ECONOMIC CONSULTING SERVICES, LLC
BEFORE THE UNITED STATES INTERNATIONAL TRADE COMMISSION
IN THE MATTER OF
C O L D - R O L L E D S T E E L PRODUCTS FROM BRAZIL, CHINA, INDIA, JAPAN, K O R E A , RUSSIA, AND THE UNITED KINGDOM
Inv. No. 701-TA-540-544 and 731-TA-1283-1287, 1289-1290
EXHIBITS TO TESTIMONY OF JIM DOUGAN
VICE PRESIDENT ECONOMIC CONSULTING S E R V I C E S , L L C
May 24, 2016
Washington, D.C.
2 5 0 . 0 0 0
Subject Import Volume Declined Well Before the Petition Was Filed
October 2014:
2013 2014 2015
Source Staff Report at Table IV-11
When Subject Imports Peaked in 2014, U.S. Producers 1
Shipments Were Still 18 Times Greater than Subject Import Volumes
CO c
35,000,000
30,000,000
25,000.000
20,000.000
a i5.ooo.ooo
10,000,000
5.000,000
i U.S. Producers
Nonsubject Imports
l Subject Imports
Source Staff Report at Table C-2 2013 2014 2015
16,000,000
14,000,000
12,000,000
10,000,000
CO c
£> 8,000,000 c ro 3
a 6,000,000
4,000,000
2,000,000
In the Merchant Market, U.S. Producers 1 Shipments Still Dwarfed Subject Imports
i U.S. Producers
Nonsubject Imports
i Subject Imports
Source Staff Report at Table C-1 2013 2014 2015
Inventories of U.S.-Produced Cold-Rolled Steel Were Far Greater than Inventories of Subject Imports
Inventories of Subject Imports Were Miniscule Relative to Merchant Market Consumption
• Inventories of Subject Imports
• Merchant Market Consumption
! ,
2013 2014 2015
Source Staff Report at Table C-1. Table II-5. and Table VII-35.
5
U.S. Producers' Prices Increased as Subject Import Volumes Rose
Sources: Staff Report at Tables V-4, V-5, and V-6; U.S. Census Bureau Official Import Statistics.
U.S. Producers' Prices vs. Hot-Rolled Coil
Sources: Staff Repor ta t Tables V-4. V-5, and V-6: SBB/Platts.
U.S. Producers' Prices vs. Scrap 120
Sources: Staff Report at Tables V-4. V-5. and V-6; SBB/Platts.
<*> to « « *r * * T * iii itt m iii
0 0 0 0 0 0 0 0 0 0 0 0
Sources: Stalf Reportat Tables V-4, V-5. and V-6; SBB/Platts.
U.S. Producers' Prices vs. Coal 120
U.S. Producers' Financial Statements Acknowledge the Importance of Raw Materials in Pricing
• Nucor: "Our contracts include a method of adjusting prices on a periodic basis to reflect changes in the market pricing for steel and/or scrap."
- Nucor, 2015 Annual Report at 23
• AK Steel: "In 2015, approximately 58% of our shipments to contract customers allowed price adjustments during the contract period. Changes in steel prices indices trigger contract price adjustments for about one-fourth of our shipments to contract customers. When adjustments occur, the resulting adjustments typically occur at three- or six-month intervals. In certain circumstances, we adjust contract prices if particular raw material price changes exceed agreed-upon parameters."
- AK Steel, Form 10K 2015 at 2
8
120
U.S. Producers' Prices: Spread Over Hot-Rolled Coil
—•—Product 1 - • - Product 2 Product 3 - « - H R C
a 8 § § § § § §
o o o o o o o o c r
Sources: Staff Repona t Tables V-4 V-5, and V-6: SBB'Plat ts
U.S. Producers' Prices: Spread Over Scrap
Scrap
S 8 R (N t- <M o
o o o o Sources: Staff Report at Tables V-4, V-5, and V-6: SBB/Platts
U.S. Producers' Merchant Market Business Outperformed Their Total Business Throughout the POI
Operating Income as a Percent of Net Sales
2013 2014 2015
Merchant Market 0.7% 3.8% 0.6%
Total Business -1.1% 2.1% -0.8%
Sources: Staff Report at Table C-1 and Table C-2.
10
U.S. Producers Performed Best in the Second Half of 2014
Operating Income as a Percent of Net Sales
2013 1 s t Half 2014
2 n d Half 2014
2015
Merchant Market 0.7% 1.8% 5.8% 0.6%
Total Business -1.1% -0.8% 4.7% -0.8%
Sources: Preliminary Phase Staff Report at Tables C-1 and C-2; Staff Report at Tables C-1 and C-2.
11
U.S. Producers Earned More Profit in 2nd Half 2014 Than in 2013 and 1st Half 2014 Combined
$ 3 0 0 , 0 0 0 Data Labels in $1,000s
Exports to the U.S. are an Insignificant Share of Subject Producers* Shipments
2013 2014 2015
Sources: Staff Reportat Table VII-35, Foreign Producers'Questionnaires.
2016 (Proj.)
2017 (Proj.)
Exports to the United States
i Exports to all other markets
Home market commercial shipments
i Home market internal consumption/transfers
13
140
Cold-Rolled Steel Prices Have Been Increasing Worldwide Since The End Of 2015
120
100
o o II
80
fel l )
a E ai u 0)
Q 60 x •a
•USCRC Germany CRC •France CRC •Spain CRC •Japan CRC Brazil CRC
40
20
Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 Source CRU Data
14