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PUBLIC VERSION
Certain Carbon and Alloy Steel Wire Rod from Belarus, Italy, The Republic of Korea, The Russian Federation, The Republic of South Africa, Spain,
Turkey, Ukraine, United Arab Emirates, and The United Kingdom
Domestic Industry Presentation by Paul Rosenthal, Kelley Drye & Warren LLP
November 16, 2017
Prepared by Georgetown Economic Services, LLC
2011 2012 2013 2014 — -China —Subject Countries
Source: Official Department of Commerce Import Statistics.
fairy-7raded Subject Imports Surged Over the POI ti Replace the Oecjne in Imports from China
7.. 7
800,000
700,000 700,000
600,000
J) 500,000 0
.1•0 400,000
_c cn 300,000
200,000
100,000
0
KELLEY D RYE
Jan 2014 — Petitions filed
on China
• • •
Jan -2015 — Orders imposed
on China
•
•
2015 2016
- - -
3).2:1 A3113)1
7
U.S. Imports from China Surged from 2011 to 2013
air.77171,,17;'747' " ' '
700,000
600,000
g 500,000
8 400,000
300,000
0 200,000
100,000
2011 2012 2013 Source: USITC Pub. 4509 at C-3.
.1110.11.111111.1111111111111011111PXX=70054411111115ARAMMOSAMMIPTette=r4CIM.,Str... . • - • -.•' . .•
2015 2016
Subject Imports Quickly Replaced China and Reached Even Higher Volume Levels
800,000
700,000
-7). 600,000
0 I— 500,000
0 -C 400,000 cn
a) E 300,000
0 > 200,000
100,000
0
2014
+56.1%
Source: ITC Prehrg. Rep. at IV-4 (Table IV-2).
KELLEY D RYE
0 18.0%
16.0%
14.0%
2 12.0%
u) 10.0%
8.0%
0_ 6.0%
4.0%
2.0%
0.0%
Subject Imports Captured an Increasing Share of the U.S. Market From 2014 to 2016
2014 2015 2016 Source: ITC Prehrg. Rep. at IV-31 (Table IV-15).
D RYE
VA
Subject Market Shares Exceeded Those of China in Every Respective Year of the Investigatory Periods
Per
cent
Mark
et S
har
e
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
z Chinese Imports L Subject Imports
2011 /2014 2012/2015 2013 /2016 Source: ITC Prehrg. Rep. at 0-5 (Table 0-2) and USITC Pub. 4509 at C-4.
Subject Imports' Surge Continued Through the First Half of 2017
• ••••
250,000
200,000
0
150,000
I100000
'
50,000
0
1Q 2016 / 1Q 2017 2Q 2016 / 2Q 2017 3Q 2016 / 3Q 2017 - Source: KDW Prehrg. Brf. at Exh. 6.
KELLEY DRYE
The Fiiing of the Petitions in 2017 Led to a Significant Decrease in Subject Wire Rod Imports
250,000
Average lead for subject imports = 101 Days
200,000
150,000
100,000
0 >
Wire Rod Petitions Filed March 28, 2017
50,000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Subject Imports Nonsubject Imports
Source: U.S. Department of Commerce.
Subject imp rts Undersed the U.S. Product in the Vast Majority of Quarterly Comparisons as Well as Based on Volume
Flat'75.,7,^
Number of Quarters —
Underselling by Subject
Imports
Underselling Volume by
Subject Imports
Number of Quarters — Overselling by Subject
Imports
Total 1,263,228
Source: ITC Prehrg. Rep. at V-29.
PUBLIC VERSION Virtually All of U.S. Purchasers Reported Subject Imports Were Lower Priced and That They Shifted Purchases To Subject Imports Principally Due To Price
Number of Purchasers
having Purchased
CASWR from subject
countries instead of domestic CASWR
Number of purchasers reporting
that imports
were lower priced
Percent purchasers reporting that price was lower
Number of purchasers
that reported shifting
purchases principally
due to price
Quantity of subject country purchases
instead of domestic
purchases where subject imports
were lower priced (tons)
...
24 18 75.0% 17
Source: ITC Prehrg. Rep. at V-35-37 (Table V-13).
PUBLIC VERSION Purchasers Overwhelmingly Reported That Subject Imports Were
Priced Lower Than the Domestic Product MEE I.LT •
10111 •11
— Source: KDW Prehrg. Br{. at 34-35.
PUBLIC VERSION Purchasers Reported U.S. Producers Were Forced to Lower
Prices to Compete With Subject Imports
Count of purchasers reporting U.S.
producers reduced prices
Simple average of estimated U.S. price reduction (percent)
Range of estimated U.S. price reductions
(percent)
5.0 15.0%
Source: ITC Prehrg. Rep. at V-41 (Table V-16).
KELLEY DRYE
Source: ITC Prehrg. Rep. at V-39-50 (Table V-15).
PUBLIC VERSION Purchasers Reported U.S. Producers Were Forced to Lower Prices to
Compete With Subject Imports ipm:41, 1P
Pri
ce
Ch
an
ge
( US
D/S
ho
rt T
on
)
-$100
-$125
-$150
-$175
-$25
-$50
-$75
$0
Unit Net Sales Values Declined More Than Unit Raw Material Costs from 2014 to 2016
--
Raw Materials Net Sales
-$200
Source: ITC Prehrg. Rep. at VI-10 (Table VI-4).
PUBLIC VERSION
Domestic Producer Prices Fell Precipitously from First Quarter 2014 to Third Quarter 2017
Source: ITC Prehrg. Rep. at V-9 to V-20.
Domestic Industry Trade Indicators Declined From Already Low Levels from 2014 to 2016
M
Capacity
Production
Domestic Shipment Volume
Domestic Shipment Value
Market Share
Production-Related Workers
Source: ITC Prehrg. Rep. at C-5.
Domestic Industry Financial Indicators Declined Substantially from 2014 to 2016
INet Sales Value
Gross Profit
Operating Income
Net Income
Operating Income/Net Sales
Net Income/Net Sales
Source: ITC Prehrg. Rep. at 0-5.
•
U.S. Producers' Profitability Plummeted by More Than 50% from 2014 to 2016
60,000
—Operating Income
Thou
sand
s of
US
D
40,000
50,000
30,000
• •
• k52,635 •
$46,408 • • • • • • • • •
—Net Income • •
•
%4111' $25,137
20,000 $21,115
2014 Source: ITC Prehrg. Rep. at C-5 Table 0-2).
2016
1,
20.0% - --Operating Income Margin
Import Market Share —Subject
16.5%
15.0%
10.2%
10.0%
5.0% 2.8%
1.9%
0.0%
Inco
me
Mar
gin (
Per
cen
t)
lit
20.0%
5.0%
2
0.0%
U.S. Producers' Profit Ratios Were Abysmal And Declining from 2014 to 2016
2014 2016 Source: ITC Prehrg. Rep. at 0-5 (Table C-2).
Only After Imports Began to Decline Did Profits Improve
20.0% - ---Operating Income Margin —Subject Import Market Share 20.0%
17.4%
15.0%
10.0%
5.0% 3.9% 5.0% ct 2 2.8%
..... NM OW Ma OW MO MIN NM 41111P MO OM ONO 4MI. MID
0.0%
0.0%
J-S 2016 Source: ITC Prehrg. Rep. at 0-5 (Table 0-2).
J-S 2017
nc
om
e M
arg
in (
Pe
rce
nt)
Jan 201 Petitions filed
on Chind
27 -
surfing Subject lm.orts More Than Replaced Import Volumes from China
800,000
700,000
600,000
u) 500,000 0
400,000
(4 300,000
200,000
100,000
0
2011 2012 2013 2014 2 China Subject Countries
Source: Official Department of Commerce Import Statistics.
2015 2016
U.S. Producers' Market Share Declined from 2011 to Interim 2017
75.0%
70.0%
Cl) 65.0%
2 60.0%
a) c.)
o_ 55.0%
50.0%
2011 2012 2013 2014 2015 2016 J-S 2017 Source: ITC Prehrg. Rep. at 0-5 (Table 0-2) and US ITC Pub. 4509 at 0-4.
$175,000
$150,000
$125,000
$100,000
$75,000
$50,000
$25,000
Op
erat
ing
Inco
me
($1,
00
0)
$0
Surging Subject Imports Prevented the U.S. Industry from Improving Financially Once Orders Were Imposed on China
,
i:
i'
kr,
,(.
:
c, Nt '+' ‘..•
.4
W
.f f
. .
.11 •
t e .
2011 2012 2013 2014 2015 2016 Source: USITC Pub. 4509 at C-4, ITC Prehrg. Rep. at C-5.
KELLEY
D RYE
PUBLIC VERSION capital Expenditures Fell Significantly Since the End
of the China Trade Case INEM -11151M7
Source: USITC Pub. 4509 at 0-4, ITC Prehrg. Rep. at VI-15.
•
The Surge in Subjec Imports Caused U.S. Producers' Shipments to Fall More apidly than the Decline in Demand
from 2014 to 2016
Per
cent
Cha
nge
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0% -4.2% -6.0%
Growth Rate of U.S. Growth Rate of Growth Rate of U.S. Market Subject Imports Producers° Shipments
Source: ITC Prehrg. Rep. at 0-4-5 (Tables C-1 and C-2).
Non-Subject Imports Declined Over the P01
1,400,000
-7-) 1,300,000 c 0
i—
.1-. 8' u)-c 1,200,000
a) E = -6 > 1,100,000
1,000,000
2014 Source: ITC Prehrg. Rep. at IV-4 (Table IV-2).
2015 2016
WP:W'
KELLEY D RYE
Unit Net Sales Values Declined More Than Unit Raw Material Costs from 2014 to 2016
Raw Materials Net Sales $0
O -$25
O -$50
U▪ ) a -$75 U)
-$100 a) cr) c -$125
o -$150
-$175
-$200
Source: ITC Prehrg. Rep. at VI-10 Table VI-4).
ArcelorMittal USA and Republic Both Cite Unfairly Traded Imports as a Reason for their Closure
• "ArcelorMittal Georgetown, the company's primary producer of wire rod in the United States, has been severely impacted by waves of unfairly traded steel imports from China and other countries. Even in the most recent quarter, wire rod imports rose to account for 36 percent of the U.S. market."
ArcelorMittal (5/14/15)
• "With a negative 2016 economic forecast and the continued dumping of steel imports, Republic had no other option but to idle the Lorain plant."
- Republic Steel (1/17/16)
Source: KDW Prehrg. Exh. 5.
PUBLIC VERSION Based on ITC Questionnaires, Subject Producers Have Sufficient
Excess Capacity to Increase Exports to the U.S.
Faar,:,, r-rlq••
Source: ITC Prehrg. Rep. at IV-4 (Table IV-2) and VII-67 (Table VII-36).
PUBLIC VERSION Subject Countries Have More Excess Capacity to
Produce CASWR Than The Entire U.S. Market
Source: [
3:411V •••;:. -, :fiArg, • •
PUBLIC VERSION
Critical Circumstances Exist
• Commerce has found critical circumstances for Russia, South Africa, Spain, Turkey (except for Habas and lcdas), and the United Kingdom.
• Imports from each of the five subject countries rapidly increased following the filing of the petition.
• Russia up [
• South Africa up [
e Spain up [
e Turkey up [
• United Kingdom up [
• Inventory levels of the subject imports also increased rapidly. 0- The remedial effect of the orders would be seriously undermined absent
retroactive imposition of duties. Source: ITC Prehrg. Rep. at IV-9 to IV-13.
There Is a Single Like Product Encompassing All In-Scope CASWR Including Grade 1080 Tire Cord and Tire Bead CASWR
m The Commission has consistently found a single continuum like product consisting of all 11 types of CASWR in every investigation dating back to 1997.
IM The Commission expressly found grade 1080 tire cord and tire bead CASWR to be within the same continuum like product as all other CASWR in each previous case in which it examined the question (e.g., CASWR from Brazil 2002; CASWR from China 2014).
m In the Preliminary Determination, the Commission again found grade 1080 tire cord and tire bead CASWR to be within the same continuum like product as all other CASWR after applying its six-
factor test.
m No facts have changed and respondents have offered no new arguments.
1
PUBLIC VERSION
1080 Tire Cord and Tire Bead Account for a Small Share of the U.S.Market and the Increase in Subject Imports
80 tire cord and tire bead accounted for:
f tU.S. merchant market in
of the increase in subject •
ports fro m 2114 to 2016.
Source: ITC Prehrg. Rep. at 0-3-7.