Stainless Steel and Alloy Tool Steel

246 Pages·2016·9.27 MB·English

~ STAINLESS STEEL AND
ALLOY TOOL STEEL
Report to the President on
Investigation No. TA-203-16
lhlerSection 203 of the
Trade Act of 1974
USITC PUBLICATION 1975
MAY 1987
United States International Trade Commission I Washington, DC 20436
U~ITED STATES 11'.TERNATIOSAL TRADE COl\fl\llSSION
COMMISSIONERS
Susan Uebeler, Chairman
Anne E. Brunsdale, Vice Chairman
Alfred E. Eckes
Seeley G. Lodwick
David B. Rohr
Staff assigned:
Judith Zeck, Office of Investigations
Nancy Fu le her, Office of Indus tries
Stephanie Van Winkle, Office of Economics
Chand Mehta, Office of Investigations
John Kingery, Office of the General Counsel
Vera Libeau, Supervisory Investigator
Address all communications to
Kenneth R. Mason, Secretary to the Commission
United States International Trade Commission
\\'ashin1ton, DC 20436
C 0 N T E N T S
Page
Report to the President·-..· ·---·--.. -······_:······--···-·---.. --.. ···· -............. --.. ··-···--·-···--·- 1
Views of Commissioners Eckes, Lodwick, and Rohr--···-·· 3
Views of Chairman Liebeler and Vice Chairman Brunsdale··--......... - ... -·-··. . --. ·-··-- 17
Information obtained in the investigation:
Introduction----·---- A-1
Description and uses:
The products-........... ______. . , ____ ,_ _. -----·--·-----·-·-·----------········. ... -....... A-1
The production process-.... ·-------------. ·····---·---··-- A-5
U.S. tariff treatment--·--------·-· -------- A-6
Previous Section 201 and 203 investigations-............................... -·····-····---·····-- A-7
Import re lief program-·······-- -----·-·---· A-9
U.S. market--···· -------·--·----·-.... --. - ............ - ......... --. -·---··· . --···-··- A·-14
Channels of distribution-··. . ·-----. ---------·-------------·-. _ A-14
Apparent consumption--··········--· . _ ........ - ........ -.--.· -·-. ··- A-15
Condi ti on of the U.S. industry-·-····· A-15
U.S. producers--·. . ····--------···-··. . ····-.. ·-··-·-·------··-.. ····---.. ····---·-·- A·.,-15
U. S . production--······. . ··--. ·-:-----------·-·---------. -·--------·--······-· . ·-· A-20
U.S. capacity and capacity utilization. . - . --. ---·--·---. - .- - A-21
U.S. producers' domestic shipments-.............. --·----·-----------·-·-···-·---- A-22
U. S . ex po rt:;· · · ....................... -·-.. - ........... - ................................. _. ........................... - ................ -.... · ····--·-· .. ·-·--.. ······-·····-- A·-2 4
U.S. producers' inventories--................................ --·-·····--. ---·----·------ A-24
U.S. producers' unfilled orders-·. ... --·---..... _ . _ ...... - ....... - .... ····--···-. - A-25
U.S. employment-........ _, ____. ... __________. . _____ ....... --·-·--·--·····---. ··------·-- A-26
Financial experience of U.S. producers:
Overall stainless steel and/or alloy tool steel-····. . ····----. ------ A-28
Stainless steel sheet and strip·-·······. . _.:::. ...... ___, . __. .. ,_ __ .... _ .... -..... - A-28
Stain 1 es s s tee 1 plate--·····--·-------·--·-····--. -·---------··--......... -----·-·- A-3 1
Stain 1 es s s tee 1 bar--....... -----. ·-·····----····--------···--·---...................... _ . __ A-31
Stainless steel wire rod-········-·--.· ---··----------·---- A-34
Alloy too 1 s tee 1 products·-.. --..................... _ ..................... - ............ - ....... _ ......... - ................ _. A-3 4
Overall operations--···------. -·-------·-- -·--.----·- A-37
Financial condition of U.S. producers---·--.......................... -············-··-·- A-37
Summary of operating income-·and-·loss data-................... - . _. . _ . _____ A-39
Impact of volume, price, and costs of production on
gross profit-·····------................... ______· -----·-·------ A-40
Capital expenditures···--·-............. ----···-··--·-....... - ........... _,_ .......... _ ........ __, . . -·- A-43
Research and development expenses-·-.:... A-43
Investment in productive facilities-··------·---·····-... - .... ·- A-45
U.S. producers' efforts to compete-........ --------------·--·- A-46
U.S. importers................... . . ·--·--·····----··----. --------·. .· ··-----··--.... -- A-47
Importers' end-of.:...period inventories---·- A-47
Importers' unfilled orders--·······---·--·--····------. ·-·--. ··-········-.. -·- A-47
Volume of imports-................ --------------------·----- A-48
Market penetration-·--·-·-.· ·-----·---·----·-- ........ _____ A-55
The effect of the VRAs on import data--................ A-55
Prices ............ - ..... - .......· --·--. ·---·---------·······--------·----·-·--.... _____. . _ A-58
Probable economic effect of terminating or extending
import relief:
Major foreign suppliers of stainless and alloy tool steel
to the. United States----·····--······-·. .· ---·-·----. ······--·-. ·- A-63
Exc;hange rates--·····. . ·····---·------- A-75
Considerations under Section 202{c) of the Trade Act of 1974··-- A-79
Appendix A. Presidential Proclamation No. 5074-·-. ·-·-·---·--·--.. a-1
Appendix B. F.ederal Register notice----- . --------·--·. . ··-. ····-- a-11
·Appendix C. List of witnesses appearing at the public hearing-···--- a-15
Appendix D. Tari ff Schedules and Quota Levels-....... _ .......... -"~-. --·-. ·······-.· ··- a-21
Appendix E. Additional tables on the condition of the U.S_. industry...:.... a-39
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CONTENTS
Appendix F. VRA coverage table and supplemental pricing tables a-53
Appendix G. Economic analysis of the probable economic effect of
terminating import re 1 i e f .-............. ·····------· . ·-·-· .· -----.............. ·. ............. --. ------·------....... a-5 7
Appendix H. Summary of exempted products and requests for
exemptions-........ .. .......... _._ _ ._ . _,, . _____. ................... ·--·-. -- -. -. ·--- a-85
Tables
1. Stainless steel and alloy tool steel: U.S. shipments, imports,
and apparent consumption, by quantity, 1983-86---- A-16
2. Stainless steel and alloy tool steel: U.S. shipments, imports,
and apparent consumption, by value, 1983-86--·---· A·-17
3. Stainless steel and alloy tool steel: U.S. production, by types,
198 3-86-............ ---·--·- ----------·---·------- A-21
4. Stainless steel and alloy tool steel: U.S. producers' practical
capacity and capacity utilization, 1983-86--.--------·----- A-22
5. Stainless steel and. alloy tool steel: U.S. producers' domestic
shipments, by types, 1983-86----~ A-23
6. Stainless steel and alloy tool steel: U.S. exports, by types,
1983-86--·----. --. ·-··"-''"'""--------·--·-·-. - ..... - . ________. . ,_. ___ A-24
7. Stainless steel and alloy tool steel: U.S. producers'
end-of-period inventories, and as a share of shipments, 1983-86- A-25
8. Stainless steel and alloy tool steel: U.S. produc.ers '· end--of-
period unfilled orders, 1983-86 A-26
9. Stainless steel and alloy tool steel: Average number of
production and related workers, 1983-86---·--- A-26
10. Stainless steel and alloy tool steel: Number of hours worked
by production and related workers in U.S. establishments in
which products are produced, 1983-86--. --------- A-27
11. Stainless steel and alloy tool steel: Average hourly wage of
production and related workers, 1983-86---------- A-27
12. Stainless steel and alloy tool steel: Hours worked per ton of
output ~f production and related workers in U.S. establishments
in which products are produced, 1983-86------------- A-28
13. Stainless steel and alloy tool steel: Income-and-loss data of 19
U.S. producers on their operations, 1983-86-·--··. . -·--------- A-29
14. Stainless steel sheet and strip: Income-and-loss data of 10 U.S.
producers on their operat.ions, 1983-86------ A-30
15. Stainless steel plate: Income-and-loss data of 7 U.S. producers
on their operations, 1983-86-----------------· A-32
16. Stainless steel bar: Income-and-loss data of 8 U.S. producers
on their operations, 1983-86-- A-33
17. Stainless steel wire rod: Income-and-loss data of 5 U.S.
producers on their operations, 1983-86-·. . A-35
18. Alloy tool steel: Income-and-loss data of 12 U.S. producers on
their operations, 1983-86 A-36
19. Stainless steel and alloy tool steel: Income-an.d-loss data of
17 U.S. producers on their overall or divisional operations,
1983-86--·-"""'""_ ____, __ . -· ... ---- A-38
20. Stainless steel and alloy tool steel: Selected balance sheet
data and financial ratios of 17 U.S. producers on their overall
or divisional operations, as of the end of accounting years
1983-86---. -· . ·---..... _____ .,_____ ................... ________
A--39
iii
CONlENTS
Tables---. continued
21. Ratios of ppe~ating ~ncome or (loss) to .net sale~ for all
manufacturing. firms,. all producers o.f durable goods. •. and. ...,- :
producers of the. stainl.ess steel and allqy too steel pr:ogµcts
subject to this i!'lvestigati,on. 1983.,.-86::-.... - A-40
22. Stainless steel and alloy tool steel: Effect of volume of
shipments, price, and cost of production increases or (decreases)
on gross profit between 1983 and 1986-. ·-----···-·----····-·. ..... - . --. __ _ A-41
23. Stainless steel and alloy tool steel: Increases or (decreases)
in gross.profit between 1983 .and 1996 due tp volume, .price, and
cost of production changes. · ·· .. · ' . _ . · ·
: A-42
24. Stainless steel and.alloy .tool steel: .Capital expendi.tures -l:>Y. I - ••.
U.S. producers, by products, 1983-86--. __,_ ________ A-44
25. Stainless steel and alloy tool steel: Research and development
expenses by U.S. producers, by products, 1983-86-·-· . -·------- A-45
26. Stainless steel and alloy tool steel: Investment in productive
facilities by U.S. producers, by products, 1983-86---.- ----- A-46
27. Stainless steel and alloy tool ·steel: U.S. importers' end-of-
period inventories, 1983-86-. ___ _ A-47
28. Stainless steel and alloy tool steel: U.S. importers' end-of-
period unfi lied orders, 1983-86-.· -·--- A-48
29. Stainless steel and alloy tool steel: U.S. imports for
consumption, by principal sources, 1983-86-. ___· - ------ A-49
30. Stainless steel sheet and strip: U.S. imports for consumption,
by principal sources, 1983-86-·. .- -----· A-50
31. Stainless steel plate: U.S. imports for consumption, by
principal sources, 1983-86--- ....· -----------··--------· A-51
32. Stainless steel bar: U.S. imports for consumption, by
principal sources, 1983-86-·-.· -----·------------- A-52
33. Stain less steel wire rod: U.S. imports for consumption, by
principal sources, 1983-86-·-····-------------------- A-53
34. Al loy tool steel: U.S. imports for consumption, by principal
sources, 1983-86-···. .· ·-----·------------------- A-54
35. Stainless steel and alloy tool steel: Market penetration of
imports, by quantity and ,by product, 1983-86-···------···------ A-56.
36. Stainless steel and alloy tool steel: Market penetration of
imports by value and by product, 1983-86---. ----------- A-56
37. Stainless steel and alloy tool steel: Average prices of
U.S.-produced products, by product groupings and by quarters,
1983-86---·-·-0""--'"''" , ___, ,,_,,_,_ ·--- ----· A-59
38. Stainless steel and alloy tool steel production, capacity, and
capacity utilization for certain foreign producing countries,
1984-86--.. A-63
39. Indexes of the nominal and real exchange rates between the U.S.
dollar and the British pound, French franc, Japanese yen, Korean
won, Mexican peso, Spanish peseta, Swedish krona, and West German
deutsche mark, by quarters, January 1983-December 1986- . ·- A-76
iv
CONTENTS
Tables-continued
40. Estimated effects on consumers of terminating import telief for
stainless steel and alloy tool steel products from non-VRA
imports, 1986---- ·····-··----····--·---· A-03
Estimated effects on consumers of terminating import relief for
total imports of stainless steel and alloy tool steel products,
1986-··---·----------· -------- ------ ---·· . --·- A-83
Note.-Information .that would reveal the confidential 9perations of
indiv.idual concerns may not be published and therefore has been deleted from
~~~s report. Such deletions are indicated by asterisks.
REPORT TO THE PRESIDENT
INVESTIGATION NO. TA-203-16
STAINLESS STEEL AND ALLOY TOOL STEEL
U.S. International Trade Commission
f'\ay 15, 1987
. To the President:
In accordance with section 203(i)(3) of the Trade Act of 1974 (19 U.S.C.
2253(i)(3)), the United States International Trade Commission herein reports
the results of an investigation concerning stainless steel and alloy tool
steel.
Chairman Liebeler and Vice Chairman Brunsdale provide advice on the
probable economic effect of terminating import relief provided to domestic
producers of certain stainless steel and alloy tool steel products. They also
provide advice on the considerations set forth in section 202(c) of the Trade
Act of 1974.
Commissioner Eckes advises the President that termination of the import
relief program with respect to stainless steel sheet and strip, and stainless
steel plates, would not h~ve an adverse effect on the domestic industries
producing those products, assuming the continued administration of voluntary
restraint agreements at present levels. He also advises that termination of
the import relief program would have an adverse effect on the industries
producing stainless steel bars, stainless steel wire rod, and alloy tool steel.
Commissioner Lodwick advises the President that termination of the relief
program with respect to stainless steel sheets and strip, and stainless steel
plates would not have an adverse effect, assuming the continued administration
of the voluntary restraint agreements at present levels. He also advises that
termination of the 201 relief would have an adverse effect on the industries
producing stainless steel bars, stainl~ss steel wire rod, and alloy tool steel.
2
Commissioner Rohr advises the Pre~ident.that with respect to stainle~s
steel sheets and strip, and stainless steel plates, termination of the import
relief program would not have a significant adverse economic effect on the
industries producing these products, assuming the continued administration of
the voluntary restraint agreements at present levels. With respect to
stainless steel bars and stainless steel wire rod, termina.tion or the import
relief program would ~ave a significant adverse economic impact on the
industries producing these products. With respect to alloy tool steel,
Commissioner Rohr advises that while termination of the imp0rt relief program
would have some adverse economic effects on the operation of the industry, he
finds little indication that firms in this industry havf' any significant plans
to use any further period of relief to further adjust to import competition.
The Commission instituted this investigation on January 27, 1987,
following receipt of a petition filed by t:1e Specialty Steel Industry of the
United States (SSIUS) and the United Steelworkers of America (AFL-CIO},
requesting that the Commission institute an investigation in order that it
might advise the President of its judgment as to the probable economic effect
on the domestic specialty steel industries ·of the termination of the import
relief provided to the specialty steel industries by Presidential Proclamation
5074. Public notice of the investigation and headng was given by posting
copies of the notice at the office of the -Secretary, U.S. International Trade
Commission, Washington, DC, and by P,ublishing the notice in the Federal
Register of February 4, 1987 (52 F.R. 3501). A public hearing was held in
connection with this investigation on April 2, 1987, in Washington, DC. All
interested persons were afforded an opportunity to be present, to present
evidence, and to be heard.
The information in this report was obtained from field work,
questionnaires sent to domestic producers and importers, the Commission's
files, other government agencies, briefs filed by interested parties, and
3
VIEWS OF COMMISSIONERS ALFRED ECKES, SEELEY G. LODWICK,
AND DAVID B. ROHR
The purpose of this investigation is to provide advice to
the President concerning the probable economic effect of
termination of the import relief program provided to certain
specialty steel industries under Presidential Proclamation 5074
(Proclamation) .
This is not the first time the Commission has conducted
investigations of these industries. The Commission has
conducted five prior investigations under sections 201 or 203
of the Trade Act of 1974 and many investigations under title
VII. Also, as part of its responsibilities under the
Proclamation, the Commission has closely monitored the progress
of these industries and the effect of imports on this progress
since the imposition of import relief.
The current import relief program has been in effect since
July, 1983, following a section 201 investigation conducted by
the Commission at the request of the United states Trade
·Representative (USTR) • .!f In that investigation, the Commission
determined that imports were a substantial cause of serious
.!/ The request was made as the result of an investigation of
certain unfair trade practices conducted by USTR under section
301.
4
injury to domestic industries producing stainless steel sheet
and strip, plate (flat products), bar, and wire rod (long
products), and alloy tool steel products.
The relief provided under the Proclamation included tariffs
on the flat products that have been progressively reduced from
8 percent and 10 percent respectively, to the current level of
4 percent, and tonnage qliotas on the long products and on alloy
tool steel products that have increased annually by 3 percent._!/
The nature and extent of import relief provided to the
industries under the Proclamation has changed, however, since
the program began.
In September, 1984, the President adopted a national policy
for the steel industry, directing the USTR to negotiate
voluntary restraint arrangements (VRA's) with respect to the
importation of various steel products.~ These VRA's include a
variety of steel products with varying degrees of specificity.
Some of these arrangements extend to products which would
otherwise be covered by the import relief program which is the
subject of this investigation, and substantially alter the
coverage for some products under the Proclamation. In some
..!/ The Proclamation provided for a number of exemptions for
specific products from import relief. To the extent that
exemptions are sought for products covered by our
recommendation for extension of relief, we do not find it
appropriate to provide for further exemptions (either on a
product or country-of-origin basis).
~ In negotiating these arrangements, USTR apparently decided
that VRA's are equivalent to OMA's for the purpose of sec.
203(e).