Carbon and Certain Alloy Steel Wire Rod From China, Germany, and Turkey

157 Pages·2006·0.68 MB·English

Carbon and Certain Alloy Steel Wire Rod
From China, Germany, and Turkey
Investigation Nos. 731-TA-1099-1101 (Preliminary)
Publication 3832 January 2006
U.S. International Trade Commission
COMMISSIONERS
Stephen Koplan, Chairman
Deanna Tanner Okun, Vice Chairman
JenniferA. Hillman
Charlotte R. Lane
Daniel R. Pearson
Shara L. Aranoff
RobertA.Rogowsky
DirectorofOperations
Staffassigned
MichaelSzustakowski,Investigator
HarryLenchitz,IndustryAnalyst
AmeliaPreece,Economist
DavidBoyland,Accountant
JuneBrown,Attorney
JonathanEngler,Attorney
StevenHudgens,Statistician
DouglasCorkran,SupervisoryInvestigator
Address all communications to
Secretary to the Commission
United States InternationalTrade Commission
Washington, DC 20436
U.S. International Trade Commission
Washington,DC20436
www.usitc.gov
Carbon and Certain Alloy Steel Wire Rod
From China, Germany, and Turkey
Investigation Nos. 731-TA-1099-1101 (Preliminary)
Publication 3832 January 2006

CONTENTS
Page
Determination................................................................... 1
Views of the Commission ......................................................... 3
Part I: Introduction .............................................................. I-1
Background .................................................................. I-1
Previous and related investigations................................................ I-1
Prior investigations ......................................................... I-1
Subsequent litigation ........................................................ I-3
Organization of the report ....................................................... I-4
Summary of data presented in the report ........................................... I-4
U.S. market summary .......................................................... I-4
The nature and extent of alleged sales at LTFV ...................................... I-5
The subject merchandise ........................................................ I-5
Commerce’s scope .......................................................... I-5
Tariff treatment ............................................................ I-5
The domestic like product....................................................... I-6
Physical characteristics and uses ............................................... I-6
Manufacturing process ...................................................... I-8
Channels of distribution...................................................... I-8
Price .................................................................... I-9
Domestic like product issues .................................................... I-9
Part II: Conditions of competition in the U.S. market ................................... II-1
Market characteristics .......................................................... II-1
U.S. channels of distribution..................................................... II-1
Supply and demand considerations................................................ II-2
U.S. supply ............................................................... II-2
U.S. demand .............................................................. II-5
Substitutability issues .......................................................... II-6
Part III: U.S. producers’ production, shipments, and employment .......................... III-1
U.S. producers ............................................................... III-1
U.S. capacity, production, and capacity utilization ................................... III-4
U.S. producers’ domestic shipments and export shipments ............................. III-6
U.S. producers’ direct imports and purchases ....................................... III-8
U.S. producers’ inventories ..................................................... III-8
U.S. employment, wages, and productivity ......................................... III-9
Part IV: U.S. imports, apparent U.S. consumption, and market shares ...................... IV-1
U.S. imports ................................................................. IV-1
Negligibility ................................................................. IV-4
Cumulation considerations ...................................................... IV-4
Fungibility ................................................................ IV-5
Geographic markets ......................................................... IV-10
Presence in the market ....................................................... IV-10
Apparent U.S. consumption ..................................................... IV-10
U.S. market shares ............................................................ IV-10
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CONTENTS
Page
Part V: Pricing and related information .............................................. V-1
Factors affecting prices ........................................................ V-1
Raw material and energy costs ................................................ V-1
U.S. inland transportation costs ................................................ V-2
Exchange rates ............................................................. V-2
Pricing practices .............................................................. V-2
Pricing methods ............................................................ V-2
Sales terms and discounts .................................................... V-4
Price data ................................................................... V-5
Lost sales and lost revenues ..................................................... V-6
Part VI: Financial experience of the U.S. producers ..................................... VI-1
Background .................................................................. VI-1
Operations on wire rod ......................................................... VI-1
Capital expenditures and research and development expenses ........................... VI-6
Assets and return on investment .................................................. VI-7
Capital and investment ......................................................... VI-7
Part VII: Threat considerations ..................................................... VII-1
The industry in China .......................................................... VII-1
The industry in Germany ....................................................... VII-5
The industry in Turkey ......................................................... VII-8
Subject countries combined ..................................................... VII-11
U.S. importers’ inventories ...................................................... VII-12
Dumping in third-country markets ................................................ VII-13
Global markets ............................................................... VII-13
Appendixes
A. Federal Register notices....................................................... A-1
B. Conference witnesses ......................................................... B-1
C. Summary data............................................................... C-1
Note.--Information that would reveal confidential operations of individual concerns may not be
published. Such information is indicated by asterisks.
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UNITED STATES INTERNATIONAL TRADE COMMISSION
Investigation Nos. 731-TA-1099-1101 (Preliminary)
Carbon and Certain Alloy Steel Wire Rod From China, Germany, and Turkey
DETERMINATIONS
On the basis of the record1 developed in the subject investigations, the United States International
Trade Commission (Commission) determines, pursuant to section 733(a) of the Tariff Act of 1930 (19
U.S.C. § 1673b(a)) (the Act), that there is no reasonable indication that an industry in the United States is
materially injured or threatened with material injury, or that the establishment of an industry in the United
States is materially retarded, by reason of imports from China, Germany, and Turkey of carbon and
certain alloy steel wire rod, provided for in subheadings 7213.91.30, 7213.91.45, 7213.91.60, 7213.99.00,
7227.20.00, and 7227.90.60 of the Harmonized Tariff Schedule of the United States, that are alleged to be
sold in the United States at less than fair value (LTFV).
BACKGROUND
On November 10, 2005, a petition was filed with the Commission and the U.S. Department of
Commerce by Connecticut Steel Corp., Wallingford, CT; Gerdau AmeriSteel U.S. Inc., Tampa, FL;
Keystone Steel & Wire Company, Peoria, IL; Mittal Steel USA Georgetown, Georgetown, SC; and
Rocky Mountain Steel Mills, Pueblo, CO, alleging that an industry in the United States is materially
injured and threatened with material injury by reason of LTFV imports of carbon and certain alloy steel
wire rod from China, Germany, and Turkey. Accordingly, effective November 10, 2005, the Commission
instituted antidumping duty investigation Nos. 731-TA-1099-1101 (Preliminary).
Notice of the institution of the Commission’s investigations and of a public conference to be held
in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S.
International Trade Commission, Washington, DC, and by publishing the notice in the Federal Register
of November 18, 2005 (70 FR 69988). The conference was held in Washington, DC, on December 1,
2005, and all persons who requested the opportunity were permitted to appear in person or by counsel.
1 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR § 207.2(f)).

VIEWS OF THE COMMISSION
Based on the record in the preliminary phase of these investigations, we find that there is no
reasonable indication that an industry in the United States is materially injured or threatened with material
injury by reason of subject imports of carbon and certain alloy steel wire rod (“steel wire rod”) from
China, Germany, and Turkey that are allegedly sold in the United States at less than fair value.1
I. THE LEGAL STANDARD FOR PRELIMINARY DETERMINATIONS
The legal standard for preliminary antidumping duty determinations requires the Commission to
determine, based upon the information available at the time of the preliminary determination, whether
there is a reasonable indication that a domestic industry is materially injured or threatened with material
injury, or that the establishment of an industry is materially retarded, by reason of the allegedly unfairly
traded imports.2 In applying this standard, the Commission weighs the evidence before it and determines
whether “(1) the record as a whole contains clear and convincing evidence that there is no material injury
or threat of such injury; and (2) no likelihood exists that contrary evidence will arise in a final
investigation.”3
The Court of Appeals for the Federal Circuit has stated that the purpose of preliminary
determinations is to avoid the cost and disruption to trade caused by unnecessary investigations and that
the “reasonable indication” standard requires more than a finding that there is a “possibility” of material
injury.4 It also has noted that, in a preliminary investigation, the “statute calls for a reasonable indication
of injury, not a reasonable indication of need for further inquiry.”5 Moreover, the Court of International
Trade (“CIT”) has reaffirmed that in applying the reasonable indication “standard for making a
preliminary determination regarding material injury or threat of material injury, the Commission may
weigh all evidence before it and resolve conflicts in the evidence.”6
The Commission has collected comprehensive information in these preliminary investigations.
Data on U.S. producers are based on the questionnaire responses of 10 firms that accounted for 100
percent of U.S. production in 2004. Importer questionnaire data accounted for 74.2 percent of the
quantity of U.S. imports of the subject merchandise from China in 2004, 48.4 percent of imports from
Germany, and 53.8 percent of imports from Turkey.7 The Commission collected comprehensive U.S.
import data based on official Department of Commerce (“Commerce”) import statistics and utilized the
same HTS statistical reporting numbers for purposes of data collection as those presented in the petition.8
Exports to the United States in 2004 reported by the subject country producers exceeded 84 percent of
1 Material retardation of the establishment of an industry was not an issue in these investigations.
2 19 U.S.C. § 1673b(a); see also, e.g., Co-Steel Raritan, Inc. v. United States, 357 F.3d 1294 (Fed. Cir. 2004);
Sensient Technologies Corp. v. United States, Slip Op. 04-11 (Ct. Int’l Trade Sept. 10, 2004); Committee for Fair
Coke Trade v. United States, Slip Op. 04-68 (Ct. Int’l Trade June 10, 2004); Ranchers-Cattlemen Action Legal
Foundation v. United States, 74 F. Supp.2d 1353, 1368-69 (Ct. Int’l Trade 1999); Aristech Chemical Corp. v. United
States, 20 CIT 353, 354-55 (1996); American Lamb Co. v. United States, 785 F.2d 994, 1001-04 (Fed. Cir. 1986).
3 American Lamb, 785 F.2d at 1001; see also Texas Crushed Stone Co. v. United States, 35 F.3d 1535, 1543
(Fed. Cir. 1994).
4 American Lamb, 785 F.2d at 1004.
5 Texas Crushed Stone, 35 F.3d at 1543.
6 Ranchers-Cattlemen, 74 F. Supp.2d at 1368.
7 Confidential Staff Report (“CR”) at I-5; Public Staff Report (“PR”) at I-4.
8 Compare CR at IV-1 n.1, PR at IV-1 n.1, with Petition at 7, Exhibits 3 and 6.
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U.S. imports from each country, as reported by official Commerce statistics.9 Thus, although the
Commission did not receive questionnaire responses from all producers of subject merchandise in all
subject countries, the subject country producers that did respond represent the vast majority of exports of
steel wire rod from each country to the United States during the period examined. The Chinese producers
responding to the Commission’s questionnaires accounted for 43.8 percent of 2004 Chinese production of
steel wire rod; the responding German producers accounted for 70.7 percent of 2004 German steel wire
rod production; and the responding Turkish producers accounted for 71.3 percent of 2004 Turkish steel
wire rod production.10
The sales price data collected by the Commission cover a large and representative portion of
overall sales, accounting for 43.3 percent of the quantity of U.S. producers’ U.S. commercial shipments
of steel wire rod for the period January 2002 through September 2005, 70.5 percent of reported imports
from China, 24.6 percent of reported imports from Germany, and 82.2 percent of reported imports from
Turkey.11 Although, as is customary in preliminary investigations, the Commission did not send
questionnaires to purchasers, a number of important purchasers participated in the conference, submitted
briefs, and were contacted regarding lost sales and lost revenue allegations.
We see no likelihood that any evidence we would have obtained in any final phase of these
investigations would change our determinations that the domestic industry is neither materially injured
nor threatened with material injury by reason of subject imports from China, Germany, and Turkey.
II. SUMMARY
We find that there is no reasonable indication that an industry in the United States is materially
injured by reason of the subject imports. Throughout the period examined the U.S. industry has lacked
the capacity to meet U.S. demand for steel wire rod. This shortage of domestic supply was exacerbated
by significant production curtailments and work stoppages by domestic producers that are not attributable
to subject imports in any significant respect. These production curtailments and work stoppages largely
coincided with a significant increase in apparent U.S. consumption from 2003 to 2004. As a result of this
combination of increased apparent U.S. consumption and uncertain domestic supply, purchasers and
domestic producers increasingly were forced to turn to imports to meet their needs.
Subject import volume increased only from 2003 to 2004 and declined in every other period. The
increase in subject imports in 2004 also occurred as imports from nonsubject sources increased. The
increase in import volume, both subject and nonsubject, occurred to meet U.S. demand that U.S.
producers could not meet. Therefore, we do not find the volume or increase in volume of subject imports
to be significant, either absolutely or relative to production or consumption.
U.S. prices increased significantly during the period examined. U.S. prices peaked in 2004 even
as subject imports reached their highest levels, both absolutely and relative to U.S. consumption. U.S.
prices declined somewhat during January-September (“interim”) 2005, but remained at levels well above
those experienced early in the period examined. Therefore, we do not find that subject imports depressed
U.S. prices to a significant degree. Nor do we find that subject imports suppressed U.S. prices to any
significant degree. In 2004 and interim 2005, when subject imports had their greatest market share, the
U.S. industry increased unit sales values at a rate faster than the increase in their unit raw material costs.
Although the U.S. industry’s total unit costs increased slightly relative to U.S. prices in interim 2005, the
ratio of total costs to sales value was still below that experienced by the U.S. industry earlier in the period
examined. Moreover, we find that the increase in costs relative to prices in interim 2005 largely reflects
9 CR at VII-1, VII-6, VII-10; PR at VII-1, VII-5, VII-8.
10 CR at VII-1, VII-6, VII-10; PR at VII-1, VII-5, VII-8 (as reported by ***).
11 CR at V-7, PR at V-6.
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