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Large Power Transformers from Korea Publication Large Power Transformers from Korea Investigation No. 731-TA-1189 (Review) Publication 4826 September 2018 U.S. International Trade Commission Washington, DC 20436 U.S. International Trade Commission COMMISSIONERS David S. Johanson, Chairman Irving A. Williamson Meredith M. Broadbent Rhonda K. Schmidtlein Jason E. Kearns Catherine DeFilippo Director of Operations Staff assigned Nathanael Comly, Investigator Christopher W. Robinson, Investigator Andrew David, Industry Analyst Cindy Cohen, Economist David Boyland, Accountant Lita David-Harris, Statistician Darlene Smith, Statistical Assistant Karl von Schriltz, Attorney Craig Thomsen, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Large Power Transformers from Korea Investigation No. 731-TA-1189 (Review) Publication 4826 September 2018 CONTENTS Page Determination ................................................................................................................................. 1 Views of the Commission ............................................................................................................... 3 Part I: Introduction ................................................................................................................ I-1 Background ................................................................................................................................ I-1 The original investigations ..................................................................................................... I-2 Related investigations ............................................................................................................... I-2 Summary data ........................................................................................................................... I-2 Statutory criteria and organization of the report ..................................................................... I-5 Statutory criteria ................................................................................................................... I-5 Organization of report ........................................................................................................... I-7 Commerce’s reviews ................................................................................................................. I-7 Administrative reviews .......................................................................................................... I-7 Five-year review .................................................................................................................... I-8 The subject merchandise .......................................................................................................... I-9 Commerce’s scope ................................................................................................................ I-9 Tariff treatment ..................................................................................................................... I-9 The product ............................................................................................................................. I-10 Description and applications ............................................................................................... I-10 Manufacturing processes .................................................................................................... I-22 Domestic like product issues ................................................................................................... I-24 U.S. market participants .......................................................................................................... I-25 U.S. producers ..................................................................................................................... I-25 U.S. importers ...................................................................................................................... I-26 U.S. purchasers .................................................................................................................... I-26 Apparent U.S. consumption and U.S. market shares .............................................................. I-27 i CONTENTS Page Part II: Conditions of competition in the U.S. market ............................................................ II-1 U.S. market characteristics ....................................................................................................... II-1 Channels of distribution ........................................................................................................... II-2 Geographic distribution ........................................................................................................... II-3 Supply and demand considerations ......................................................................................... II-3 U.S. supply ............................................................................................................................ II-3 U.S. demand ......................................................................................................................... II-7 Substitutability issues ............................................................................................................. II-13 Lead times .......................................................................................................................... II-13 Knowledge of country sources ........................................................................................... II-13 Factors affecting purchasing decisions............................................................................... II-14 Comparisons of domestic products, subject imports, and nonsubject imports ................ II-18 Comparison of U.S.-produced and imported LPTs ............................................................. II-18 Elasticity estimates ................................................................................................................. II-21 U.S. supply elasticity ........................................................................................................... II-21 U.S. demand elasticity ........................................................................................................ II-22 Substitution elasticity ......................................................................................................... II-22 Part III: Condition of the U.S. industry ................................................................................. III-1 Overview ................................................................................................................................. III-1 Changes experienced by the industry ................................................................................. III-2 Anticipated changes in operations ...................................................................................... III-3 U.S. production, capacity, and capacity utilization ................................................................. III-3 Constraints on capacity ....................................................................................................... III-5 U.S. producers’ U.S. shipments and exports ........................................................................... III-5 U.S. producers’ inventories ..................................................................................................... III-6 U.S. producers’ imports ........................................................................................................... III-6 U.S. employment, wages, and productivity ............................................................................ III-6 ii CONTENTS Page Part III: Condition of the U.S. industry--Continued Financial experience of U.S. producers ................................................................................. III-15 Background ........................................................................................................................ III-15 Operations on LPTs ............................................................................................................ III-16 Capital expenditures and research and development expenses ...................................... III-20 Assets and return on assets............................................................................................... III-21 Part IV: U.S. imports and the foreign industries ................................................................... IV-1 U.S. imports ............................................................................................................................. IV-1 Overview .............................................................................................................................. IV-1 Imports from subject and nonsubject countries ................................................................. IV-1 U.S. importers’ imports subsequent to March 31, 2018 ........................................................ IV-3 U.S. importers’ inventories ..................................................................................................... IV-3 The industry in Korea .............................................................................................................. IV-3 Overview .............................................................................................................................
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