U.S. International Trade CommissionPublication 4422 August 2013

Washington, DC 20436

Certain Oil Country Tubular Goods from India, Korea, The Philippines,

Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine, and Vietnam

Investigation Nos. 701-TA-499-500 and 731-TA-1215-1223 (Preliminary)

U.S. International Trade Commission

COMMISSIONERS

Irving A. Williamson, Chairman Daniel R. Pearson Shara L. Aranoff Dean A. Pinkert

David S. Johanson Meredith M. Broadbent

Robert B. Koopman

Staff assigned

Address all communications to Secretary to the Commission

United States International Trade Commission Washington, DC 20436

Director, Office of Operations

Michael Szustakowski, Investigator Alan Treat, Industry Analyst

Mahnaz Khan, Industry Analyst Craig Thomsen, Economist Charles Yost, Accountant

Jennifer Brinckhaus, Statistician Carolyn Holmes, Statistical Assistant

Peter Sultan, Attorney Nataline Viray-Fung, Attorney

Andrew Warner, Intern Douglas Corkran, Supervisory Investigator

U.S. International Trade CommissionWashington, DC 20436

www.usitc.gov

Publication 4422 August 2013

Certain Oil Country Tubular Goods from India, Korea, The Philippines,

Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine, and Vietnam

Investigation Nos. 701-TA-499-500 and 731-TA-1215-1223 (Preliminary)

CONTENTSPage

i

Determination.........................................................................................................................1ViewsoftheCommission.........................................................................................................3

PartI:Introduction................................................................................................................I1Background............................................................................................................................... .I1Statutorycriteriaandorganizationofthereport.....................................................................I2Statutorycriteria................................................................................................................... I2Organizationofreport........................................................................................................... I3

Marketsummary....................................................................................................................... I3Summarydataanddatasources............................................................................................... I4Previousandrelatedinvestigations.......................................................................................... I4Antidumpingandcountervailingdutyinvestigations...........................................................I4Safeguardinvestigations....................................................................................................... I6

NatureandextentofallegedsubsidiesandsalesatLTFV........................................................I7Allegedsubsidies................................................................................................................... I7AllegedsalesatLTFV........................................................................................................... I10

Thesubjectmerchandise........................................................................................................ I11Commercesscope.............................................................................................................. I11Tarifftreatment................................................................................................................... I11

Theproduct............................................................................................................................. I12Overview.............................................................................................................................. I12Descriptionandapplications............................................................................................... I13Manufacturingprocesses.................................................................................................... I18

Domesticlikeproductissues................................................................................................... I23Physicalcharacteristicsanduses......................................................................................... I23Manufacturingfacilitiesandproductionemployees..........................................................I24Interchangeabilityandcustomerandproducerperceptions.............................................I25Channelsofdistribution...................................................................................................... I25Price............................................................................................................................... ......I26

CONTENTSPage

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PartI:IntroductionContinuedIntermediateproducts............................................................................................................ I26Uses............................................................................................................................... ......I26Markets............................................................................................................................... .I27Characteristicsandfunctions.............................................................................................. I27Value............................................................................................................................... .....I28Transformationprocess....................................................................................................... I28

PartII:Supplyanddemandinformation...............................................................................II1U.S.marketcharacteristics....................................................................................................... II1Channelsofdistribution....................................................................................................... II1Geographicdistribution........................................................................................................ II3

Supplyanddemandconsiderations......................................................................................... II4Supply............................................................................................................................... ....II4Demand.............................................................................................................................. II10

Substitutabilityissues............................................................................................................. II18Factorsaffectingpurchasingdecisions............................................................................... II18Comparisonsofdomesticproducts,subjectimports,andnonsubjectimports................II19

PartIII:U.S.producersproduction,shipments,andemployment.......................................III1U.S.producers......................................................................................................................... III1U.S.production,capacity,andcapacityutilization.................................................................III5U.S.producersU.S.shipmentsandexports...........................................................................III7Orderbooks............................................................................................................................. III7U.S.producersinventories..................................................................................................... III8U.S.producersimportsandpurchases..................................................................................III8U.S.employment,wages,andproductivity............................................................................III9

CONTENTSPage

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PartIV:U.S.imports,apparentU.S.consumption,andmarketshares................................IV1U.S.importers...................................................................................................................... ....IV1U.S.imports............................................................................................................................. IV3Negligibility.............................................................................................................................. IV6Cumulationconsiderations.................................................................................................. IV8Fungibility............................................................................................................................ IV8Presenceinthemarket....................................................................................................... IV9Geographicalmarkets....................................................................................................... IV10

ApparentU.S.consumption.................................................................................................. IV11U.S.marketshares................................................................................................................ IV12RatioofimportstoU.S.production......................................................................................IV13

PartV:Pricingdata...............................................................................................................V1Factorsaffectingprices............................................................................................................ V1Rawmaterialcosts............................................................................................................... V1U.S.inlandtransportationcosts........................................................................................... V3

Pricingpractices....................................................................................................................... V3Pricingmethods.................................................................................................................... V3Salestermsanddiscounts.................................................................................................... V5

Pricedata............................................................................................................................... ...V6Pricetrends......................................................................................................................... V14Pricecomparisons.............................................................................................................. V17

Lostsalesandlostrevenues................................................................................................... V20PartVI:FinancialexperienceofU.S.producers....................................................................VI1Background.............................................................................................................................. VI1OperationsonOCTG............................................................................................................ VI1Varianceanalysis................................................................................................................. VI6Capitalexpendituresandresearchanddevelopmentexpenses........................................VI7Assetsandreturnoninvestment........................................................................................VI9

CONTENTSPage

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PartVI:FinancialexperienceofU.S.producersContinuedCapitalandinvestment...................................................................................................... VI10Actualnegativeeffects...................................................................................................... VI11Anticipatednegativeeffects.............................................................................................. VI12

PartVII:Threatconsiderationsandinformationonnonsubjectcountries..........................VII1TheindustryinIndia............................................................................................................... VII3OperationsonOCTG........................................................................................................... VII4Alternativeproducts........................................................................................................... VII5

TheindustryinKorea............................................................................................................. VII6OperationsonOCTG........................................................................................................... VII6Alternativeproducts........................................................................................................... VII8

TheindustryinthePhilippines............................................................................................... VII8OperationsonOCTG........................................................................................................... VII9Alternativeproducts........................................................................................................... VII9

TheindustryinSaudiArabia................................................................................................ VII10OperationsonOCTG......................................................................................................... VII10Alternativeproducts......................................................................................................... VII11

TheindustryinTaiwan......................................................................................................... VII11OperationsonOCTG......................................................................................................... VII12Alternativeproducts......................................................................................................... VII13

TheindustryinThailand....................................................................................................... VII13OperationsonOCTG......................................................................................................... VII14Alternativeproducts......................................................................................................... VII14

TheindustryinTurkey.......................................................................................................... VII14OperationsonOCTG......................................................................................................... VII15Alternativeproducts......................................................................................................... VII16

CONTENTSPage

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PartVII:ThreatconsiderationsandinformationonnonsubjectcountriesContinuedTheindustryinUkraine........................................................................................................ VII16OperationsonOCTG......................................................................................................... VII17Alternativeproducts......................................................................................................... VII18

TheindustryinVietnam....................................................................................................... VII18OperationsonOCTG......................................................................................................... VII19Alternativeproducts......................................................................................................... VII20

Subjectcountriescombined................................................................................................. VII21U.S.inventoriesofimportedmerchandise..........................................................................VII22U.S.importersoutstandingorders......................................................................................VII23Antidumpingorcountervailingdutyordersinthirdcountrymarkets................................VII24Informationonnonsubjectcountries..................................................................................VII24Argentina.......................................................................................................................... VII31Canada.............................................................................................................................. VII33Germany........................................................................................................................... VII35Japan............................................................................................................................... ..VII36Mexico.............................................................................................................................. VII38

Appendixes

A. FederalRegisternotices.................................................................................................... A1B. Calendarofthepublicconference....................................................................................B1C. Summarydata................................................................................................................... C1D. Quarterlynonsubjectcountrypricedata.........................................................................D1

Note.Informationthatwouldrevealconfidentialoperationsofindividualconcernsmaynotbepublishedandthereforehasbeendeleted.Suchdeletionsareindicatedbyasterisks.

UNITEDSTATESINTERNATIONALTRADECOMMISSION

InvestigationNos.701TA499500and731TA12151223(Preliminary)

CertainOilCountryTubularGoodsfromIndia,Korea,thePhilippines,SaudiArabia,Taiwan,Thailand,Turkey,andVietnam

DETERMINATIONS

Onthebasisoftherecord1 developedinthesubjectinvestigations,theUnitedStatesInternationalTradeCommission(Commission)determines,pursuanttosections703(a)and733(a)oftheTariffActof1930(19U.S.C.''1671b(a)and1673b(a))(theAct),thatthereisareasonableindicationthatanindustryintheUnitedStatesismateriallyinjuredbyreasonofimportsfromIndia,Korea,thePhilippines,SaudiArabia,Taiwan,Thailand,Turkey,Ukraine,andVietnamofcertainoilcountrytubulargoods,providedforprimarilyinsubheadings7304.29,7305.20,and7306.29oftheHarmonizedTariffScheduleoftheUnitedStates,thatareallegedtobesoldintheUnitedStatesatlessthanfairvalue(LTFV),andbyimportsofcertainoilcountrytubulargoodsthatareallegedlysubsidizedbytheGovernmentsofIndiaandTurkey.

COMMENCEMENTOFFINALPHASEINVESTIGATIONS

Pursuanttosection207.18oftheCommission=srules,theCommissionalsogivesnoticeofthecommencementofthefinalphaseofitsinvestigations.TheCommissionwillissueafinalphasenoticeofscheduling,whichwillbepublishedintheFederalRegisterasprovidedinsection207.21oftheCommission=srules,uponnoticefromtheDepartmentofCommerce(Commerce)ofaffirmativepreliminarydeterminationsintheinvestigationsundersections703(b)or733(b)oftheAct,or,ifthepreliminarydeterminationsarenegative,uponnoticeofaffirmativefinaldeterminationsinthoseinvestigationsundersections705(a)or735(a)oftheAct.Partiesthatfiledentriesofappearanceinthepreliminaryphaseoftheinvestigationsneednotenteraseparateappearanceforthefinalphaseoftheinvestigations.Industrialusers,and,ifthemerchandiseunderinvestigationissoldattheretaillevel,representativeconsumerorganizationshavetherighttoappearaspartiesinCommissionantidumpingandcountervailingdutyinvestigations.TheSecretarywillprepareapublicservicelistcontainingthenamesandaddressesofallpersons,ortheirrepresentatives,whoarepartiestotheinvestigations.

BACKGROUND

OnJuly2,2013,apetitionwasfiledwiththeCommissionandCommercebyUnitedStatesSteelCorporation,Pittsburgh,PA;MaverickTubeCorporation,Houston,TX;BoomerangTubeLLC,Chesterfield,MO;EnergeX,adivisionofJMCSteelGroup,Chicago,IL;NorthwestPipeCompany,Vancouver,WA;TejasTubularProductsInc.,Houston,TX;TMKIPSCO,Houston,TX;VallourecStar,L.P.,Houston,TX;andWeldedTubeUSA,Inc.,Lackawanna,NY,allegingthatan

1 Therecordisdefinedinsec.207.2(f)oftheCommission=sRulesofPracticeandProcedure(19CFR'207.2(f)).

industryintheUnitedStatesismateriallyinjuredorthreatenedwithmaterialinjurybyreasonofsubsidizedimportsofcertainoilcountrytubulargoodsfromIndiaandTurkeyandLTFVimportsofcertainoilcountrytubulargoodsfromIndia,Korea,thePhilippines,SaudiArabia,Taiwan,Thailand,Turkey,Ukraine,andVietnam.Accordingly,effectiveJuly2,2013,theCommissioninstitutedcountervailingdutyinvestigationNos.701TA499500(Preliminary)andantidumpingdutyinvestigationNos.731TA12151223(Preliminary).

NoticeoftheinstitutionoftheCommission=sinvestigationsandofapublicconferencetobeheldinconnectiontherewithwasgivenbypostingcopiesofthenoticeintheOfficeoftheSecretary,U.S.InternationalTradeCommission,Washington,DC,andbypublishingthenoticeintheFederalRegisterofJuly10,2013(78FR41421).TheconferencewasheldinWashington,DC,onJuly23,2013,andallpersonswhorequestedtheopportunitywerepermittedtoappearinpersonorbycounsel.

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ViewsoftheCommission

Basedontherecordinthepreliminaryphaseoftheseinvestigations,wefindthatthereisareasonableindicationthatanindustryintheUnitedStatesismateriallyinjuredbyreasonofimportsofcertainoilcountrytubulargoods(OCTG)fromIndia,Korea,thePhilippines,SaudiArabia,Taiwan,Thailand,Turkey,Ukraine,andVietnamthatareallegedlysoldintheUnitedStatesatlessthanfairvalueandimportsofthesubjectmerchandisefromIndiaandTurkeythatareallegedlysubsidizedbytheGovernmentsofIndiaandTurkey.

I. TheLegalStandardforPreliminaryDeterminations

ThelegalstandardforpreliminaryantidumpingandcountervailingdutydeterminationsrequirestheCommissiontodetermine,basedupontheinformationavailableatthetimeofthepreliminarydeterminations,whetherthereisareasonableindicationthatadomesticindustryismateriallyinjuredorthreatenedwithmaterialinjury,orthattheestablishmentofanindustryismateriallyretarded,byreasonoftheallegedlyunfairlytradedimports.1Inapplyingthisstandard,theCommissionweighstheevidencebeforeitanddetermineswhether(1)therecordasawholecontainsclearandconvincingevidencethatthereisnomaterialinjuryorthreatofsuchinjury;and(2)nolikelihoodexiststhatcontraryevidencewillariseinafinalinvestigation.2II. Background

ThepetitionsintheseinvestigationswerefiledonJuly2,2013,bytheUnitedStatesSteelCorporation(U.S.Steel);MaverickTubeCorporation(Maverick);andBoomerangTubeLLC;EnergeX,adivisionofJMCSteelGroup;NorthwestPipeCompany;TejasTubularProductsInc.;TMKIPSCO;VallourecStar,L.P.;andWeldedTubeUSA,Inc.(collectivelyJointPetitioners)(U.S.Steel,Maverick,andJointPetitionersarecollectivelythePetitioners).PetitionersaredomesticproducersofcertainOCTGandaccountedforapproximately***percentofreporteddomesticOCTGproductionin2012.3Petitionersappearedatthestaffconferenceandsubmittedpostconferencebriefs.

Thefollowingrespondentsandgroupsofrespondentsappearedatthestaffconferenceandsubmittedpostconferencebriefs:

119U.S.C.1671b(a),1673b(a)(2000);seealsoAmericanLambCo.v.UnitedStates,785F.2d994,

100104(Fed.Cir.1986);AristechChem.Corp.v.UnitedStates,20CIT353,35455(1996).NopartyarguesthattheestablishmentofanindustryintheUnitedStatesismateriallyretardedbytheallegedlyunfairlytradedimports.

2AmericanLambCo.,785F.2dat1001;seealsoTexasCrushedStoneCo.v.UnitedStates,35F.3d1535,1543(Fed.Cir.1994).

3SeeConfidentialStaffReport,MemorandumINVLL059(Aug.9,2013),asamendedbyMemorandumINVLL061(CR)atTableIII1,PublicReport,CertainOilCountryTubularGoodsfromIndia,Korea,Philippines,SaudiArabia,Taiwan,Thailand,Turkey,Ukraine,andVietnam,Inv.Nos.701TA499500and731TA12151223(Preliminary),USITCPub.4422(Aug.2013)(PR)atTableIII1.

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(1)JindalIndiaLtd.,SuryaGlobalSteelTubesLtd.,MaharashtraSeamlessLtd.,JindalPipesLtd.,GVNFuelsLtd.,JindalSawLtd.,ISMTLtd.,producersand/orexportersofsubjectmerchandisefromIndia,andJindalSawLtd.(US)andIndianSeamlessInc.,U.S.importers(theJindalGroup);

(2)UnitedSeamlessTubulaarPvt.Ltd.,aproducerandexporterofsubjectmerchandise,andOilCountryTubularLtd.,anexporterofsubjectmerchandisefromIndia(collectivelyUSTPL/OCTL);

(3)AJUBesteelCo.,Ltd.,HusteelCo.,Ltd.,HyundaiHYSCO,NexteelCo.,Ltd.,SeAHSteelCorp.,producersofsubjectmerchandise;andHusteelUSA,Inc.,HyundaiUSA,Inc.,HyundaiHYSCOUSA,Inc.,SeAHSteelAmerica,Inc.,U.S.importersofsubjectmerchandise(KoreanRespondentGroup)4;

(4)ILJINSteelCorporation,aproducerandexporterofsubjectmerchandisefromKorea(ILJIN);

(5)HLDClarkSteelPipeCo.,Ltd.,aproducerandexporterofsubjectmerchandisefromthePhilippines(PhilippineRespondent);

(6)JubailEnergyServicesCompany,aproducerandexporterofsubjectmerchandisefromSaudiArabia,andDufercoSteelInc.,aU.S.importerofsubjectmerchandise(SaudiRespondents);

(7)ChungHungSteelCorporation,FarEastMachineryCo.,Ltd.,KaoHsingChangIronandSteelCorp.,ShinYangSteelCo.,Ltd.,andTensionSteelIndustriesCo.,Ltd.,producersandexportersofsubjectmerchandisefromTaiwan(collectivelyTaiwanRespondents);

(8)WSPPipeCo.,Ltd.(WSP),aproducerandexporterofsubjectmerchandisefromThailand(ThaiRespondent);

(9)ayirovaBoruSanayiveTicaretA.S.,YcelBoruIthalatIhracatvePazarlamaA.S.andToselikProfilveSacEndustrisiA.S.,TosyaliDisTicaretA.S.,producersandexportersofsubjectmerchandisefromTurkey(collectivelyayirova/Toselik);

(10)BorusanMannesmannBoruSanayiveTicaretAnonimSirketi,aproducerandexporterofsubjectmerchandisefromTurkey("Borusan");

(11)Interpipe,aproducerandexporterofsubjectmerchandisefromUkraineandNorthAmericanInterpipe,Inc.,aU.S.importerofsubjectmerchandise(UkraineRespondents);

(12)HotRollingPipeCo.,Ltd.Vietnam(HRP),aproducerandexporterofsubjectmerchandisefromVietnam;and

(13)SeAHSteelVINACorporation(SeAH),aproducerandexporterofsubjectmerchandisefromVietnam.

U.S.industrydataarebasedonthequestionnaireresponsesof13producers,believedtoaccountforthevastmajorityofU.S.productionofOCTG.5U.S.importdataarebasedonofficialU.S.DepartmentofCommerce(Commerce)importstatisticsandquestionnaireresponsesfrom46U.S.importers.6Morespecifically,importdataconsistedofthesumof:(i)

4TheKoreanRespondentGroup,TaiwanRespondents,andBorusanfiledajointpostconference

brief.Inconnectionwiththatbrief,werefertotheserespondentsastheJointRespondentsGroup.5CRatI5,PRatI4.6CRatIV1,PRatIV1;CR/PRatTableIV2.

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officialCommerceimportstatisticsforcasingandtubing(forwhichtherearespecificHTSstatisticalreportingnumbers);(ii)dataforcouplingstock(forwhichtherearenotspecificHTSstatisticalreportingnumbers)obtainedfromimporters;and(iii)importsofcasingandtubingfromthe***.7

TheCommissionreceivedresponsestoitsquestionnairesfrom32foreignproducers/exportersofsubjectmerchandise,asfollows:

tenproducers/exportersinIndia,accountingforvirtuallyallU.S.importsofOCTGfromIndiain2012;8

sevenproducers/exportersinKorea,accountingforvirtuallyallU.S.importsofOCTGfromKoreaoverthePOI;9

oneproducer/exporterinthePhilippines,accountingfor***importsofOCTGfromthePhilippinesin2012;10

twoproducers/exportersinSaudiArabia,accountingfor***percentofimportsofOCTGfromSaudiArabiain2012;11

fourproducers/exportersinTaiwan,accountingforvirtuallyallimportsofOCTGfromTaiwanin2012;12

oneproducer/exporterinThailand,accountingfor***importsofOCTGfromThailandin2012;13

threeproducers/exportersinTurkey,accountingfor***percentofimportsofOCTGfromTurkeyin2012;14

twoproducers/exportersinUkraine,accountingfor***importsofOCTGfromUkrainein2012;15and

twoproducers/exportersinVietnam,accountingfor***ofallimportsofOCTGfromVietnamin2012.16

III. DomesticLikeProduct

A. InGeneral

IndeterminingwhetherthereisareasonableindicationthatanindustryintheUnitedStatesismateriallyinjuredorthreatenedwithmaterialinjurybyreasonofimportsofthesubjectmerchandise,theCommissionfirstdefinesthedomesticlikeproductandthe

7CRatIV1n.2,PRatIV1n.2;CR/PRatTableIV3;EDISDoc.No.516328.8CRatVII4,PRatVII3.9CRatVII9,PRatVII7.10CRatVII13,PRatVII9.11CRatVII17,PRatVII11.12CRatVII22,PRatVII13.13CRatVII26,PRatVII14.14CRatVII30,PRatVII16.15CRatVII34,PRatVII17.16CRatVII38,PRatVII19.

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industry.17Section771(4)(A)oftheTariffActof1930,asamended(theTariffAct),definestherelevantdomesticindustryastheproducersasawholeofadomesticlikeproduct,orthoseproducerswhosecollectiveoutputofadomesticlikeproductconstitutesamajorproportionofthetotaldomesticproductionoftheproduct.18Inturn,theTariffActdefinesdomesticlikeproductasaproductwhichislike,orintheabsenceoflike,mostsimilarincharacteristicsanduseswith,thearticlesubjecttoaninvestigation.19

Thedecisionregardingtheappropriatedomesticlikeproduct(s)inaninvestigationisafactualdetermination,andtheCommissionhasappliedthestatutorystandardoflikeormostsimilarincharacteristicsandusesonacasebycasebasis.2021Nosinglefactorisdispositive,andtheCommissionmayconsiderotherfactorsitdeemsrelevantbasedonthefactsofaparticularinvestigation.22TheCommissionlooksforcleardividinglinesamongpossiblelikeproductsanddisregardsminorvariations.23AlthoughtheCommissionmustacceptCommercesdeterminationastothescopeoftheimportedmerchandisethatissubsidized

1719U.S.C.1677(4)(A).1819U.S.C.1677(4)(A).1919U.S.C.1677(10).20See,e.g.,CleoInc.v.UnitedStates,501F.3d1291,1299(Fed.Cir.2007);NECCorp.v.Department

ofCommerce,36F.Supp.2d380,383(Ct.IntlTrade1998);NipponSteelCorp.v.UnitedStates,19CIT450,455(1995);TorringtonCo.v.UnitedStates,747F.Supp.744,749n.3(Ct.IntlTrade1990),affd,938F.2d1278(Fed.Cir.1991)(everylikeproductdeterminationmustbemadeontheparticularrecordatissueandtheuniquefactsofeachcase).TheCommissiongenerallyconsidersanumberoffactorsincludingthefollowing:(1)physicalcharacteristicsanduses;(2)interchangeability;(3)channelsofdistribution;(4)customerandproducerperceptionsoftheproducts;(5)commonmanufacturingfacilities,productionprocesses,andproductionemployees;and,whereappropriate,(6)price.SeeNippon,19CITat455n.4;TimkenCo.v.UnitedStates,913F.Supp.580,584(Ct.IntlTrade1996).

21Inasemifinishedproductsanalysis,theCommissionexaminesthefollowing:(1)thesignificanceandextentoftheprocessesusedtotransformtheupstreamintothedownstreamarticles;(2)whethertheupstreamarticleisdedicatedtotheproductionofthedownstreamarticleorhasindependentuses;(3)differencesinthephysicalcharacteristicsandfunctionsoftheupstreamanddownstreamarticles;(4)whetherthereareperceivedtobeseparatemarketsfortheupstreamanddownstreamarticles;and(5)differencesinthecostsorvalueoftheverticallydifferentiatedarticles.See,e.g.,GlycinefromIndia,Japan,andKorea,Inv.Nos.731TA11111113(Preliminary),USITCPub.No.3921at7(May2007);Artists'CanvasfromChina,Inv.No.731TA1091(Final),USITCPub.No.3853at6(May2006);LiveSwinefromCanada,Inv.No.731TA1076(Final),US1TCPub.3766at8n.40(Apr.2005);CertainFrozenFishFilletsfromVietnam,Inv.No.731TA1012(Preliminary),USITCPub.No.3533at7(Aug.2002).

22See,e.g.,S.Rep.No.96249at9091(1979).23See,e.g.,Nippon,19CITat455;Torrington,747F.Supp.at74849;seealsoS.Rep.No.96249at

9091(Congresshasindicatedthatthelikeproductstandardshouldnotbeinterpretedinsuchanarrowfashionastopermitminordifferencesinphysicalcharacteristicsorusestoleadtotheconclusionthattheproductandarticlearenotlikeeachother,norshouldthedefinitionoflikeproductbeinterpretedinsuchafashionastopreventconsiderationofanindustryadverselyaffectedbytheimportsunderconsideration.).

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and/orsoldatlessthanfairvalue,24theCommissiondetermineswhatdomesticproductisliketheimportedarticlesCommercehasidentified.25TheCommissionmay,whereappropriate,includedomesticarticlesinthedomesticlikeproductinadditiontothosedescribedinthescope.26

B. ProductDescription

Initsnoticesofinitiation,Commercedefinedtheimportedmerchandisewithinthescopeoftheseinvestigationsasfollows:

Themerchandisecoveredbytheinvestigationsiscertainoilcountry

tubulargoods(OCTG),whicharehollowsteelproductsofcircularcrosssection,includingoilwellcasingandtubing,ofiron(otherthancastiron)orsteel(bothcarbonandalloy),whetherseamlessorwelded,regardlessofendfinish(e.g.,whetherornotplainend,threaded,orthreadedandcoupled)whetherornotconformingtoAmericanPetroleumInstitute(API)ornonAPIspecifications,whetherfinished(includinglimitedserviceOCTGproducts)orunfinished(includinggreentubesandlimitedserviceOCTGproducts),whetherornotthreadprotectorsareattached.ThescopeoftheinvestigationsalsocoversOCTGcouplingstock.

Excludedfromthescopeoftheinvestigationsare:casingortubingcontaining10.5percentormorebyweightofchromium;drillpipe;unattachedcouplings;andunattachedthreadprotectors.

ThemerchandisesubjecttotheinvestigationsiscurrentlyclassifiedintheHarmonizedTariffScheduleoftheUnitedStates(HTSUS)underitemnumbers:7304.29.10.10,7304.29.10.20,7304.29.10.30,7304.29.10.40,7304.29.10.50,7304.29.10.60,7304.29.10.80,7304.29.20.10,7304.29.20.20,7304.29.20.30,7304.29.20.40,7304.29.20.50,7304.29.20.60,7304.29.20.80,7304.29.31.10,7304.29.31.20,7304.29.31.30,7304.29.31.40,7304.29.31.50,7304.29.31.60,7304.29.31.80,7304.29.41.10,7304.29.41.20,7304.29.41.30,7304.29.41.40,

24See,e.g.,USEC,Inc.v.UnitedStates,34Fed.Appx.725,730(Fed.Cir.2002)(TheITCmaynot

modifytheclassorkindofimportedmerchandiseexaminedbyCommerce.);AlgomaSteelCorp.v.UnitedStates,688F.Supp.639,644(Ct.IntlTrade1988),affd,865F.3d240(Fed.Cir.),cert.denied,492U.S.919(1989).

25HosidenCorp.v.AdvancedDisplayMfrs.,85F.3d1561,1568(Fed.Cir.1996)(theCommissionmayfindasinglelikeproductcorrespondingtoseveraldifferentclassesorkindsdefinedbyCommerce);Cleo,501F.3dat1298n.1(Commerces{scope}findingdoesnotcontroltheCommissions{likeproduct}determination.);Torrington,747F.Supp.at74852(affirmingtheCommissionsdeterminationdefiningsixlikeproductsininvestigationswhereCommercefoundfiveclassesorkinds).

26See,e.g.,PureMagnesiumfromChinaandIsrael,Inv.Nos.701TA403and731TA89596(Final),USITCPub.3467at8n.34(Nov.2001);Torrington,747F.Suppat74849(holdingthattheCommissionisnotlegallyrequiredtolimitthedomesticlikeproducttotheproductadvocatedbythepetitioner,coextensivewiththescope).

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7304.29.41.50,7304.29.41.60,7304.29.41.80,7304.29.50.15,7304.29.50.30,7304.29.50.45,7304.29.50.60,7304.29.50.75,7304.29.61.15,7304.29.61.30,7304.29.61.45,7304.29.61.60,7304.29.61.75,7305.20.20.00,7305.20.40.00,7305.20.60.00,7305.20.80.00,7306.29.10.30,7306.29.10.90,7306.29.20.00,7306.29.31.00,7306.29.41.00,7306.29.60.10,7306.29.60.50,7306.29.81.10,and7306.29.81.50.

ThemerchandisesubjecttotheinvestigationsmayalsoenterunderthefollowingHTSUSitemnumbers:7304.39.00.24,7304.39.00.28,7304.39.00.32,7304.39.00.36,7304.39.00.40,7304.39.00.44,7304.39.00.48,7304.39.00.52,7304.39.00.56,7304.39.00.62,7304.39.00.68,7304.39.00.72,7304.39.00.76,7304.39.00.80,7304.59.60.00,7304.59.80.15,7304.59.80.20,7304.59.80.25,7304.59.80.30,7304.59.80.35,7304.59.80.40,7304.59.80.45,7304.59.80.50,7304.59.80.55,7304.59.80.60,7304.59.80.65,7304.59.80.70,7304.59.80.80,7305.31.40.00,7305.31.60.90,7306.30.50.55,7306.30.50.90,7306.50.50.50,and7306.50.50.70.27

OCTGincludescasing,tubing,andcouplingstockofcarbonandalloysteelusedinoil

andgaswells.28Casingisacircularpipethatservesasastructuralretainerforthewallsofthewell.Ittypicallyhasanoutsidediameter(O.D.)rangingfrom4.5inchesto20inchesandalengthtypicallyrangingfrom34feetto48feet.Casingprovidesafirmfoundationforthedrillstringbysupportingthewallsoftheholetopreventcavinginorwallcollapsebothduringdrillingandafterthewelliscompleted.29Casingalsoservesasasurfacepipedesignedtopreventcontaminationoftherecoverableoilandgasbysurfacewater,gas,sand,orlimestone.30Tubingisasmallerdiameterpipe(between1.0504.5inchesO.D.)installedinsidethelargerdiametercasingthatisusedtoconducttheoilorgastothesurface,eitherthroughnaturalfloworthroughpumping.31Couplingstockisathickwalled,seamlesstubularproductusedtomanufacturecouplingblanks.Couplingblanks,inturn,areunthreadedtubeblanksusedtomakeindividualcouplings.CouplingsarethickwalledandinternallythreadedseamlesscylindersthatareusedtojointwolengthsofthreadedOCTG.32CasingandtubingareusuallyproducedinaccordancewithspecificationspromulgatedbytheAPI.33

27CertainOilCountryTubularGoodsfromIndia,theRepublicofKorea,theRepublicofthePhilippines,SaudiArabia,Taiwan,Thailand,theRepublicofTurkey,Ukraine,andtheSocialistRepublicofVietnam:InitiationofAntidumpingDutyInvestigations,78Fed.Reg.45505,45512(July

29,2013);CertainOilCountryTubularGoodsfromIndiaandTurkey:InitiationofCountervailingDutyInvestigations,78Fed.Reg.45502,45505(July29,2013).

28CRatI15,PRatI13.29CRatI18,PRatI15.30CRatI20,PRatI15.31CRatI20,PRatI17.32CRatI21,PRatI17.33CRatI20,PRatI17.

9

C. ArgumentsandAnalysis

PetitionersarguethattheCommissionshouldfindonelikeproductthatiscoextensivewiththescopeoftheseinvestigations.34TheJointRespondentsGroupagreeswiththedomesticlikeproductdefinitionproposedbyPetitioners.35ILJINarguesthattheCommissionshouldfindthatthefollowingfourproductsareseparatedomesticlikeproducts(ratherthanproposingalternativelikeproductdefinitions):(i)finishedseamlessOCTG,(ii)finishedweldedOCTG,(iii)seamlessgreentubes,and(iv)weldedgreentubes.3637

1. WhetheraClearLineDividesSeamlessOCTGandWeldedOCTG

PhysicalCharacteristicsandUses.SeamlessandweldedOCTGbotharegenerallyproducedinaccordancewithspecificationspromulgatedbytheAPIandareusedindrillingforoilornaturalgas.38TheweldlineinweldedOCTGrepresentsadistinctphysicalcharacteristicnotpresentinseamlessOCTG.39BothweldedandseamlessOCTGareusedforthesamepurpose,foroilandgaswells.SeamlessOCTGiseitherrequiredorpreferredincertaindrillingconditions.40

ManufacturingFacilities,ProductionProcessesandEmployees.U.S.millsproduceweldedandseamlessOCTGonseparateproductionlines.41Whilesomedomesticproducersmakebothproducts,mostmakeonlyone.42SeamlessOCTGisproducedfromabilletthatiseitherpiercedorextrudedtoformahollowshellthatissubsequentlyrolled.WeldedOCTGisproducedfromsteelsheetincoilformthatisrolledandwhoseedgesareheatedandweldedtogethertoformahollowshell.43SeamlessOCTGproductionfacilitiesareconsiderablymoreexpensivetobuildthanweldedOCTGproductionlines.44AlthoughtheinitialproductionprocessesaredifferentforweldedandseamlessOCTG,theprocessesforheattreating(totheextentthatthepipesareheattreated)andfinishingarethesame.

34U.S.SteelPostconferenceBriefatExh.1,pp.2527,MaverickPostconferenceBriefat23,andJoint

PetitionersPostconferenceBriefat23.35JointPostconferenceBriefonBehalfofRespondentsfromKorea,Taiwan,andTurkeyat7and

ResponsetoStaffQuestionsat14,andConferenceTranscript(Tr.)at241243(Cameron).36ILJINdefinesgreentubesassemifinishedOCTGthatis...processedbyheattreatingaswellas

byotherprocesses...beforebeingsoldintheU.S.merchantOCTGmarket.ILJINPostconferenceBriefat11.ILJINexpressesdoubtastowhetherU.S.Steelusesasimilardefinitionofgreentubes.Id.at12,n.32.

37ILJINPostconferenceBriefat1627.38CRatI20,PRatI17.39CRatI30,PRatI2324.40CRatII26,PRatII2122.41CRatI31,PRatI24.42CRatI31,PRatI24.43CRatI2223,PRatI18.44Tr.at14(Schagrin),244(Khandelwal),and244245(Blomberg).

10

ChannelsofDistribution.AlmostallfinishedweldedOCTGandfinishedseamlessOCTGaresoldtodistributors.45

Interchangeability.WeldedandseamlessOCTGareinterchangeabletoalargeextent,butnotcompletely.AlthoughseamlessOCTGcanbeusedinanyweldedOCTGapplication,thereverseisnottrue.Certainhighstressapplications,suchashighersulfursourserviceapplications,requireseamlessOCTG,andtheseamlessproductmayalsobepreferredinsomeapplicationstoreducerisk.46AwitnessforpetitionersestimatedthatweldedOCTGcouldbeusedfor70percentofseamlessapplications,andawitnessforrespondentsnotedthattheyareinterchangeableahighpercentageofthetime.47Moreover,counselfortheJointRespondentGrouptestifiedthatthedegreeofoverlapbetweenseamlessandweldedOCTGthatexiststodayisgreaterthanwhentheCommissionfirstdecidedtotreatthetwoasasinglelikeproductalmost20yearsago.48

ProducerandCustomerPerceptions.Asnotedabove,weldedandseamlessOCTGareproducedonseparateproductionlines,usingdifferentprocesses,and,asnotedbelow,seamlessOCTGsellsatasubstantialpremiumtotheweldedproduct.SeamlessOCTGisrequiredinsomehighstressapplicationsandisregardedasbeingsafertouseinothers.49

Price.AverageannualunitvaluesofU.S.producersU.S.shipmentsshowthatfinishedseamlessOCTGwassellingatasubstantialpremiumtofinishedweldedOCTGbetweenJanuary2010andMarch2013,theperiodofinvestigation(POI).Forexample,in2012theaverageunitvalueforseamlessOCTGwas$2,017,whiletheaverageunitvalueforweldedOCTGwas$1,512.50

Conclusion.WeldedOCTGandseamlessOCTGsharebasicphysicalcharacteristics.Theirgeneralusesinoilandgaswellsarethesame.Theyaremadeindifferentmanufacturingfacilities,usingdifferentprocesses,buttheyaresubjecttothesameheattreatmentandfinishing.Theyshareidenticalchannelsofdistribution.Thereisalargedegreeofinterchangeabilitybetweenthetwoproducts,althoughweldedOCTGcannotbeusedincertaindemandingapplications.Distinctionsinthewaysinwhichtheseproductsaremadeandpricedwillinfluencecustomerandproducerperceptionsoftheseproducts.Finally,thepricepremiumforseamlessOCTGissubstantial.

Onbalance,inlightoftheidenticalchannelsofdistribution,commonbasicphysicalcharacteristicsanduses,andthelargedegreeofinterchangeabilitybetweentheproducts,wedonotfindthatseamlessandweldedOCTGareseparatelikeproducts.

45CRatI33,PRatI25.46CRatI30andII2627,PRatI2324andII2122.47Tr.at109(Matthews)and261(Brewer).48Tr.at241(Cameron).49CRatII26,PRatII2122.50CR/PRatTableI2.

11

2. WhetheraClearLineDividesGreenTubesfromFinishedOCTG

Basedontherecordofthesepreliminaryphaseinvestigations,ourcurrentunderstandingofthedefinitionofgreentubesisthattheseareunfinishedtubulargoodsthatmayrequireheattreatmentorfurtherprocessingtomeettheAPIspecificationsforcasingandtubing.Greentubesneednotalwaysbeheattreatedbeforefinaluse.Insomecases,upgradeablegreentubesthatmeettheminimumspecificationsforlowergradeAPI5CTcasingandtubing(i.e.,H40andJ55)canbecertifiedtothosegradesandusedinapplicationsnotrequiringadditionalheattreatment,oncetheyhavebeenfinished(i.e.,ifrequired,threadedandcoupled).However,heattreatmentwillsometimesallowsuchtubestomeetminimumspecificationsforhighergradecasingandtubing.51

BecausethequestionofwhethergreentubesshouldbetreatedasaseparatelikeproductfromfinishedOCTGinvolvesacomparisonofarticlesatdifferentstagesofprocessing,itisappropriatetoanalyzethislikeproductissueusingthesemifinishedproductanalysis.52

DedicationforUse.TherecordindicatesthatallgreentubesarededicatedtotheproductionoffinishedOCTG.Insomecases,thiswillrequireheattreatment;inothercases,itwillrequireonlyendfinishing.Greentubesareunusablewithoutbeingatleastendfinished.53

SeparateMarkets.ILJINsassertionthattherearecompletelyseparatemarketsforgreentubesandfinishedOCTGwiththeformerbeingsoldtoprocessorsandthelattersoldtodistributorsisnotfullysupportedbythecurrentrecord.Somegreentubesaresoldtodistributorswhothenarrangeforthegreentubestobeheattreatedand/orfinished.54Moreover,greentubessoldtoprocessorsarefrequentlysoldtodistributorsafterheattreatment.55

DifferencesinPhysicalCharacteristicsandFunctionsoftheUpstreamandDownstreamArticles.GreentubesintendedforaspecificOCTGapplicationaretypicallyproducedtomeetthespecificationsforthatapplication(involving,forexample,specificchemistries,tensilestrength,wallthickness,andlength).56Thus,thespecificcharacteristicsofthegreentubeimpartessentialcharacteristicstothefinishedOCTG.Heattreatmentdoesnotchangethephysicalappearanceofthetubes,butitdoeschangethemicrostructureandmechanicalpropertiesofpipes.57Thefinishingprocess(upsettingpipeends58andthreadingthem)doeschangethephysicalcharacteristicsofthepipestosomeextent,butrendersthemusablein

51CRatI2021,PRatI17.52See,e.g.,DrillPipeandDrillCollarsfromChina,Inv.Nos.701TA474and731TA1176

(Preliminary),USITCPub.4127at7(Mar.2010).53CRatI3233,PRatI15.Endfinishingreferstotheprocessofthreadingtheendofatubeorcasing

andaddingacoupling.SeeCRatI28,PRatI22.54CRatI33andI36,PRatI25andI27.55CRatI36,PRatI27.56CRatI31,PRatI24.57CRatI27,PRatI2122.58Upsettingreferstoaprocessinwhichtheendofapipeisheatedtoforgingtemperature,and

theninsertedendwiseintoanupsettingmachine.Themachinepushesthehotmetalback,creatingathickerwallattheendofthepipe.CRatI28,PRatI22.

12

theirintendedenduseapplication.59Insum,greentubesandfinishedOCTGsharesomephysicalcharacteristics,butaredifferentinotherrespects.

Greentubesareanintermediateproductthatcannotbeusedinawell.However,greentubeshavenofunctionotherthanbeingprocessedintofinishedOCTG.60

DifferencesinValue.ThecurrentrecordshowsthatpricesforgreentubesaresubstantiallylowerthanpricesforfinishedOCTG.Forexample,U.S.millshipmentsofgreentubeintendedforOCTGapplicationstooneprocessorhadanaverageunitvalueof***in2012,incomparisontoanaverageunitvalueof***forU.S.shipmentsoffinishedOCTG.61However,greentubesaccountforanotinsubstantialpartofthefinalcostoffinishedOCTG.62

ExtentofProcessesUsedtoTransformUpstreamProductintoDownstreamProduct.Totheextentthatgreentubesareheattreatedandfinished,theprocessesusedtotransformthegreentubesaresubstantial.63Asdiscussedbelow,theCommissionhasinpastinvestigationsinvolvingOCTGfoundthatprocessorsthatperformheattreatmentengageinsufficientproductionrelatedactivitytoqualifyasdomesticproducersofOCTG.Totheextentthatgreentubesareonlyendfinished,theprocessusedtotransformgreentubesintothedownstreamproductisnotassubstantial.64TheCommissionhasinpastinvestigationsinvolvingOCTGfoundthatthreadersdonotengageinsufficientproductionrelatedactivitytoqualifyasdomesticproducersofOCTG.

Conclusion.Whiletheavailablerecordinformationonthisissueatthepreliminaryphaseoftheseinvestigationsismixed,allgreentubesarededicatedtotheproductionoffinishedOCTG.Althoughthetwoproductsappearlargelytobesoldindifferentmarkets,thereissomeoverlapinthatsomegreentubesmaybesoldtodistributors.GreentubesandfinishedOCTGsharesomebasicphysicalcharacteristics,butnotothers.Theirfunctionsaredifferent.ThereisasignificantdifferenceinthevalueofgreentubesandfinishedOCTG.TheextentoftheprocessesinvolvedintransforminggreentubeintofinishedOCTGvariesdependingonwhetherheattreatmentisinvolved.Onbalance,forpurposesofthesepreliminarydeterminations,theredoesnotappeartobeacleardividinglinebetweengreentubesandfinishedOCTG,andwedonotfindthattheyareseparatelikeproducts.65

59CRatI28,PRatI22.60CRatI37,PRatI2728.61CRatI37,PRatI28.62SeeCR/PRatTableI3(showingunitvaluesforpurchasesofunfinishedOCTGandU.S.shipmentsof

finishedOCTG).63CRatI2628,PRatI2122.64CRatI2829,PRatI2223.65Wenotethatsomeofthepartiestothepreliminaryphaseoftheseinvestigationsmayhavebeen

usingthetermgreentubetomeandifferentthings.Tr.at266(Treat).Insomecases,theyreferredtoaproductthatrequiresheattreatmentbeforeitcanbeused.Tr.at222(Cameron).Inothercases,theyusedthetermtoencompassnotonlypipethatrequiresheattreatment,butalsoproductthatcanbeusedwithoutheattreatmentonceitisendfinished.Tr.at26667(Cameron,Cunningham).TheCommissionintendstoreconsiderthisissueinanyfinalphaseoftheseinvestigations,andexaminetheextenttowhichgreentubesandfinishedOCTGaresoldinseparatemarkets.Partiesareremindedthat(Continued)

13

IV. DomesticIndustry

Thedomesticindustryisdefinedasthedomesticproducersasawholeofadomesticlikeproduct,orthoseproducerswhosecollectiveoutputofadomesticlikeproductconstitutesamajorproportionofthetotaldomesticproductionoftheproduct.66Indefiningthedomesticindustry,theCommissionsgeneralpracticehasbeentoincludeintheindustryproducersofalldomesticproductionofthelikeproduct,whethertollproduced,captivelyconsumed,orsoldinthedomesticmerchantmarket.

A. SufficientProductionRelatedActivities

Indecidingwhetherafirmqualifiesasadomesticproducerofthedomesticlikeproduct,theCommissiongenerallyanalyzestheoverallnatureofafirmsU.S.productionrelatedactivities,althoughproductionrelatedactivityatminimumlevelscouldbeinsufficienttoconstitutedomesticproduction.67

InpriorOCTGinvestigations,theCommissionfoundthatthedomesticindustries(producingcasing,tubing,anddrillpipe)68includedprocessors,butdidnotincludefirmsthatperformbasicthreadingandcouplingoperations(threaders).TheCommissionfoundthattheheattreatmentperformedatprocessingfacilitiesaltersthemicrostructureormechanicalpropertiesofthepipe.Moreover,processingoperations,particularlyconcerningdrillpipe,requirededicatedequipmentandsignificantlevelsofmetallurgicalandengineeringexpertise.Processorsemploymentwassubstantialinrelationtothatofmills.Additionally,processing(Continued)iftheywanttheCommissiontocollectadditionaldatainanyfinalphaseinvestigations,theyshouldsoindicateinwrittencommentstodraftquestionnaires,pursuantto19C.F.R.section207.20(b),andstatewithprecisionthelikeproductdefinitionsthattheypropose.

6619U.S.C.1677(4)(A).67TheCommissiongenerallyconsiderssixfactors:(1)sourceandextentofthefirmscapital

investment;(2)technicalexpertiseinvolvedinU.S.productionactivities;(3)valueaddedtotheproductintheUnitedStates;(4)employmentlevels;(5)quantityandtypeofpartssourcedintheUnitedStates;and(6)anyothercostsandactivitiesintheUnitedStatesdirectlyleadingtoproductionofthelikeproduct.NosinglefactorisdeterminativeandtheCommissionmayconsideranyotherfactorsitdeemsrelevantinlightofthespecificfactsofanyinvestigation.DiamondSawbladesandPartsThereoffromChinaandKorea,Inv.Nos.731TA109293(Final),USITCPub.3862at811(July2006).

68ThescopeoftheseinvestigationsisessentiallythesameasthescopeoftheinvestigationintheCommissionsrecent2010investigationofcertainoilcountrytubulargoodsfromChina.SeeCertainOilCountryTubularGoodsfromChina,Inv.No.701TA463(Final),USITCPub.4124at5(Jan.2010)(2010OCTG).Thescopeoftheseinvestigations(andthe2010Chinainvestigations)differsfrompriorinvestigationsinthattheseinvestigationsdonotincludedrillpipe,butdoincludecouplingstock.SeeCertainOilCountryTubularGoodsfromArgentina,Italy,Japan,Korea,andMexico,Inv.Nos.731TA711and713TA716(SecondReview),USITCPub.3923at7(June2007);andCertainOilCountryTubularGoodsfromAustria,Brazil,China,France,Germany,India,Indonesia,Romania,SouthAfrica,Spain,Turkey,Ukraine,andVenezuela,Inv.Nos.701TA428,731TA992994and9961005(Preliminary),USITCPub.3511at5(May2002).

14

operationswerecapitalintensive.Bycontrast,thecapitalinvestments,technicalexpertise,andemploymentassociatedwiththreadingandcouplingoperationsweremorelimited.69

TherecordinthesepreliminaryphaseinvestigationsdoesnotindicateanychangesinthenatureoftheactivitiesperformedbyprocessorsandthreaderssincethepriorOCTGinvestigations.70Thus,itprovidesnobasisfortreatingprocessorsandthreadersdifferentlythaninpriorOCTGinvestigations.Weincludeprocessorsbutdonotincludethreadersinthedomesticindustry.71

B. RelatedParties

WemustdeterminewhetheranyproducerofthedomesticlikeproductshouldbeexcludedfromthedomesticindustrypursuanttoSection771(4)(B)oftheTariffAct.ThisprovisionallowstheCommission,ifappropriatecircumstancesexist,toexcludefromthedomesticindustryproducersthatarerelatedtoanexporterorimporterofsubjectmerchandiseorwhicharethemselvesimporters.72ExclusionofsuchaproduceriswithintheCommissionsdiscretionbaseduponthefactspresentedineachinvestigation.73

69E.g.,OilCountryTubularGoodsfromArgentina,Austria,Italy,Japan,Korea,Mexico,andSpain,Inv.

Nos.701TA363364,731TA711717(Final),USITCPub.2911atI34(Aug.1995).70Noneofthepartiestothepreliminaryphaseoftheseinvestigationsadvocatedtreatingprocessors

andthreadersdifferentlythaninpriorOCTGinvestigations,exceptthatMavericksuggestedthattheCommissionmightreconsideritspriorpracticeoftreatingprocessorsthatheattreatunfinishedOCTGasdomesticproducers,inlightofaMay2013preliminaryscopedeterminationinwhichCommerceruledthatgreentubesthatareproducedinChinaandheattreated,threaded,andcoupledinathirdcountrybeforebeingshippedtotheUnitedStatesremainaproductofChina.MaverickPostconferenceBriefatExh.1,pp.1415.CommercesMay2013preliminaryscopedetermination,citedbyMaverick,doesnotconcernU.S.productionoperationsandhenceisnotdispositivefortheCommissionsanalysisofwhetherU.S.processorsengageinsufficientproductionrelatedactivitytobeconsidereddomesticproducers.Ifanypartywantstoraisethisissueinanyfinalphaseinvestigations,itshouldmakeappropriatecommentsatthequestionnairedraftingstagetoensureappropriatedatacollection.

71Toproperlyanalyzethisissue,inanyfinalphaseoftheseinvestigationswewillseek,interalia,segregateddataonOCTGimportedintotheUnitedStates(fromsubjectandnonsubjectsources),forheattreatmentintheUnitedStates.

72SeeTorringtonCo.v.UnitedStates,790F.Supp.1161,1168(Ct.IntlTrade1992),affdmem.,991F.2d809(Fed.Cir.1993);SandvikABv.UnitedStates,721F.Supp.1322,133132(Ct.IntlTrade1989),affdmem.,904F.2d46(Fed.Cir.1990);EmpirePlowCo.v.UnitedStates,675F.Supp.1348,1352(Ct.IntlTrade1987).

73TheprimaryfactorstheCommissionhasexaminedindecidingwhetherappropriatecircumstancesexisttoexcludearelatedpartyincludethefollowing:

(1)thepercentageofdomesticproductionattributabletotheimportingproducer;(2)thereasontheU.S.producerhasdecidedtoimporttheproductsubjecttoinvestigation,i.e.,

whetherthefirmbenefitsfromtheLTFVsalesorsubsidiesorwhetherthefirmmustimportinordertoenableittocontinueproductionandcompeteintheU.S.market;and(Continued)

15

Onedomesticproducer,***,importedOCTGdirectlyfromoneofthesubjectcountriesduringthePOI.74Itisthereforearelatedpartyasdefinedbythestatute.75Wefindthatappropriatecircumstancesdonotexisttoexclude***fromthedomesticindustry.

***imported***.76Thecompany***.77Itsimportsaccountedfor***percentofitsdomesticproductioninthatperiod,78suggestingitsprimaryinterestisnotindomesticproduction,asopposedtoimportationofthesubjectmerchandise.***,and***withrespecttoothersubjectcountries.79Thecompanysoperatingincomeratiowas***thanthatofanyotherdomesticproducerininterim2013.808182Wedonotfinditappropriatetoexclude***fromthedomesticindustry,asitisa***.83

(Continued)

(3)thepositionoftherelatedproducervisavistherestoftheindustry,i.e.,whetherinclusionorexclusionoftherelatedpartywillskewthedatafortherestoftheindustry.See,e.g.,TorringtonCo.v.UnitedStates,790F.Supp.at1168.

74CR/PRatTableIII8.75Anotherdomesticproducer,***,purchasedsubjectmerchandise.CR/PRatTableIII8.The

Commissionhaspreviouslyconcludedthatapurchasermaybetreatedasarelatedpartyifitcontrolslargevolumesofsubjectimports.TheCommissionhasfoundsuchcontroltoexistwhenthedomesticproducerwasresponsibleforapredominantproportionofanimporterspurchasesandthesepurchasesweresubstantial.See,e.g.,FoundryCokefromChina,Inv.No.731TA891(Final),USITCPub.3449at89(Sept.2001).***purchasesofOCTGfrom***.ItspurchasesofOCTGfrom***.Thepurchasesoftheimportersfromwhich***werenotsubstantial.Intheyearinwhichitspurchasesofimportsfrom***.Accordingly,wedonottreat***asarelatedparty.

76CR/PRatTableIII8.77CR/PRatTableIII1Note.78CR/PRatTableIII8.79CR/PRatTableIII1.80CR/PRatTableVI2.81Consistentwithherpracticeinpastinvestigationsandreviews,CommissionerAranoffdoesnotrely

onindividualcompanyoperatingincomemargins,whichreflectadomesticproducersfinancialoperationsrelatedtoproductionofthedomesticlikeproduct,inassessingwhetherarelatedpartyhasbenefittedfromimportationofsubjectmerchandise.Rather,shedetermineswhethertoexcludearelatedpartybasedprincipallyonitsratioofsubjectimportstodomesticproductionandwhetheritsprimaryinterestslieindomesticproductionorimportation.***.

82Forpurposesofthepreliminaryphaseoftheseinvestigations,CommissionerPinkertdoesnotrelyupon***financialperformanceindeterminingwhetherthereareappropriatecircumstancestoexcludeitfromthedomesticindustry.Inhisview,thepresentrecordisnotsufficienttolinktheproducersfinancialperformancewithrespecttoitsU.S.operationstoanyspecificbenefititderivesfromitsrelatedpartystatus.

83Forexample,itproduced***ofthe1,018,330shorttonsproducedbythedomesticindustryininterim2013.CR/PRatTableIII3.

16

V. NegligibleImports

PursuanttoSection771(24)oftheTariffAct,importsfromasubjectcountryofmerchandisecorrespondingtoadomesticlikeproductthataccountforlessthan3percentofallsuchmerchandiseimportedintotheUnitedStatesduringthemostrecent12monthsforwhichdataareavailableprecedingthefilingofthepetitionshallbedeemednegligible.84Thestatutefurtherprovidesthatsubjectimportsfromasinglecountrythataccountforlessthan3percentofsuchtotalimportsoftheproductmaynotbeconsiderednegligibleifthereareseveralcountriessubjecttoinvestigationwithnegligibleimportsandthesumofsuchimportsfromallsuchcountriesaccountsformorethan7percentofallsuchmerchandiseimportedintotheUnitedStates.85

TheCommissionhasfoundinpriorinvestigationsthatthe12monthperiodprecedingthefilingofthepetitionendswiththelastfullmonthpriortothemonthinwhichthepetitionisfiled,ifthosedataareavailable.86AsthepetitionsintheseinvestigationswerefiledonJuly2,2013,anddataareavailableforJune2013,themostrecent12monthsforwhichdataareavailableprecedingthefilingofthepetitionareJuly2012throughJune2013.Asdiscussedabove,theCommissioncalculatedtheimportdataforthisperiodusingofficialimportstatisticsforcasingandtubing,dataforcouplingstockobtainedfromimporters,andspecificimportdatafor***.

Therearefourcountrieswhoseimportswerebelowtheapplicable3percentstatutorythreshold:87Taiwan(2.9percent),thePhilippines(2.2percent),SaudiArabia(***percent),andThailand(0.8percent).88Theaggregatevolumeofimportsfromthesecountriesis***

8419U.S.C.1671b(a),1673b(a),1677(24)(A)(i),1677(24)(B);seealso15C.F.R.2013.1

(identifyingcertaindevelopingcountriesforpurposesof19U.S.C.1677(36)forwhichtherelevantnegligibilitythresholdisdifferentincountervailingdutyinvestigations).

8519U.S.C.1677(24)(A)(ii).Thethresholdis9percentfordesignateddevelopingcountries.19U.S.C.1677(24)(B).

86CarbonandCertainAlloySteelWireRodfromBrazil,Canada,Egypt,Germany,Indonesia,Mexico,Moldova,SouthAfrica,TrinidadandTobago,Turkey,Ukraine,andVenezuela,Inv.Nos.701TA417421(Preliminary)and731TA953963(Preliminary),USITCPub.3456at8,n.37(Oct.2001.Seealso,e.g.,PolyethyleneTerephthalateFilm,SheetandStripfromBrazil,China,Thailand,andtheUnitedArabEmirates,Inv.Nos.731TA11311134(Preliminary),USITCPub.3962at12n.68(Nov.2007)at12,n.68;HydraulicMagneticCircuitBreakersfromSouthAfrica,Inv.No.731TA1033(Preliminary),USITCPub.3600at9,n.43(June2003);UreaAmmoniumNitrateSolutionfromBelarus,Lithuania,RussiaandUkraine,Inv.Nos.731TA10061009(Preliminary),USITCPub.3517at9,n.51(June2002).ThispracticewasaffirmedinCoSteelRaritan,Inc.v.UnitedStates,244F.Supp.2d1349(Ct.IntlTrade2002),vacatedonothergrounds,CoSteelRaritan,Inc.v.UnitedStates,357F.3d.1294(Fed.Cir.2004).

87Forpurposesofcountervailingdutyinvestigations,Indiaisamongthecountriesclassifiedasdevelopingcountriesunder15C.F.R.2013.1,sothenegligibilitythresholdforthecountervailingdutyinvestigationofsubjectimportsfromIndiais4percent.19U.S.C.1677(24)(B).SubjectimportsfromIndia(at***percent)areabovethatthreshold.CR/PRatTableIV4.

88CR/PRatTableIV4.

17

percent.89Becausethisexceedsthestatutorythresholdof7percent,wedonotfindthatimportsfromanyofthesubjectcountriesarenegligible.

VI. Cumulation

Forpurposesofevaluatingthevolumeandpriceeffectsforadeterminationofreasonableindicationofmaterialinjurybyreasonofsubjectimports,section771(7)(G)(i)oftheTariffActrequirestheCommissiontocumulatesubjectimportsfromallcountriesastowhichpetitionswerefiledand/orinvestigationsselfinitiatedbyCommerceonthesameday,ifsuchimportscompetewitheachotherandwiththedomesticlikeproductintheU.S.market.Inassessingwhethersubjectimportscompetewitheachotherandwiththedomesticlikeproduct,theCommissiongenerallyhasconsideredfourfactors:

(1) thedegreeoffungibilitybetweensubjectimportsfromdifferent

countriesandbetweensubjectimportsandthedomesticlikeproduct,includingconsiderationofspecificcustomerrequirementsandotherqualityrelatedquestions;

(2) thepresenceofsalesorofferstosellinthesamegeographicmarketsofsubjectimportsfromdifferentcountriesandthedomesticlikeproduct;

(3) theexistenceofcommonorsimilarchannelsofdistributionforsubjectimportsfromdifferentcountriesandthedomesticlikeproduct;and

(4) whetherthesubjectimportsaresimultaneouslypresentinthemarket.90

Whilenosinglefactorisnecessarilydeterminative,andthelistoffactorsisnotexclusive,thesefactorsareintendedtoprovidetheCommissionwithaframeworkfordeterminingwhetherthesubjectimportscompetewitheachotherandwiththedomesticlikeproduct.91Onlyareasonableoverlapofcompetitionisrequired.92

Petitionersarguethatallsubjectimportsshouldbecumulated.93USTPL/OCTLarguesthatimportsfromIndiashouldnotbecumulatedwiththosefromothersubjectcountries,orat

89CRatIV8,PRatIV7.90SeeCertainCastIronPipeFittingsfromBrazil,theRepublicofKorea,andTaiwan,Inv.Nos.731TA

27880(Final),USITCPub.1845(May1986),affd,FundicaoTupy,S.A.v.UnitedStates,678F.Supp.898(Ct.IntlTrade),affd,859F.2d915(Fed.Cir.1988).

91See,e.g.,WielandWerke,AGv.UnitedStates,718F.Supp.50(Ct.IntlTrade1989).92TheStatementofAdministrativeAction(SAA)totheUruguayRoundAgreementsAct(URAA),

expresslystatesthatthenewsectionwillnotaffectcurrentCommissionpracticeunderwhichthestatutoryrequirementissatisfiedifthereisareasonableoverlapofcompetition.H.R.Rep.No.103316,Vol.Iat848(1994)(citingFundicaoTupy,678F.Supp.at902);seeGossGraphicSys.,Inc.v.UnitedStates,33F.Supp.2d1082,1087(Ct.IntlTrade1998)(cumulationdoesnotrequiretwoproductstobehighlyfungible);WielandWerke,AG,718F.Supp.at52(Completelyoverlappingmarketsarenotrequired.).

93U.S.SteelPostconferenceBriefat1214.

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leastnotwithimportsfromcountriesthatexportmostlysemifinishedOCTGtotheUnitedStates.94ILJINarguesthatimportsfromcountriesthatshipmostlysemifinishedOCTGshouldnotbecumulatedwiththosefromcountriesthatshipmostlyfinishedOCTG.95TheSaudiRespondentsarguethatimportsfromSaudiArabiashouldnotbecumulatedwiththosefromothersubjectcountriesbecausecompetitionisattenuatedamongimportsfromSaudiArabia,othersubjectcountries,andthedomesticlikeproductbecausetheproductfromSaudiArabiaishighendseamlessOCTG.96TheUkraineRespondentsrequestedthatimportsfromUkrainenotbecumulatedwiththosefromothersubjectcountriesbutdidnotspecifyabasisfortheirargument.97HRParguesthatimportsfromVietnamshouldnotbecumulatedbecausesuchimportsareaninsignificantfactorintheU.S.marketandarenotlikelytogrowsignificantly.98

ThethresholdrequirementforcumulationissatisfiedbecausePetitionersfiledtheantidumpingdutyandcountervailingdutypetitionswithrespecttotheninesubjectcountriesonthesameday,July2,2013.Inaddition,noneofthestatutoryexceptionstocumulationapplies.Asdiscussedbelow,wefindareasonableoverlapofcompetitionamongsubjectimportsfromallninecountriesandbetweensubjectimportsfromeachsourceandthedomesticlikeproduct.

Fungibility.Casingandtubingproducts,regardlessofsource,aregenerallyproducedinaccordancewithAPIstandards.99Mostrespondingdomesticproducersandamajorityofimportersreportedthatsubjectimportsfromthesubjectcountriesarealwaysorfrequentlyusedinterchangeablywitheachotherandwiththedomesticlikeproduct.TheremainingdomesticproducersandimportersindicatedthatOCTGfromthesubjectcountriesaresometimesusedinterchangeablywitheachotherandwiththedomesticlikeproduct.100Nodomesticproducersorimportersreportedthatsubjectimportsareneverusedinterchangeablywitheachotherandwiththedomesticlikeproduct.101

WhenaskedwhetherdifferencesotherthanpriceareeversignificantintheirsalesinchoosingbetweenOCTGfromdifferentsources,thegreatmajorityofdomesticproducersrespondedsometimesornever.102Importersweremoredividedonthisquestion.Apluralityofimportersreportedthereweresometimesdifferencesotherthanpricebetweendomesticandsubjectimportsandbetweensubjectcountries,butotherresponsesweresplitbetweenalways,frequently,andnever.103

Werecognizethatthereareseveralfactorsthatlimitthefungibilitybetweenandamongsubjectimportsfromeachsourceandthedomesticlikeproduct.First,weldedandseamlessOCTGarenotcompletelyinterchangeable.Importsfromthesubjectcountriestendedtobe

94USTPL/OCTLPostconferenceBriefat27.95ILJINPostconferenceBriefat2829.96SaudiRespondentsPostconferenceBriefat2728.97UkraineRespondentsPostconferenceBriefat8.98HRPPostconferenceBriefat47.99CRatII26,PRatII22.100CR/PRatTableII6.101CR/PRatTableII6.102CR/PRatTableII7.103CR/PRatTableII7.

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concentratedinoneproductortheother:importsfromKorea,thePhilippines,Taiwan,Turkey,andVietnamwerealmostexclusivelyweldedOCTG;importsfromSaudiArabia,Thailand,andUkrainewereexclusivelyseamlessOCTG;andimportsfromIndiawerepredominantlyseamlessOCTG.104AlthoughseamlessOCTGcanbeusedinanyweldedOCTGapplication,thereverseisnottrue.CertainhighstressapplicationsrequireseamlessOCTG,andtheseamlessproductmayalsobepreferredinsomeapplicationstoreducerisk.105AwitnessforpetitionersestimatedthatweldedOCTGcouldbeusedfor70percentofseamlessapplicationsandawitnessforrespondentsnotedthattheyareinterchangeableinmanycasesfromanengineeringperspective.106FungibilitymayalsobesomewhatlimitedbyrequirementsforpremiumconnectionsorforalloyOCTGgrades.107AnotherfactorthatmaylimitfungibilitysomewhatistheextenttowhichsubjectcountriesandthedomesticindustryshipunfinishedorfinishedOCTG.USTPL/OCTLcontendsthatthemajorityofimportsfromIndiaandsomeothersubjectcountriesarefinishedOCTG,whilealmostallimportsfromothersubjectcountriesconsistofunfinishedOCTGsuchasgreentubesthathavenotbeenheattreatedorthreaded,andplainendpipethatgenerallyhasbeenheattreatedbutnotthreaded.108Wenote,however,thatUSTPL/OCTLhasnotprovidedanydatatosupportitsclaimthatimportsfromparticularcountriesarepredominantlyfinishedorunfinishedOCTG.WeintendtogathershipmentdataonfinishedOCTG,unfinishedOCTG,andgreentubesinanyfinalphaseoftheseinvestigations.109Wenotehowever,thattotheextentthatanysubjectcountryexportsanappreciableamountofbothtypesofOCTG,thissupportsafindingofareasonableoverlapofcompetition.110ThedomesticindustrysellsbothunfinishedandfinishedOCTG.111AsfortheundocumentedcontentionsofUSTPL/OCTLandILJINthatunfinishedandfinishedOCTGdonotcompetewitheachother,therecordsuggestsotherwise.Forexample,adistributormayweighwhethertobuyplainendpipe(anunfinishedproduct)andhaveitthreadedand/orcoupledbyafinisherratherthanbuyingafinishedOCTGproduct.112

104CR/PRatTableIV5.105CRatII26,PRatII2122.106CRatII26,PRatII21.107CRatII2728,PRatII2223.108USTPL/OCTLPostconferenceBriefat23.109PartiesareencouragedtospecifydefinitionsforunfinishedOCTG,finishedOCTG,andgreen

tubessothataccurateshipmentdatacanbegatheredfortheseproducts.110ThefactshereareclearlydistinguishablefromthoseintheLightweightThermalPaper

investigation,onwhichUSTPL/OCTLandILJINrely.Inthatcase,allimportsfromonesubjectcountrywerejumborolls,andallimportsfromtheothersubjectcountrywereslitrolls.Thetwoformscouldnotbeusedinterchangeably,andtheCommissionfoundnoreasonableoverlapofcompetitionbasedonlackoffungibility.CertainLightweightThermalPaperfromChinaandGermany,Inv.Nos.701TA451and731TA11261127(Final),USITCPub.4043at12(Nov.2008).ContrarytoILJINscontention,theCommissiondidnotpurporttocreateanyruleconcerningcumulationofunfinishedandfinishedarticles.

111Tr.at8788(Thompson)andU.S.SteelPostconferenceBriefatExh.1,p.19.112SeeU.S.SteelPostconferenceBriefatExh.1,pp.1920.

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Onbalance,therecordindicatesasubstantialdegreeofsubstitutabilitybetweenandamongsubjectimportsfromeachsourceandthedomesticlikeproduct,notwithstandingthefactorsthatlimitfungibility.

ChannelsofDistribution.Subjectimportsandthedomesticlikeproductsharedthesamechannelsofdistribution.DuringthePOI,thegreatmajorityofdomesticallyproducedandimportedOCTGfromeachsubjectsourcewereshippedtodistributors.113

GeographicOverlap.ThemajorityofimportsfromeachsubjectsourceareconcentratedintheCentralSouthwest.114ThePacificCoastreceivedthesecondgreatestshareofsubjectimports,withsubjectimportsfrom***thatregion.115AllrespondingU.S.producersreportedmakingsalestotheCentralSouthwest,andnineof14reportedmakingsalestothePacificCoastregion.

SimultaneousPresenceinMarket.SubjectimportsfromeachsubjectsourcewerepresentintheUnitedStatesineachyearofthePOIandininterim2013,exceptthattherewerenoimportsfromthePhilippinesorThailandin2010.116Subjectimportsfromeachsubjectsourcewerepresentinthemajorityofthe39monthsofthePOI,exceptforimportsfromthePhilippines(whichwerepresentin17months)andimportsfromThailand(whichwerepresentin19months).117

Conclusion.Insum,becausetherelevantantidumpingandcountervailingdutypetitionswerefiledonthesameday,andtherecordindicatesthatthereisareasonableoverlapofcompetitionbetweenandamongsubjectimportsandthedomesticlikeproduct,wecumulatesubjectimportsfromIndia,Korea,thePhilippines,SaudiArabia,Taiwan,Thailand,Turkey,Ukraine,andVietnamforpurposesofouranalysisofwhetherthereisareasonableindicationofmaterialinjury.

VII. ReasonableIndicationofMaterialInjurybyReasonofSubjectImports

A. LegalStandard

Inthepreliminaryphaseofantidumpingandcountervailingdutyinvestigations,theCommissiondetermineswhetherthereisareasonableindicationthatanindustryintheUnitedStatesismateriallyinjuredorthreatenedwithmaterialinjurybyreasonoftheimportsunderinvestigation.118Inmakingthisdetermination,theCommissionmustconsiderthevolumeofsubjectimports,theireffectonpricesforthedomesticlikeproduct,andtheirimpactondomesticproducersofthedomesticlikeproduct,butonlyinthecontextofU.S.production

113CRatII1,PRatII1.114CRatII3,PRatII3,andCR/PRatTableII2.115CRatII3,PRatII3,andCR/PRatTableII2.116CR/PRatTableIV2.117CR/PRatTableIV6.11819U.S.C.1671b(a),1673b(a).

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operations.119Thestatutedefinesmaterialinjuryasharmwhichisnotinconsequential,immaterial,orunimportant.120Inassessingwhetherthereisareasonableindicationthatthedomesticindustryismateriallyinjuredbyreasonofsubjectimports,weconsiderallrelevanteconomicfactorsthatbearonthestateoftheindustryintheUnitedStates.121Nosinglefactorisdispositive,andallrelevantfactorsareconsideredwithinthecontextofthebusinesscycleandconditionsofcompetitionthataredistinctivetotheaffectedindustry.122

AlthoughthestatuterequirestheCommissiontodeterminewhetherthereisareasonableindicationthatthedomesticindustryismateriallyinjuredbyreasonofunfairlytradedimports,123itdoesnotdefinethephrasebyreasonof,indicatingthatthisaspectoftheinjuryanalysisislefttotheCommissionsreasonableexerciseofitsdiscretion.124Inidentifyingacausallink,ifany,betweensubjectimportsandmaterialinjurytothedomesticindustry,theCommissionexaminesthefactsofrecordthatrelatetothesignificanceofthevolumeandpriceeffectsofthesubjectimportsandanyimpactofthoseimportsontheconditionofthedomesticindustry.Thisevaluationunderthebyreasonofstandardmustensurethatsubjectimportsaremorethanaminimalortangentialcauseofinjuryandthatthereisasufficientcausal,notmerelyatemporal,nexusbetweensubjectimportsandmaterialinjury.125

Inmanyinvestigations,thereareothereconomicfactorsatwork,someorallofwhichmayalsobehavingadverseeffectsonthedomesticindustry.Sucheconomicfactorsmightincludenonsubjectimports;changesintechnology,demand,orconsumertastes;competitionamongdomesticproducers;ormanagementdecisionsbydomesticproducers.ThelegislativehistoryexplainsthattheCommissionmustexaminefactorsotherthansubjectimportstoensurethatitisnotattributinginjuryfromotherfactorstothesubjectimports,therebyinflatinganotherwisetangentialcauseofinjuryintoonethatsatisfiesthestatutorymaterial

11919U.S.C.1677(7)(B).TheCommissionmayconsidersuchothereconomicfactorsasare

relevanttothedeterminationbutshallidentifyeach{such}factor...{a}ndexplaininfullitsrelevancetothedetermination.19U.S.C.1677(7)(B).

12019U.S.C.1677(7)(A).12119U.S.C.1677(7)(C)(iii).12219U.S.C.1677(7)(C)(iii).12319U.S.C.1671b(a),1673b(a).124AngusChemicalCo.v.UnitedStates,140F.3d1478,148485(Fed.Cir.1998)({T}hestatutedoes

notcompelthecommissionerstoemploy{aparticularmethodology}.),affg944F.Supp.943,951(Ct.IntlTrade1996).

125TheFederalCircuit,inaddressingthecausationstandardofthestatute,hasobservedthat{a}slongasitseffectsarenotmerelyincidental,tangential,ortrivial,theforeignproductsoldatlessthanfairvaluemeetsthecausationrequirement.NipponSteelCorp.v.USITC,345F.3d1379,1384(Fed.Cir.2003).ThiswasreaffirmedinMittalSteelPointLisasLtd.v.UnitedStates,542F.3d867,873(Fed.Cir.2008),inwhichtheFederalCircuit,quotingGeraldMetals,Inc.v.UnitedStates,132F.3d716,722(Fed.Cir.1997),statedthatthiscourtrequiresevidenceintherecordtoshowthattheharmoccurredbyreasonoftheLTFVimports,notbyreasonofaminimalortangentialcontributiontomaterialharmcausedbyLTFVgoods.SeealsoNipponSteelCorp.v.UnitedStates,458F.3d1345,1357(Fed.Cir.2006);TaiwanSemiconductorIndustryAssnv.USITC,266F.3d1339,1345(Fed.Cir.2001).

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injurythreshold.126Inperformingitsexamination,however,theCommissionneednotisolatetheinjurycausedbyotherfactorsfrominjurycausedbyunfairlytradedimports.127Nordoesthebyreasonofstandardrequirethatunfairlytradedimportsbetheprincipalcauseofinjuryorcontemplatethatinjuryfromunfairlytradedimportsbeweighedagainstotherfactors,suchasnonsubjectimports,whichmaybecontributingtooverallinjurytoanindustry.128Itisclearthattheexistenceofinjurycausedbyotherfactorsdoesnotcompelanegativedetermination.129

AssessmentofwhethermaterialinjurytothedomesticindustryisbyreasonofsubjectimportsdoesnotrequiretheCommissiontoaddressthecausationissueinanyparticularwayaslongastheinjurytothedomesticindustrycanreasonablybeattributedtothesubjectimportsandtheCommissionensure{s}thatitisnotattributinginjuryfromothersourcesto

126SAA,H.R.Rep.103316,Vol.Iat85152(1994)({T}heCommissionmustexamineotherfactorsto

ensurethatitisnotattributinginjuryfromothersourcestothesubjectimports.);S.Rep.96249at75(1979)(theCommissionwillconsiderinformationwhichindicatesthatharmiscausedbyfactorsotherthanlessthanfairvalueimports.);H.R.Rep.96317at47(1979)(inexaminingtheoverallinjurybeingexperiencedbyadomesticindustry,theITCwilltakeintoaccountevidencepresentedtoitwhichdemonstratesthattheharmattributedbythepetitionertothesubsidizedordumpedimportsisattributabletosuchotherfactors;thosefactorsincludethevolumeandpricesofnonsubsidizedimportsorimportssoldatfairvalue,contractionindemandorchangesinpatternsofconsumption,traderestrictivepracticesofandcompetitionbetweentheforeignanddomesticproducers,developmentsintechnologyandtheexportperformanceandproductivityofthedomesticindustry);accordMittalSteel,542F.3dat877.

127SAAat85152({T}heCommissionneednotisolatetheinjurycausedbyotherfactorsfrominjurycausedbyunfairimports.);TaiwanSemiconductorIndustryAssn,266F.3dat1345.({T}heCommissionneednotisolatetheinjurycausedbyotherfactorsfrominjurycausedbyunfairimports....Rather,theCommissionmustexamineotherfactorstoensurethatitisnotattributinginjuryfromothersourcestothesubjectimports.(emphasisinoriginal));AsociaciondeProductoresdeSalmonyTruchadeChileAGv.UnitedStates,180F.Supp.2d1360,1375(Ct.IntlTrade2002)({t}heCommissionisnotrequiredtoisolatetheeffectsofsubjectimportsfromotherfactorscontributingtoinjuryormakebrightlinedistinctionsbetweentheeffectsofsubjectimportsandothercauses.);seealsoSoftwoodLumberfromCanada,Inv.Nos.701TA414and731TA928(Remand),USITCPub.3658at10001(Dec.2003)(Commissionrecognizedthat{i}fanallegedotherfactorisfoundnottohaveorthreatentohaveinjuriouseffectstothedomesticindustry,i.e.,itisnotanothercausalfactor,thenthereisnothingtofurtherexamineregardingattributiontoinjury),citingGeraldMetals,132F.3dat722(thestatutedoesnotsuggestthatanimporterofLTFVgoodscanescapecountervailingdutiesbyfindingsometangentialorminorcauseunrelatedtotheLTFVgoodsthatcontributedtotheharmfuleffectsondomesticmarketprices.).

128S.Rep.96249at7475;H.R.Rep.96317at47.129SeeNippon,345F.3dat1381(anaffirmativematerialinjurydeterminationunderthestatute

requiresnomorethanasubstantialfactorshowing.Thatis,thedumpingneednotbethesoleorprincipalcauseofinjury.).

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thesubjectimports.130131Indeed,theFederalCircuithasexaminedandaffirmedvariousCommissionmethodologiesandhasdisavowedrigidadherencetoaspecificformula.132

TheFederalCircuitsdecisionsinGeraldMetals,Bratsk,andMittalSteelallinvolvedcasesinwhichtherelevantotherfactorwasthepresenceinthemarketofsignificantvolumesofpricecompetitivenonsubjectimports.TheCommissioninterpretedtheFederalCircuitsguidanceinBratskasrequiringittoapplyaparticularadditionalmethodologyfollowingitsfindingofmaterialinjuryincasesinvolvingcommodityproductsandasignificantmarketpresenceofpricecompetitivenonsubjectimports.133Theadditionalreplacement/benefittestlookedatwhethernonsubjectimportsmighthavereplacedsubjectimportswithoutanybenefittotheU.S.industry.TheCommissionappliedthatspecificadditionaltestinsubsequentcases,includingtheCarbonandCertainAlloySteelWireRodfromTrinidadandTobagodeterminationthatunderliestheMittalSteellitigation.

MittalSteelclarifiesthattheCommissionsinterpretationofBratskwastoorigidandmakesclearthattheFederalCircuitdoesnotrequiretheCommissiontoapplyanadditionaltestnoranyonespecificmethodology;instead,thecourtrequirestheCommissiontohaveevidenceintherecordtoshowthattheharmoccurredbyreasonoftheLTFVimports,andrequiresthattheCommissionnotattributeinjuryfromnonsubjectimportsorotherfactorsto

130MittalSteel,542F.3dat87778;seealsoid.at873(WhiletheCommissionmaynotenteran

affirmativedeterminationunlessitfindsthatadomesticindustryismateriallyinjuredbyreasonofsubjectimports,theCommissionisnotrequiredtofollowasinglemethodologyformakingthatdetermination...{andhas}broaddiscretionwithrespecttoitschoiceofmethodology.)citingUnitedStatesSteelGroupv.UnitedStates,96F.3d1352,1362(Fed.Cir.1996)andS.Rep.96249at75.

131CommissionerPinkertdoesnotjointhisparagraphorthefollowingthreeparagraphs.HepointsoutthattheFederalCircuit,inBratsk,444F.3d1369,andMittalSteel,heldthattheCommissionisrequired,incertaincircumstanceswhenconsideringpresentmaterialinjury,toundertakeaparticularkindofanalysisofnonsubjectimports,albeitwithoutrelianceuponpresumptionsorrigidformulas.MittalSteelexplainsasfollows:

WhatBratskheldisthatwherecommodityproductsareatissueandfairlytraded,pricecompetitive,nonsubjectimportsareinthemarket,theCommissionwouldnotfulfillitsobligationtoconsideranimportantaspectoftheproblemifitfailedtoconsiderwhethernonsubjectornonLTFVimportswouldhavereplacedLTFVsubjectimportsduringtheperiodofinvestigationwithoutacontinuingbenefittothedomesticindustry.444F.3dat1369.Underthosecircumstances,BratskrequirestheCommissiontoconsiderwhetherreplacementoftheLTFVsubjectimportsmighthaveoccurredduringtheperiodofinvestigation,anditrequirestheCommissiontoprovideanexplanationofitsconclusionwithrespecttothatfactor.542F.3dat878.

132NucorCorp.v.UnitedStates,414F.3d1331,1336,1341(Fed.Cir.2005);seealsoMittalSteel,542F.3dat879(BratskdidnotreadintotheantidumpingstatuteaProcrusteanformulafordeterminingwhetheradomesticinjurywasbyreasonofsubjectimports.).

133MittalSteel,542F.3dat87579.

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subjectimports.134Accordingly,wedonotconsiderourselvesrequiredtoapplythereplacement/benefittestthatwasincludedinCommissionopinionssubsequenttoBratsk.

TheprogressionofGeraldMetals,Bratsk,andMittalSteelclarifiesthat,incasesinvolvingcommodityproductswherepricecompetitivenonsubjectimportsareasignificantfactorintheU.S.market,theCourtwillrequiretheCommissiontogivefullconsideration,withadequateexplanation,tononattributionissueswhenitperformsitscausationanalysis.135

Thequestionofwhetherthematerialinjurythresholdforsubjectimportsissatisfiednotwithstandinganyinjuryfromotherfactorsisfactual,subjecttoreviewunderthesubstantialevidencestandard.136CongresshasdelegatedthisfactualfindingtotheCommissionbecauseoftheagencysinstitutionalexpertiseinresolvinginjuryissues.137

B. ConditionsofCompetitionandtheBusinessCycle

Thefollowingconditionsofcompetitioninformouranalysisofwhetherthereisareasonableindicationofmaterialinjurybyreasonofcumulatedsubjectimports.

1. DemandConditions

AstheCommissionhasfoundinpriorOCTGinvestigationsandreviews,demandforOCTGiscyclicalandlargelydrivenbythelevelofactivityintheU.S.economy,specificallyintheoilandgasexplorationandproductionsectors.138Becauseoilandnaturalgaspricespartlyinfluencedrillingactivity,thesepricesalsodrivethedemandforOCTG.139ThedemandforOCTGiscloselyassociatedwiththenumberofrigsandtotalfootageofwellsdrilledintheUnitedStates.140

134MittalSteel,542F.3dat873(quotingfromGeraldMetals,132F.3dat722),87579&n.2

(recognizingtheCommissionsalternativeinterpretationofBratskasaremindertoconductanonattributionanalysis).

135Tothatend,aftertheFederalCircuitissueditsdecisioninBratsk,theCommissionbegantopresentpublishedinformationorsendoutinformationrequestsinfinalphaseinvestigationstoproducersinnonsubjectcountriesthataccountedforsubstantialsharesofU.S.importsofsubjectmerchandise(if,infact,therewerelargenonsubjectimportsuppliers).InordertoprovideamorecompleterecordfortheCommissionscausationanalysis,theserequeststypicallyseekinformationoncapacity,production,andshipmentsoftheproductunderinvestigationinthemajorsourcecountriesthatexporttotheUnitedStates.TheCommissionplanstocontinueutilizingpublishedorrequestedinformationinfinalphaseinvestigationsinwhichtherearesubstantiallevelsofnonsubjectimports.

136Weprovideinourrespectivediscussionsofvolume,priceeffects,andimpactafullanalysisofotherfactorsallegedtohavecausedanymaterialinjuryexperiencedbythedomesticindustry.

137MittalSteel,542F.3dat873;NipponSteelCorp.,458F.3dat1350,citingU.S.SteelGroup,96F.3dat1357;S.Rep.96249at75(ThedeterminationoftheITCwithrespecttocausationis...complexanddifficult,andisamatterforthejudgmentoftheITC.).

1382010OCTG,USITCPub.4124at12;CRatII12,PRatII11.139CRatII12,PRatII11.140CRatII1,PRatII1.

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OCTGdemandroseconsiderablyduringthePOI.ApparentU.S.consumptionofOCTGincreasedfrom5.0millionshorttonsin2010to6.1millionshorttonsin2011and7.2millionshorttonsin2012.141MeasuresofOCTGdemandincreasedsharplybetweenJanuary2010andNovember2011beforebeginningasmallandirregulardecline.142Specifically,rigcountandtotalfootagedrilledincreasedbetween2010and2011,thendeclinedslightlyin2012.143Operatorconsumptionfigures,whichtrackOCTGusedbywelloperators,increasedsteadilyfrom2010to2012beforedeclininginthefirsthalfof2013.144Somerespondingproducersandimportersnotedthatdemandhasnotincreasedinrecentmonths.145

U.S.producersandrespondentsgenerallyagreethatdemandforOCTGhasrisensharplysinceJanuary2010.146Thisislargelyduetoincreaseduseofhydraulicfracturing(alsoknownasfracking)andhorizontaldrillingandincreaseddrillingspurredbyhigheroilprices.147SinceJanuary2010,horizontaldrillingandfrackinghaveplayedanincreasingroleinoilandgasexploration.148Becausebothtechniquesallowwellstoreachfurther,thefootageofOCTGusedwhenfrackingand/orhorizontaldrillingisgreateronaperwellbasisthanthefootageusedintraditionalverticalwells.149Thisincreasehasalsoledtogreaterdemandforpremiumandsemipremiumconnectionsandthreadsforthesehighstressapplications.150

2. SupplyConditions

ThethreesourcesofOCTGsupplyintheU.S.marketaredomesticshipments,importsofsubjectmerchandiseandimportsfromnonsubjectcountries.OCTGimportsfromChinahaveallbutdisappearedfromtheU.S.marketafterantidumpingandcountervailingdutyorderswereimposedonOCTGfromChinain2010.151

141CR/PRatTableIV7.Apparentconsumptionforinterim2013was1.7millionshorttons,slightly

lowerthanthe1.9millionshorttonsininterim2012.142CR/PRatFiguresII3,II4,andII5.143CR/PRatFiguresII4andII5.ThenumberofrigsintheUnitedStateswasaround1,200atthe

beginningof2010,rosetoaround1,700inearly2011,andpeakedatslightlygreaterthan2,000inlate2011beforebeginningtodeclineslowlythroughthefirsthalfof2012andmorerapidlyinthesecondhalfofthatyear.Rigcounthashoveredaround1,750throughouttheinterim2013period.Totalfootagedrilledwasaround240millionfeetin2010,roseabove300millionfeetin2011,anddroppedslightly,butremainedover300millionfeetin2012.

144CR/PRatFigureII3.145CRatII19,PRatII16.146CRatII18,PRatII16;KoreanRespondentGroupPostconferenceBriefat16(incorporatedby

referencebyTaiwanandthePhilippineRespondents,Borusan,USTPL/OCTL,theJindalGroup,ayirova/Toselik,andHRP).

147CRatII19,PRatII16.148CRatII1,PRatII1.149CRatI1718andII1,PRatI1415andII1.150CRatII27,PRatII22.151ExhibitstoTestimonyofMr.Hecht,Skadden,Arps,Slate,MeagherandFlomLLC,Tr.Appendixat

2.

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The13domesticproducersthatrespondedtotheCommissionsU.S.producersquestionnaireaccountedforthevastmajorityofOCTGproducedintheUnitedStates.152Thedomesticindustryscapacityincreasedfrom5.5millionshorttonsin2010to5.7millionshorttonsin2011and6.0millionshorttonsin2012.153Capacityutilizationincreasedfrom52.5percentin2010to60.7percentin2011and63.0percentin2012.154U.S.producershaveplannedfurtherexpansionsandadditionalplantopeningsinthecurrentandfollowingyears.155 The32subjectproducers/exportersofOCTGthatrespondedtotheCommissionsquestionnairesaccountedforallorvirtuallyallimportsofOCTGin2012ineightoftheninesubjectcountriesintheseinvestigations.156Subjectcapacityrosefrom2.2millionshorttonsin2010to3.0millionshorttonsin2011and3.2millionshorttonsin2012.157Subjectcapacityutilizationalsorose,from58.6percentin2010to66.0percentin2011and69.8percentin2012.158ContributingtothisincreasedsubjectcapacityarenewproductionfacilitiesinthePhilippinesandThailandthatpetitionersallegewereestablishedbyfirmsaffiliatedwithproducersinChinanowsubjecttoU.S.antidumpingandcountervailingdutyorders.159

152CRatIII1,PRatIII1.153CR/PRatTableIII3.Thedomesticindustryscapacitywas1.5millionshorttonsininterim2012

and1.6millionshorttonsininterim2013.154CR/PRatTableII3.Capacityutilizationwas69.7percentininterim2012and65.4percentin

interim2013.155CR/PRatTableIII2.TableIII2liststhevariousinvestments,changesinproductioncapacity,

acquisitions/mergers,andshutdownsinthedomesticindustrysince2010.Thetablelists20instanceswhereproducershaveannouncedconstructionofadditionalfacilities,upgradedequipment,addedproductionlines,and/orcommissionednewmills.Severalproducersalsoreportedhavingtoshutdownfacilitiestemporarilyduetolackoforders,curtailproduction,and/orcurtailemployment.CRatIII56,PRatIII4.

For2013andbeyond,TenarisannounceditsintentiontobuildanewseamlessmillinTexasby2016,BorusanandMannesmanbrokegroundonamillinTexasthatisexpectedtobeginproductionofOCTGin2015;VallourecexpectstobeginheattreatmentandfinishingoperationsinanewmillinOhio;WeldedTubehasbegunconstructionofamillinNewYorkthatisexpectedtobeginproductionin2013;OMKcommissionedamillinTexasthatisexpectedtoreachfullcapacitybymid2013;BigRiverSteelannouncedaproposedmillwithanannualcapacityof1.7millionshorttons;andTexasSteelConversionhas***.CR/PRatTableIII2.SeealsoCR/PRTableVI4,showingcapitalexpendituresincreasingfrom$269.0millionin2010to$711.1millionin2011anddecreasingto$616.9millionin2012.

156CRatVII4,9,13,17,22,26,30,34,and38;PRatVII3,7,9,11,13,14,16,17,and19.Respondingproducers/exportersfromVietnamaccountedforonly***percentofimportsofOCTGfromVietnamin2012.CRatVII38,PRatVII19.

157CR/PRatTableVII19.Subjectcapacitywas802,900shorttonsininterim2012and817,800shorttonsininterim2013.

158CR/PRatTableVII19.Subjectcapacityutilizationwas70.5percentininterim2012and67.7percentininterim2013.

159SeeCRatVII13,PRatVII9;CRatVII26,PRatVII14.ThePhilippineRespondentscapacityincreasedfromnonein2010to***shorttonsin2011,andincreased***percentin2012.CapacityutilizationinthePhilippinesincreasedfrom***percentin2011to***percentin2012.InThailand,(Continued)

27

ImportsfromnonsubjectcountrieswerepresentintheU.S.marketthroughoutthePOI.160Theyoriginatedfromavarietyofcountries,includingCanada,Japan,Germany,Mexico,Argentina,Austria,Russia,Romania,Colombia,Brazil,andSpain.ThelargestsourcesofnonsubjectimportsduringthePOIwereCanada,Japan,Germany,Mexico,andArgentina.161SeveraldomesticproducershaveaffiliatesthatproduceOCTGinnonsubjectcountriessuchas***.162

Asizeableportionofimportsfromsubjectand,tosomedegree,nonsubjectsourcesconsistsofOCTGproductsthatarefurtherprocessedintheUnitedStates,suchasgreentubesthatmaynothavebeenheattreatedorthreaded,aswellasplainendpipethatmayhavebeenheattreatedbutnotthreaded.WewillseekmoreinformationinanyfinalphaseoftheseinvestigationsregardingthenatureandextentofcompetitionamongOCTGproductsatthevariousstagesofprocessing,includinghowtheimportedproductscompetewithproductsmanufactureddomestically.

InventoriesofU.S.producedOCTGandOCTGfromsubjectcountriesbothintheUnitedStatesandinthesubjectcountriesarealsoasourceofcurrentsupply.U.S.inventoriesofdomesticproductwereattheirlowestin2010andpeakedinabsolutetermsinMarch2012.163PetitionersassertthatthecurrentinventoriesofOCTGfromallsourcesrepresentapproximatelya5monthsupplyandthatthisinventoryoverhangistoohigh.164CumulatedinventoriesofsubjectimportsintheUnitedStateshaveincreasedfrom143,927shorttonsin2010,to190,730shorttonsin2011,andreached323,088shorttonsin2012.165Wewillseekfurtherinformationinanyfinalphaseinvestigationsregardingfactorswhichmightaffectinventorylevelsandseekpartiescommentsontypicalinventorylevelsinthisindustry.

3. Substitutability

OCTGisproducedaccordingtostandardsandspecificationspublishedbyanumberoforganizations,includingtheAPI.166OnceamillpassesinspectionandobtainsAPIcertification,itmaybeginmarketingitsOCTGasAPIgrade.167OCTGisusuallyproducedinaccordancewith

(Continued)capacityincreasedfromnonein2010to***shorttonsin2011,and***shorttonsin2012.Capacityutilizationwas***percentinthefirstyearofproductionandincreasedto***percentin2012.

160CR/PRatTableIV2.161CR/PRatTableIV3.162CR/PRatTableIII1.163CRatIII14,PRatIII8.InventoriesasapercentofU.S.shipments,however,declinedfrom14.0

percentin2010to12.4percentin2011and10.7percentin2012.Theywere11.8percentininterim2012and12.0percentininterim2013.

164U.S.SteelPostconferenceBriefat49(citingPetitionVol.I,ExhibitI53).165CR/PRatTableC1.166CRa