de C.V., dated February 13, 2004 (Collapsing Memo). This 
single entity is hereafter referred to as Galvak/Hylsa.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products sold in the home market as described in the ``Scope of 
Investigation'' section of this notice, above, that were sold in the 
ordinary course of trade for purposes of determining appropriate 
product comparisons to U.S. sales. We have relied upon seven criteria 
to match U.S. sales of subject merchandise to comparison-market sales 
of the foreign like product. These criteria, in order of importance 
are: (1) Steel type, (2) galvanized coating, (3) whether the 
merchandise was painted or primed, (4) outside perimeter, (5) wall 
thickness, (6) shape, and (7) finish. Where there were no sales of 
identical merchandise in the home market made in the ordinary course of 
trade, we compared U.S. sales to sales of the most similar foreign like 
product made in the ordinary course of trade, based on the 
characteristics listed above. Where we were unable to match U.S. sales 
to home market sales of the foreign like product, we based normal value 
(NV) on constructed value (CV).

Fair Value Comparisons

    To determine whether sales of LWRPT from Mexico were made in the 
United States at LTFV, we compared the export price (EP) or constructed 
export price (CEP) to the NV, as described in the Export Price and 
Constructed Export Price and Normal Value sections of this notice. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated 
weighted-average EPs and CEPs. We compared these to weighted-average 
NVs in Mexico.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP as defined in sections 772(a) and (b) of the Act, respectively. 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold (or

[[Page 19404]]

agreed to be sold) before the date of importation by the exporter or 
producer outside the United States to an unaffiliated purchaser for 
exportation to the United States. We based EP on packed and delivered 
prices to unaffiliated purchasers in the United States. In accordance 
with section 772(c)(2) of the Act, we reduced the starting price by 
movement expenses and export taxes and duties, if appropriate. These 
deductions included, where appropriate, foreign inland freight, foreign 
brokerage and handling, international freight, marine insurance and 
U.S. customs duties.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold in the United States before or after 
the date of importation, by or for the account of the producer or 
exporter of the merchandise, or by a seller affiliated with the 
producer or exporter, to an unaffiliated purchaser, as adjusted under 
sections 772(c) and (d) of the Act. We based CEP on packed prices to 
unaffiliated purchasers in the United States. In accordance with 
section 772(c)(2) of the Act, we reduced the starting price by movement 
expenses U.S. duties, if appropriate. Movement expenses include, where 
applicable, expenses incurred for foreign inland freight, international 
freight, marine insurance, foreign and U.S. brokerage and handling, 
U.S. customs duties (including harbor maintenance fees and merchandise 
processing fees), U.S. inland insurance, U.S. inland freight, and 
warehousing. In accordance with section 772(d)(1) of the Act we made 
additional adjustments to the starting price in order to calculate CEP, 
by deducting direct and indirect selling expenses related to commercial 
activity in the United States. Pursuant to section 772(d)(3) of the 
Act, where applicable, we made an adjustment to the starting price for 
CEP profit.
    We determined the EP or CEP for each company as follows:

Prolamsa

    We calculated a CEP for all of Prolamsa's U.S. sales because the 
subject merchandise was sold directly to Prolamsa Inc., Prolamsa's U.S. 
affiliate, prior to being sold to the first unaffiliated purchaser in 
the United States. We made deductions from the starting price for 
movement expenses in accordance with section 772(c)(2)(A) of the Act. 
These items include expenses incurred for inland freight, domestic 
brokerage and handling, U.S. brokerage and handling and U.S. customs 
duties. In addition, we made deductions from the U.S. starting price 
for discounts and rebates. Additionally, we made adjustments to the 
U.S. starting price for billing adjustments.

LM

    We calculated an EP for all of LM's sales because the merchandise 
was sold directly by LM to the first unaffiliated purchaser in the 
United States prior to importation. We made deductions from the FOB, 
duty paid, starting price for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These items include expenses incurred 
for inland freight, domestic brokerage and U.S. customs duties, when 
applicable. In addition, we made deductions from the starting price for 
discounts, where appropriate.

Regiomontana

    We calculated an EP for all of Regiomontana's sales because the 
merchandise was sold directly by Regiomontana to the first unaffiliated 
purchaser in the United States prior to importation.\7\ We made 
deductions from the FOB starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These items include 
inland freight, international freight, and U.S. and domestic brokerage 
and handling. Additionally, we adjusted for billing adjustments in 
accordance with 19 CFR 351.401(c).
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    \7\ Petitioners requested that the Department treat 
Regiomontana's sales made through unaffiliated U.S. commissioned 
selling agents as CEP sales, and deduct the commission expense from 
the CEP. See Petitioners March 25, 2004, letter at 8-9. However, 
because all of Regiomontana's U.S. sales were made by Regiomontana 
to the first unaffiliated purchaser in the United States prior to 
importation, in accordance with section 772(a) of the Act we have 
treated all U.S. sales as EP sales.
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Galvak/Hylsa

    On December 2, 2003, in accordance with the instructions provided 
in the Department's questionnaire regarding reporting requirements for 
affiliated companies, Galvak and Hylsa submitted a single response to 
section A of the Department's questionnaire. Galvak and Hylsa, 
collectively, continued to submit responses to the Department's 
questionnaire and supplemental questionnaires. Due to the Department's 
decision to collapse the two companies, we accepted and conducted an 
analysis of the collapsed data. See Collapsing Memo.
    We calculated an EP for all of Galvak/Hylsa's sales because the 
merchandise was sold directly by Galvak/Hylsa to the first unaffiliated 
purchaser in the United States prior to importation.\8\ We note that 
Galvak/Hylsa's affiliated reseller in the United States provided 
certain administrative services pertaining to a small percentage of 
U.S. sales.
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    \8\ Petitioners requested that the Department treat Galvak/
Hylsa's U.S. sales as CEP transactions, because Galvka/Hylsa was the 
importer of record for its own sales of subject merchandise during 
the POI. See Petitioners March 25, 2004, letter at 9-10. However, 
where the same party is both the foreign producer/exporter, as well 
as the importer of record, the Department's practice is to treat 
such sales as EP transactions. See Certain Preserved Mushrooms from 
India: Preliminary Results of Antidumping Duty Administrative 
Review, 69 FR 10659, 10661-10662 (March 8, 2004). Therefore, 
consistent with the Department's practice, we have continued to 
treat Galvak/Hylsa's U.S. sales as EP transactions.
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See Galvak/Hylsa's December 31, 2003, questionnaire response at 8.

    However, the sales documents provided in the questionnaire response 
indicate that these services were minor and that the invoicing was done 
by Galvak/Hylsa. Further, the merchandise was shipped directly from 
Galvak/Hylsa's production facility in Mexico to the unaffiliated U.S. 
customer. Id. Therefore, we have preliminarily concluded that the sales 
were, in fact, EP sales. We made deductions from the FOB starting price 
for movement expenses in accordance with section 772(c)(2)(A) of the 
Act. These items include inland freight, domestic brokerage, U.S. 
brokerage, and warehousing. In accordance with 19 CFR 351.401(c), we 
increased the starting price for freight fees, brokerage and handling 
fees, insurance fees, and duty fees, charged to the customer, and 
adjusted for billing adjustments. In addition, we made deductions from 
the starting price for discounts, where appropriate.

Normal Value

A. Selection of Comparison Market

    Section 773(a)(1) of the Act directs the Department to base NV on 
the price at which the foreign like product is sold in the home market, 
provided that, among other things, the merchandise is sold in 
sufficient quantities in the home market (or has sufficient aggregate 
value, if quantity is inappropriate). The statute provides that the 
total quantity of home market sales of foreign like product (or value) 
will normally be considered sufficient if it is five percent or more of 
the aggregate quantity (or value) of sales of the subject merchandise. 
Based on a comparison of the aggregate quantity of home market sales of 
foreign like product and U.S. sales of subject merchandise by Prolamsa, 
LM, Galvak/Hylsa, and Regiomontana, we determined that the quantity of 
foreign like product sold in Mexico is more than five percent of the 
quantity of U.S. sales of subject merchandise for each

[[Page 19405]]

respondent. Accordingly, for each of the respondents, we based NV on 
home market sales.
    In deriving NV, we made adjustments as detailed in the Calculation 
of Normal Value Based on Comparison-Market Prices and Calculation of 
Normal Value Based on Constructed Value sections below.

B. Affiliated-Party Transactions and Arm's-Length Test

    During the POI, Prolamsa, Regiomontana, LM, and Galvak/Hylsa sold 
foreign like product to affiliated customers.
    To test whether these sales were made at arm's-length prices, we 
compared, on a model-specific basis, the starting prices of sales to 
affiliated and unaffiliated customers, net of all discounts and 
rebates, movement charges, direct selling expenses, commissions, and 
home market packing. Where the price to the affiliated party was, on 
average, within a range of 98 to 102 percent of the price of the same 
or comparable merchandise sold to unaffiliated parties, we determined 
that sales made to the affiliated party were at arm's-length. See 19 
CFR 351.403(c); see also, Preamble, 69 FR at 69186. Sales to affiliated 
customers in the home market that were not made at arm's-length prices 
were excluded from our analysis because we considered them to be 
outside the ordinary course of trade. See 19 CFR 351.102(b).

C. Cost of Production Analysis

    Based on timely allegations filed by the petitioners, and in 
accordance with section 773(b)(2)(A)(i) of the Act, we found reasonable 
grounds to believe or suspect that LWRPT sales were made at prices 
below the COP. As a result, we initiated sales below cost 
investigations on February 2, 2004 (Prolamsa),\9\ on February 4, 2004 
(LM \10\ and Galvak/Hylsa),\11\ and on February 3, 2004 
(Regiomontana)\12\ to determine whether sales were made at prices below 
the COP.
---------------------------------------------------------------------------

    \9\ See Prolamsa Cost Memo.
    \10\ See LM Cost Memo.
    \11\ See Galvak/Hylsa Cost Memo.
    \12\ See Regiomontana Cost Memo.
---------------------------------------------------------------------------

    We conducted the COP analysis as described below.
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP for each respondent based on the sum of the cost 
of materials and fabrication of the foreign like product, plus amounts 
for the home market general and administrative (G&A) expenses and 
interest expenses. We relied on the submitted COP data, except as noted 
below:

Galvak/Hylsa

    We revised the financial expense ratio by including the full amount 
of net exchange losses and net gain on monetary positions instead of 
the selected portions of the net exchange losses and net gains that 
were reported. In addition, we added back certain interest income 
items. We also recalculated the rate based on the figures from the 
parent company's 2002 consolidated income statement instead of using 
the average of the parent company's 2002 and 2003 income statements.
    For both Galvak and Hylsa, we revised their G&A ratios by using the 
administrative expenses, including charges from their parent companies 
and debt restructuring expenses, and COGS figures from Hylsa and 
Galvak's respective 2002 unconsolidated income statements instead of an 
average of their respective 2002 and 2003 income statements. See 
Galvak/Hylsa's Analysis Memorandum, dated April 6, 2004.

Prolamsa

    We adjusted the reported total cost of manufacturing to include the 
depreciation expense related to the revaluation of fixed assets 
recorded in Prolamsa's audited financial statements in accordance with 
Mexican generally accepted accounting principles. See Prolamsa's 
Analysis Memorandum, dated April 6, 2004.
    We adjusted the G&A ratio to reflect the 2002 profit sharing costs 
included in Prolamsa's 2002 audited financial statements. Id.

LM

    We adjusted the reported total cost of manufacturing to include the 
depreciation expense related to the revaluation of fixed assets 
recorded in LM's audited financial statements in accordance with 
Mexican generally accepted accounting principles. We adjusted the G&A 
ratio to reflect the 2002 profit sharing costs included in LM's 2002 
audited financial statements. In addition, we adjusted the reported 
interest expenses for exchange gains and losses, interest paid to 
affiliates and the gain on monetary position. See LM's Analysis 
Memorandum, dated April 6, 2004.

Regiomontana

    We adjusted the G&A ratio to reflect the 2002 profit sharing costs 
included in Regiomontana's 2002 audited financial statements. We 
adjusted the reported interest expense for the gain on monetary 
position. See Regiomontana's Cost Analysis Memorandum, dated April 6, 
2004.
2. Test of Home Market and Third-Country Market Sales Prices
    As required by section 773(b)(1) of the Act, for each respondent 
subject to a cost investigation, we compared, on a product-specific 
basis, the adjusted weighted average COP to the comparison-market 
prices, less any applicable movement charges, taxes, rebates, 
commissions, and other direct and indirect selling expenses to 
determine whether these sales had been made at prices below the COP. 
For those sales that we determined were made below COP, we examined 
whether they had been made within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. 
See sections 773(b)(1)(A) and (B) of the Act.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, when 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 the below-cost sales were not made in substantial 
quantities within an extended period of time. When 20 percent or more 
of the respondent's sales of a given product during the POI were at 
prices less than the COP, we disregarded the below-cost sales because 
they were made in substantial quantities within an extended period of 
time pursuant to sections 773(b)(2)(B) and (C) of the Act and because, 
based on comparisons of prices to weighted-average COPs for the POI, we 
determined that these sales were at prices which would not permit 
recovery of all costs within a reasonable period of time in accordance 
with section 773(b)(2)(D) of the Act. Based on this test, we 
disregarded below-cost sales with respect to Galvak/Hylsa. See Analysis 
Memorandum to the file dated April 6, 2004, for additional information. 
For the remaining respondents, less than 20 percent of sales of a given 
product were at prices less than COP. Therefore, we did not disregard 
any below-cost sales for these respondents.

D. Calculation of Normal Value Based on Comparision-Market Prices

    We determined price-based NVs for respondent companies as follows. 
For all respondents, we made adjustments to the starting price for any 
differences

[[Page 19406]]

in packing costs, in accordance with section 773(a)(6) of the Act, and 
we deducted from starting prices movement expenses pursuant to section 
773(a)(6)(B)(ii) of the Act. In addition, where applicable, we made 
adjustments to starting prices to account for differences in cost 
attributable to differences in the physical characteristics of the 
merchandise sold in the U.S. and home markets pursuant to section 
773(a)(6)(C)(ii) of the Act, as well as for differences in 
circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We also made 
adjustments, pursuant to 19 CFR 351.410(e), for indirect selling 
expenses incurred on comparison-market or U.S. sales where commissions 
were granted on sales in one market but not in the other market, where 
applicable.
    Company-specific adjustments are described below.

Prolamsa

    We based NV for Prolamsa on prices to unaffiliated customers or, as 
indicated above, affiliated customers, if affiliated party home market 
sales satisfied the arm's-length test. We reduced the home market 
starting price for rebates in accordance with 19 CFR 351.401(c). In 
addition, we reduced the starting price for inland freight pursuant to 
section 773(a)(6)(B) of the Act. In accordance with 19 CFR 351.401(c), 
we increased the starting price for interest revenue and adjusted for 
billing adjustments and discounts. We also made COS adjustments to the 
starting price for imputed credit expenses in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. Finally, we deducted 
home market packing costs from, and added U.S. packing costs to the 
starting price in accordance with sections 773(a)(6)(A) and (B) of the 
Act.

LM

    We based NV for LM on prices to unaffiliated customers or, as 
indicated above, affiliated customers, if affiliated party home market 
sales satisfied the arm's-length test. We reduced the home market 
starting price for rebates in accordance with 19 CFR 351.401(c). We 
reduced the home market starting price for discounts and inland freight 
pursuant to section 773(a)(6)(B) of the Act. We also made COS 
adjustments to the starting price for imputed credit expenses in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. Finally, we deducted home market packing costs from, and added 
U.S. packing costs to the starting price in accordance with sections 
773(a)(6)(A) and (B) of the Act.

Galvak/Hylsa

    We based NV for Galvak/Hylsa on prices to unaffiliated customers 
or, as indicated above, affiliated customers, if affiliated party home 
market sales satisfied the arm's-length test. In accordance with 19 CFR 
351.401(c), we increased the starting price for freight fees charged to 
the customer and interest revenue, and adjusted for billing 
adjustments. We reduced the home market starting price for movement 
expenses such as inland freight and warehousing pursuant to section 
773(a)(6)(B) of the Act. We also made COS adjustments to the starting 
price for imputed credit expenses and warranty expenses in accordance 
with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We 
deducted home market packing costs from, and added U.S. packing costs 
to, the starting price in accordance with sections 773(a)(6)(A) and (B) 
of the Act.

Regiomontana

    We based NV for Regiomontana on prices to unaffiliated customers 
or, as indicated above, affiliated customers, if affiliated party home 
market sales satisfied the arm's-length test. Where applicable, we made 
an adjustment for inland freight pursuant to section 773(a)(6)(B) of 
the Act. In accordance with 19 CFR 351.401(c), we increased the 
starting price for handling fees charged to the customer and interest 
revenue and adjusted for billing adjustments and discounts. We also 
made COS adjustments to the starting price for imputed credit expenses 
in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. Finally, we deducted home market packing costs from, and added 
U.S. packing costs to, the starting price in accordance with sections 
773(a)(6)(A) and (B) of the Act.

E. Calculation of Normal Value Based on Constructed Value

    Section 773(b)(1) of the Act provides that if, after disregarding 
all sales made at prices below the COP, there are no comparison market 
sales made in the ordinary course of trade, NV shall be based on 
constructed value (CV). We calculated CV in accordance with section 
773(e) of the Act. Specifically, section 773(e) of the Act provides 
that CV shall be based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for selling, 
general and administrative expenses (SG&A), profit, and U.S. packing.
    In accordance with section 773(e)(2)(A) of the Act, we used the 
actual amounts incurred and realized by each respondent in connection 
with the production and sale of the foreign like product, in the 
ordinary course of trade, for consumption in the comparison market to 
calculate SG&A expenses and profit. For price-to-CV comparisons, we 
made adjustments to CV for COS differences, pursuant to section 
773(a)(8) of the Act.

F. Level of Trade/Constructed Export Price Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determined NV based on sales in the comparison market 
at the same level of trade (LOT) as the U.S. sales (either EP or CEP 
transactions). The NV LOT is that of the starting-price sale in the 
comparison market or, when the NV is based on CV, that of the sales 
from which we derive SG&A expenses and profit. For EP sales, the U.S. 
LOT is also the level of the starting-price sale, which is usually the 
price of the sale from the exporter to the importer. For CEP sales, it 
is the level of the constructed sale from the exporter to the importer.
    To determine whether comparison market sales are at a different LOT 
than EP or CEP transactions, 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 LOT, and the difference affects price comparability 
with U.S. sales, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison-
market sales at the LOT of the export transaction, we make a LOT 
adjustment pursuant to section 773(a)(7)(A) of the Act. For CEP sales, 
if the LOT of the home market sale is more remote from the factory than 
the CEP level and there is no basis for determining whether the 
difference between the LOT of the home market sale and the CEP 
transaction affects price comparability, we adjust NV pursuant to 
section 773(a)(7)(B) of the Act (the CEP offset provision). See Final 
Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes 
From Canada, 67 FR 8781 (February 26, 2002).
    To determine whether a LOT adjustment is warranted, we obtained 
information from each respondent about the marketing stages at which 
its reported U.S. and comparison-market sales were made, including a 
description of the selling activities performed by the respondent for 
each of its channels of distribution. In identifying LOTs for EP and 
comparison market sales, we considered the selling

[[Page 19407]]

functions reflected in the starting price before any adjustments. For 
CEP sales, we considered only the selling activities reflected in the 
price after the deduction of expenses and profit pursuant to section 
772(d) of the Act. Generally, if the claimed LOTs are the same, the 
functions and activities of the seller should be similar. Conversely, 
if a party claims that LOTs are different for different groups of 
sales, the functions and activities of the seller should be dissimilar.
    In conducting our LOT analysis for each respondent, we took into 
account the specific customer types, channels of distribution, and 
selling functions of each respondent. For Galvak/Hylsa, Regiomontana, 
Prolamsa and LM, we found that there was a single LOT in the United 
States and a single, identical, LOT in the comparison market. 
Therefore, it was not necessary to make a LOT or CEP offset adjustment. 
For a further discussion of our LOT analysis for each respondent, see 
their respective Level of Trade Memorandums, dated April 6, 2004.

G. Currency Conversions

    We made currency conversions to 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 obtained from the Federal Reserve Bank, the 
Department's preferred source for exchange rates.

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determination.

All Others Rate

    Section 735(c)(5)(A) of the Act provides for the use of an ``all 
others'' rate, which is applied to non-investigated firms. See 
Statement of Administrative Action, H.R. Doc. No. 103-316, Vol. I 
(1994). This section states that the all others rate shall generally be 
an amount equal to the weighted-average dumping margins established for 
exporters and producers individually investigated, excluding any zero 
and de minimis margins, and any margins based entirely upon the facts 
available. Therefore, we have preliminarily assigned to all other 
exporters of LWRPT from Mexico a margin that is based on the weighted-
average margins calculated for all mandatory respondents.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
CBP to suspend liquidation of all shipments of LWRPT from Mexico that 
are entered, or withdrawn from warehouse, for consumption on or after 
the date of publication of this notice in the Federal Register. We will 
instruct CBP to require a cash deposit or the posting of a bond equal 
to the weighted-average amount by which the NV exceeds the U.S. price, 
as indicated below. These suspension-of-liquidation instructions will 
remain in effect until further notice. The weighted-average dumping 
margins are as follows:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Prolamsa...................................................         5.56
LM.........................................................        13.61
Galvak/Hylsa...............................................        19.89
Regiomontana...............................................         4.45
All Others.................................................        11.59
------------------------------------------------------------------------

Disclosure

    The Department will disclose to the parties to the proceeding the 
calculations performed in the preliminary determination within five 
days of the date of publication of this notice, in accordance with 19 
CFR 351.224(b).

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary sales at LTFV determination. If our final 
antidumping determination is affirmative, the ITC will determine 
whether the imports covered by that determination are materially 
injuring or threatening material injury to the U.S. industry. The 
deadline for the final ITC determination would be the later of 120 days 
after the date of this preliminary determination or 45 days after the 
date of our final determination.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the last verification report. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. Further, the Department respectfully 
requests that all parties submitting written comments also provide the 
Department with an additional copy of the public version of any such 
comments on diskette.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by an interested party. If a request for a hearing 
is made in an investigation, the hearing normally will be held two days 
after the deadline for submission of the rebuttal briefs, at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. Parties should confirm by telephone the time, 
date, and place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
in a hearing if one is requested, must submit a written request within 
30 days of the publication of this notice. Requests should specify the 
number of participants and provide a list of the issues to be 
discussed. Oral presentations will be limited to issues raised in the 
briefs.
    As noted above, the Department will make its final determination 
within 135 days after the date of the publication of the preliminary 
determination.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: April 6, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-8376 Filed 4-12-04; 8:45 am]
BILLING CODE 3510-DS-P