Wiley Rein - USITC · Rein 10 LLP . U.S. Prices Are Very Attractive $750 $700 $650 $600 $550 $500...
Transcript of Wiley Rein - USITC · Rein 10 LLP . U.S. Prices Are Very Attractive $750 $700 $650 $600 $550 $500...
Wiley Rein
Cut-to-Length Plate from India, Indonesia, and Korea: Why the Orders Should Remain in Place LLP
Presentation of the Domestic Industry
Alan H. Price
January 4, 2018
Overview m All three countries satisfy the requirements for cumulation
• Conditions of competition render the domestic industry vulnerable to material injury by reason of subject imports
• Revocation as to one or all of the subject countries will likely lead to
• Increases in import volumes
• Negative price effects
• The continuation or recurrence of injury to the domestic industry within the reasonably foreseeable future
Wiley Rein
LLP
Cumulation PI The ITC should cumulate all three subject countries
• In the previous reviews, the ITC cumulated imports from these countries • "Based on the likely reasonable overlap of competition among subject imports
from India, Indonesia, and Korea, and the absence of other differences in likely conditions of competition in the U.S. market that would warrant the consideration of subject imports from any one of the countries on an individual basis, we exercise our discretion to cumulate subject imports from India, Indonesia, and Korea." 2011 Review
• If the orders are revoked, imports from each of the three countries are likely to have a discernible adverse impact on the domestic industry
111 There is a likelihood of an overlap of competition Wiley Hein
LLP
Conditions of Competition • "Price is a very important factor in purchasing decisions for
CTL plate" (2015 Sunset Review)
• There is massive global overcapacity
• Subject countries are increasing capacity
• The U.S. industry was hammered by a surge of unfairly traded imports during the POR
• U.S. demand is declining
• The U.S. market is attractive because of relatively higher prices
Wiley Rein
LLP
In 2016, World CTL Plate Capacity Exceeded Production by Nearly 63 Million Tons
250
200
= 100 2
50
Source: Nucor Prehearing Brief at Exhibits 1 and 6
0
iley Relit
LLP World Capacity World Production
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Mil
lio
n N
et T
ons
U.S. Consumption of CTL Plate Has Declined Sharply and Continues to Fall
2014 2016 Jan-Sep 2016
-6.2%
Jan-Sep 2017
Source:
Prehearing
Staff Report at
1-46
Wiley 6
Rein LLP
The Subject Countries Have the Ability to Increase Exports Rapidly
• All of the subject countries increased capacity since the last review
• The subject producers have enormous excess capacity
• The subject producers are all export-oriented
• The subject producers can quickly shift exports to the United States
A SAIL
DA DONGKUK STEEL 111 HYLII1DRI STEEL
KRAKATAll SIFF!
Wiley Rem
LLP
20
Millio
n N
et T
ons
15
10
2017 2011
25
5
o
Source: Nucor
Prehearing
Brief, Exhibit 6
Wiley Rein
LLP
Since the Last Review, the Subject Producers Have Increased CTL Plate Capacity by 40% 30
9 Subject Overcapacity
Source: Nucor
Prehearing Brief,
Exhibits 1 and 6;
Prehea ring Staff
Report at Table C-1
Wiley Rem_
LLP US Consumption
6.0
4.0
2.0
0.0
Subject Overcapacity in 2016 Was Nearly Twice
Annual U.S. Consumption of CTL Plate
18.0
16.0
14.0
The U.S. Market Is Attractive
• The United States represents a large, open market for CTL plate
• Even though U.S. prices fell throughout the POR, U.S. prices are still attractive compared to other countries
• Exports of CTL plate from the subject countries are subject to trade barriers, including in major markets like Thailand and India
• U.S. purchasers expect that imports from these countries will enter the U.S. market in substantial quantities if the orders are revoked
Wiley Rein
LLP 10
U.S. Prices Are Very Attractive
$750
$700
$650
$600
$550
$500
$450
$400
$350
$300
$/ N
et T
on
in 2
016
Wiley Rein
LLP
All US Imports All India Exports All Indonesia Exports All Korea Exports 11
Source: Public Prehearing Report at IV-16, IV-24, and IV-28
Price Effects • The Commission found likely negative price effects in both of the preceding sunset
reviews
• "Given the likely significant volume of imports from India, Indonesia, and Korea, the importance of price in the CTL plate market, the substitutability of subject imports and the domestic like product, the price effects of low-priced subject imports in the original investigations, the underselling by subject imports during the original investigations, the first reviews, and continuing in these reviews, and the incentive that exists for subject imports to enter the U.S. market in significantly increased quantities, we find a likelihood of significant negative price effects from the subject imports upon revocation of the orders." 2011 Review
• Subject producer prices to third country markets are well below prices to the U.S. market
• Because CTL plate is sold on the basis of price, even small volumes at low prices can have a disruptive effect
• The subject countries have high rates of dumping and subsidization
• Market participants expect prices to fall if these orders are revoked
12
Wiley Rein
LLP
$850
$800
$750
$500
$450
$400
$/ N
et T
on i
n 20
16 $700
$650
$600
$550
Wiley Hell
LLP 13
Indian Export Prices to Other Markets Are Far Below Those to the United States
United States Portugal Greece Italy Spain
Source: Prehearing Staff Report at IV-16
700
600
500 to
r%Ic 400 • _
h-
15 300
200
100
0
Korean Export Prices to Other Markets Are Well Below Those to the United States
United States Vietnam Spain Japan Philippines 1 4.
Source: Prehearing Staff Report at IV-28
Wiley Rein
LLP
All US Imports
Indonesian Export Prices to Other Markets Are Well Below the Average Price of Imports into the United States
800
700
600
`8 500
C C 400
a) 300
200
100
0
15
Spain Italy Saudi Arabia Other
Source: Prehearing Staff Report at IV-3 and IV-24
Wiley Ron
LLP
The Domestic Industry Is Vulnerable • Virtually all trade and financial indicators for the domestic industry fell
between 2014 and 2016
Production -18.5%
Capacity Utilization -18.1%
Shipment Volume
-18.7%
Average Unit Value -28.0%
Shipment Value -41.5%
Capital Expenditures -46.9%
Operating Income -96.2%
Source: Prehearing
Staff Report, Table C-1
Wiley Rem
LLP
The Domestic Industry Has Not Recovered in 2017
• Despite relief, from interim 2016 to interim 2017:
• Production and shipment volume remained flat
• Capacity utilization remained below 60%
• Operating income remained below 2%
• Capital expenditures fell even further
• Recovery in the near term is uncertain, as U.S. demand is
projected to remain sluggish and prices low
17
Wiley Rem
LLP
The Indonesian Producers Will Re-Enter the U.S. Market Given the Opportunity
• Indonesia is an export platform for CTL plate
• The Indonesian industry's capacity utilization is below 50%
• Indonesian exports of CTL plate increased by more than 150% from 2012 to 2016
• Indonesian exports are subject to trade barriers in major markets, including Australia, India, Malaysia, Taiwan, and Thailand
• Indonesia has shown the ability to move quickly into new markets, like Spain and Italy
11 Indonesia has easy access to the U.S. distribution network
Wiley Help,
Thailand Malaysia Italy Spain
60,000
50,000
40,000
30,000
20,000
10,000
0
mi 2015
• 2016
Subject Indonesian Producers Have Shown The Ability
To Move Into New Markets Very Rapidly
70,000
Source: Prehearing
Staff Report at IV-23
Wiley Rein
LLP
Mi l
lio
n N
e t T
on
s
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Indonesian Export Capability in 2017 Was Greater than All Imports in 2015
from the Countries Subject to the AD and CVD Investigations
20 Indonesia Capacity Available for Export, 2017 Imports from 12 Subject Countries, 2015
Source: Nucor
Prehearing Brief at
Exhibits 1, 6; ITC
Data Web
Wiley Rein
LLP
• POSCO in the Americas
POSCO Canada 0 0
UPI
PO SC 0
,America
Detroit Office°
Houston ---
Office(s_) —POSCO PO SCO ._ _ _ AAPC Mexico
21
Diversion Through Indonesia • CTL plate exports by POSCO are
currently subject to combined AD/CVD duties of 11.7%
• PT Krakatau POSCO is a joint venture of Krakatau and POSCO of Korea
• POSCO has an extensive distribution network in the United States
Wiley Rein
LLP
Conclusion • The main thing that has changed since the last sunset
review is that conditions for the domestic industry have gotten worse
• The subject producers have more capability than ever to export large quantities of CTL plate to the United States
• If the orders are revoked, imports from India, Indonesia and Korea will re-enter the U.S. market in substantial quantities, causing injury to the domestic industry
Wiley Rein
LLP 22