Pure and Alloy Magnesium from Canada and Pure Magnesium from China

Pure and Alloy Magnesium From Canada and Pure Magnesium From China Investigation Nos. 701-TA-309-A-B and 731-TA-696 (Second Review) Publication 3859 July 2006 U.S. International Trade Commission COMMISSIONERS Daniel R. Pearson, Chairman Shara L. Aranoff, Vice Chairman Jennifer A. Hillman Stephen Koplan Deanna Tanner Okun Charlotte R. Lane Robert A. Rogowsky Director of Operations Staff assigned Fred Fischer, Investigator Jeremy Wise, Investigator Vincent DeSapio, Industry Analyst Robert Hughes, Economist Ioana Mic, Economist Charles Yost, Accountant Jonathan Engler, Attorney Peter Sultan, Attorney Steven Hudgens, Statistician George Deyman, 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 Pure and Alloy Magnesium From Canada and Pure Magnesium From China Investigation Nos. 701-TA-309-A-B and 731-TA-696 (Second Review) Publication 3859 July 2006 Inv. No. 701-TA-309-A-B and 731-TA-696 (Second Review) Pure and Alloy Magnesium CONTENTS Page Determinations and Views of the Commission ...................................... 1 Determinations ............................................................. 1 Views of the Commission..................................................... 3 Views of Chairman Pearson and Commissioners Okun and Lane ................... 6 Views of Vice Chairman Aranoff and Commissioners Hillman and Koplan ........... 34 Part I: Introduction and overview ................................................ I-1 Background ................................................................ I-1 Pure and alloy magnesium from Canada (second review) ......................... I-1 Pure magnesium from China (second review) .................................. I-2 The original investigations................................................. I-4 The initial five-year reviews ................................................ I-5 Other Title VII investigations ............................................... I-6 Section 332 investigations ................................................. I-6 Summary data from the original investigations and reviews ....................... I-8 Statutory criteria and organization of the report................................. I-9 Commerce’s second five-year reviews ........................................... I-10 Pure and alloy magnesium from Canada ...................................... I-10 Pure magnesium from China................................................ I-11 Commerce’s initial five-year reviews ............................................ I-11 Pure and alloy magnesium from Canada ...................................... I-11 Pure magnesium from China................................................ I-11 Commerce’s administrative and new shipper reviews ............................... I-12 Pure and alloy magnesium from Canada ...................................... I-12 Pure magnesium from China................................................ I-12 Distribution of Continued Dumping and Subsidy Offset Act funds to affected domestic producers ........................................................... I-13 The subject products ......................................................... I-15 Canada................................................................. I-15 China.................................................................. I-15 U.S. tariff treatment ...................................................... I-16 Description and uses ...................................................... I-16 Manufacturing process .................................................... I-21 Domestic like product issues ................................................... I-25 The Commission’s previous like product determinations concerning magnesium from Canada ............................................................. I-25 The Commission’s previous like product determinations concerning magnesium from China .............................................................. I-26 Pure vs. alloy magnesium.................................................. I-27 Primary vs. secondary magnesium ........................................... I-30 Cast vs. granular magnesium ............................................... I-31 U.S. market participants ...................................................... I-32 U.S. producers........................................................... I-32 U.S. importers........................................................... I-33 U.S. purchasers .......................................................... I-34 Apparent U.S. consumption and market shares..................................... I-34 i Inv. No. 701-TA-309-A-B and 731-TA-696 (Second Review) Pure and Alloy Magnesium CONTENTS–Continued Page Part II: Conditions of competition in the U.S. market ............................... II-1 U.S. market segments and channels of distribution.................................. II-1 Pure vs. alloy magnesium.................................................. II-1 Off-spec vs. pure and/or alloy magnesium ..................................... II-2 Geographic markets ...................................................... II-2 Supply and demand considerations .............................................. II-2 U.S. supply ............................................................. II-2 U.S. demand ............................................................ II-5 Substitutability issues ........................................................ II-7 Factors affecting purchasing decisions........................................ II-8 Comparisons of domestic products and subject imports ........................... II-10 Comparisons of U.S. product and subject imports with nonsubject imports ........... II-15 Elasticity estimates .......................................................... II-16 U.S. supply elasticity ..................................................... II-16 Subject import supply elasticity ............................................. II-16 U.S. demand elasticity .................................................... II-16 Substitution elasticity ..................................................... II-16 Part III: Condition of the U.S. industry ........................................... III-1 U.S. producers’ capacity, production, and capacity utilization ......................... III-3 U.S. producers’ domestic shipments, company transfers, and export shipments ........... III-3 U.S. producers’ imports, purchases, and related-party considerations ................... III-4 U.S. producers’ inventories.................................................... III-4 U.S. producers’ employment, wages, and productivity ............................... III-5 Financial experience of U.S. producers........................................... III-5 Background ............................................................. III-5 Operations on pure and alloy magnesium...................................... III-6 Tolling of alloy magnesium ................................................ III-9 Value added ............................................................ III-9 Variance analysis ........................................................ III-9 Capital expenditures and research and development expenses ...................... III-10 Assets and return on investment ............................................. III-10 Part IV: U.S. imports and the industries in Canada and China ........................ IV-1 U.S. imports................................................................ IV-1 U.S. producers’ imports....................................................... IV-2 U.S. importers’ shipments..................................................... IV-2 U.S. importers’ inventories.................................................... IV-2 U.S. importers’ current orders.................................................. IV-2 The industry in Canada ....................................................... IV-3 Norsk Hydro............................................................ IV-4 Magnola ............................................................... IV-5 Timminco Canada........................................................ IV-6 Other Canadian projects................................................... IV-6 The industry in China ........................................................ IV-6 Antidumping duty orders in third-country markets .................................. IV-9 The world market ........................................................... IV-9 ii Inv. No. 701-TA-309-A-B and 731-TA-696 (Second Review) Pure and Alloy Magnesium CONTENTS–Continued Page Part V: Pricing and related information ........................................... V-1 Factors affecting pricing ...................................................... V-1 Transportation costs to the United States...................................... V-1 U.S. inland transportation.................................................. V-1 Exchange rates.............................................................. V-1 Pricing practices ............................................................ V-2 Pricing methods ......................................................... V-3 Sales terms and discounts .................................................. V-3 Price data.................................................................. V-4 Price trends and comparisons..............................................

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