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U.S. International Trade Commission COMMISSIONERS Deanna Tanner Okun, Chairman Jennifer A. Hillman, Vice Chairman Marcia E. Miller Stephen Koplan Charlotte R. Lane Robert A. Rogowsky Director of Operations Robert G. Carpenter Director of Investigations Robert B. Koopman Director of Economics 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 Steel: Monitoring Developments in the Domestic Industry (Investigation No. TA-204-9) Steel-Consuming Industries: Competitive Conditions With Respect to Steel Safeguard Measures (Investigation No. 332-452) Volume III: Executive Summaries and Investigation No. 332-452 (Report and Appendices) Publication 3632 September 2003 Steel: Monitoring Developments in the Domestic Industry (Investigation No. TA-204-9) This report was principally prepared by Office of Investigations Bonnie J. Noreen, Supervisory Investigator Major Contributors Investigators Fred H. Fischer and Elizabeth A. Haines Economist Joshua M. Levy Financial Analysts John T. Fry, Chandrakant G. Mehta, Mary Pedersen, and Charles Yost Statisticians Steven K. Hudgens and Andrew Rylyk Industry Analysts Dennis Fravel, Karen Taylor, and Karl S. Tsuji With contributions from: Mara Alexander, Statistician Gerry R. Benedick, Economist Marc A. Bernstein, Attorney Cindy E. Cohen, Economist William Gearhart, Attorney Lita David--Harris, Statistician Carolyn Holmes, Statistical Assistant Ken Kozel, Statistical Assistant Harry Lenchitz, Industry Analyst Melissa Rutsch, Intern Lemuel Shields, Statistical Assistant Darlene Smith, Statistical Assistant Norman VanToai, Industry Analyst Loretta Willis, Statistical Assistant Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 Steel--Consuming Industries: Competitive Conditions With Respect to Steel Safeguard Measures (Investigation No. 332--452) This report was principally prepared by Applied Economics Division Catherine DeFilippo,Chief James Fetzer, Project Leader Karl Tsuji, Deputy Project Leader Major Contributors Office of Economics Soamiely Andriamananjara, Edward Balistreri, John Benedetto, Cindy Cohen, Michael Ferrantino, Eric Forden, Russell Hillberry, Mary Peterson, Amelia Preece, Sandra Rivera, Marinos Tsigas, and Saba Zeleke Office of Industries Brian Allen, Larry Brookhart, Gail Burns, John Cutchin, Dennis Fravel, Gerald Houck, Harry Lenchtz, Sharon Greenfield, Deborah McNay, and Karen Taylor Office of Investigations Mara Alexander, Steven Hudgens, Kenneth Kozel, Chandrakant Mehta, and James Stewart Reviewers Arona Butcher, and Mark Paulson Interns Larry Chomsisengphet, Andrew Miller, Matthew Ogburn, Anupama Prattapati, Ben Randol, Audrey Tafoya, Tiffanie Teel, Shakira Van Savage, and Jamie Wateman Supporting assistance was provided by: Cecelia Allen, Diane Bennett, Joyce Prue, Paula Wells, Wanda Tolson, and Zema Tucker With other contributions from: James Brandon, Vincent DeSapio, William Greene, James Lukes, Dennis Luther, Christopher Mapes, Ruben Mata, Josephine Spalding-Masgarha, Heather Sykes, Joann Tortorice, Norman VanToai, Judith--Anne Webster, and Linda White Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 ERRATA SHEET Publication No. 3632 Steel: Monitoring Developments in the Domestic Industry (Investigation TA-204-9) and Steel-Consuming Industries: Competitive Conditions With Respect to Steel Safeguard Measures (Investigation No. 332-452) has been edited since its initial publication. The new release of Publication No. 3632 reflect changes in page numbering and the tables of contents only. There are no changes to the data or subject matter of the publication. ABBREVIATED TABLE OF CONTENTS Publication 3632 Volume I: Steel: Monitoring Developments In The Domestic Industry Investigation No. TA-204-9 Executive Summaries INTRODUCTION AND GENERAL OVERVIEW Part I: Introduction Part II: U.S. market participants Part III: Manufacturing processes, product descriptions, and uses Part IV: Global developments (1999-2002) Part V: U.S. developments (1999-2002) Part VI: Current market factors CARBON AND ALLOY FLAT STEEL Part I: Overview (flat steel) Part II: Industry and market data (certain carbon and alloy flat-rolled steel) Part III: Industry and Market Data (tin) Part IV: Adjustment efforts CARBON AND ALLOY LONG STEEL Part I: Overview (long steel) Part II: Industry and market data (hot bar) Part III: Industry and Market Data (cold bar) Part IV: Industry and Market Data (rebar) Part V: Adjustment efforts Volume II: Monitoring Developments In The Domestic Industry Investigation No. TA-204-9 (Part II) CARBON AND ALLOY TUBULAR STEEL Part I: Overview (tubular steel) Part II: Industry and market data (welded) Part III: Industry and Market Data (fittings) Part IV: Adjustment efforts STAINLESS STEEL Part I: Overview (stainless steel) Part II: Industry and market data (stainless bar) Part III: Industry and Market Data (stainless rod) Part IV: Industry and Market Data (stainless wire) Part V: Adjustment efforts APPENDIXES Federal Register notices Hearing witnesses Summary tables U.S. producers’ positions with respect to the section 203 relief Additional carbon and alloy flat steel tables The foreign industries Public price data Volume III: Steel-Consuming Industries: Competitive Conditions With Respect To Steel Safeguard Measures, Investigation No. 332-452 Executive Summaries Chapter 1. Introduction Chapter 2. Reported Impact of Safeguard Measures on Steel-Consuming Industries Chapter 3. Ports and Related-Service Providers: Recent Changes in Competitive Conditions and the Effects of Safeguard Remedies Chapter 4. Simulated Impact of the Safeguard Measures Chapter 5. The Possible Future Impact of Continuing or Terminating Safeguard Measures Appendices Request letter and Federal Register notice Description of steel products subject to the section 203 safeguard measures Hearing calendar Market characteristics and the potential effect of the safeguard measures on steel-consuming industries Financial tables Technical appendix on employment analysis Technical appendix on modeling issues Investigation of “ITC Questionnaire Tip Sheet” EXECUTIVE SUMMARY INVESTIGATION NO. 332-452 iii EXECUTIVE SUMMARY Introduction Following receipt of a request on March 18, 2003, from the U.S. House of Representatives, Committee on Ways and Means (Committee), the U.S. International Trade Commission (USITC or Commission) instituted investigation No. 332-452, Steel-Consuming Industries: Competitive Conditions with Respect to Steel Safeguard Measures, pursuant to section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)).1 As requested by the Committee, the investigation’s analysis was conducted along sectoral lines, in order to assess the impact of the steel safeguard measures on differing segments of the U.S. manufacturing sector and to focus on steel products subject to the President’s safeguard measures.2 The report addresses the effects of the safeguard measures on steel-consuming industries and on ports and their related services including the following competitive conditions: • changes in employment, wages, profitability, sales, productivity, and capital investment of steel-consuming industries; • an examination of the reported effects of the safeguard measures on factors such as prices for steel paid by consuming industries, steel shortages and availability, the ability of steel consumers to obtain required products or quality specifications, lead and delivery times, contract abrogation, sourcing of finished parts from overseas by customers of steel-consuming industries, and the relocation or shift of U.S. downstream production to foreign plants or facilities; • the impact of international competitive factors, such as relative differences in steel costs to foreign steel-consuming industries not subject to the safeguard measures, and on steel consumers’ exports and imports of steel-containing products; • an examination of shifts in sourcing patterns in the United States, i.e., how much steel was purchased from domestic steel producers by domestic steel-consuming industries before the safeguard action, and how this sourcing has changed following the implementation of the safeguard measures; and 1 On Mar. 5, 2003, the Commission instituted an investigation under section 204(a) of the Trade Act of 1974 (Inv. No. TA-204-9) in order to prepare a report to the President and the Congress on results of monitoring developments relating to the domestic steel industry since the President imposed tariffs and tariff-rate quotas on imports of certain steel products (68 FR 12380, Mar. 14, 2003). In its letter, the Committee requests that the Commission provide its report in this section 332 investigation and its monitoring report in the section 204(a) investigation in a single document. In a Mar. 27, 2003 letter to the Commission, the Office of the United States Trade Representative (USTR) referenced the format requested by the Committee and informed the Commission that USTR has no objection to receiving the section 204(a)(2) report and the section 332(g) report in a single document. A copy of the request letter from the Committee and the Commission’s Federal Register notice of institution of this investigation are contained in appendix A. 2 The President imposed import relief in the form of tariffs and tariff-rate quotas on imports of certain