Polyvinyl Alcohol from China and Japan Investigation Nos. 731-TA-1014 and 1016 (Third Review) Publication 5173 March 2021 U.S. International Trade Commission Washington, DC 20436 U.S. International Trade Commission COMMISSIONERS Jason E. Kearns, Chair Randolph J. Stayin, Vice Chair David S. Johanson Rhonda K. Schmidtlein Amy A. Karpel Catherine Defilippo Director of Operations Staffassigned Alejandro Orozco, Investigator Karl Tsuji, Industry Analyst Hau Nguyen, Economist Zahra Bekk:al, Accountant Charles Yost, Accountant Darlene Smith, Statistician Brian Allen, Attorney Douglas Corkran, 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 Polyvinyl Alcohol from China and Japan Investigation Nos. 731-TA-1014 and 1016 (Third Review) Publication 5173 March 2021 CONTENTS Page Determinations .................................................................................................................... 1 Views of the Commission ...................................................................................................... 3 Part I: Introduction .............................................................................................................. I-1 Background ................................................................................................................................ I-1 The original investigations ..................................................................................................... I-3 Litigation ................................................................................................................................ I-4 First five-year reviews ........................................................................................................... I-4 Second five-year reviews ....................................................................................................... I-5 Previous and related investigations .......................................................................................... I-6 Litigation in related investigations ........................................................................................ I-7 Summary data ........................................................................................................................... I-8 Statutory criteria ..................................................................................................................... I-13 Organization of report ............................................................................................................. I-15 Commerce’s reviews ............................................................................................................... I-16 Administrative reviews ........................................................................................................ I-16 Changed circumstances reviews ......................................................................................... I-17 Scope rulings ........................................................................................................................ I-17 Five-year reviews ................................................................................................................. I-17 The subject merchandise ........................................................................................................ I-19 Commerce’s scope .............................................................................................................. I-19 Tariff treatment ................................................................................................................... I-20 The product ............................................................................................................................. I-21 Description and applications ............................................................................................... I-21 Manufacturing processes .................................................................................................... I-24 Domestic like product issues ................................................................................................... I-26 i CONTENTS Page Part I: Introduction--Continued U.S. market participants .......................................................................................................... I-27 U.S. producers ..................................................................................................................... I-27 U.S. importers ...................................................................................................................... I-30 U.S. purchasers .................................................................................................................... I-32 Apparent U.S. consumption and market shares ..................................................................... I-32 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-4 U.S. supply ............................................................................................................................ II-4 U.S. demand ......................................................................................................................... II-8 Substitutability issues ............................................................................................................. II-11 Lead times .......................................................................................................................... II-11 Knowledge of country sources ........................................................................................... II-11 Factors affecting purchasing decisions............................................................................... II-12 Comparisons of domestic products, subject imports, and nonsubject imports ................ II-16 Comparison of U.S.-produced and imported PVA.............................................................. II-19 Elasticity estimates ................................................................................................................. II-21 U.S. supply elasticity ........................................................................................................... II-21 U.S. demand elasticity ........................................................................................................ II-21 Substitution elasticity ......................................................................................................... II-21 ii CONTENTS Page Part III: Condition of the U.S. industry ................................................................................ III-1 Overview ................................................................................................................................. III-1 Changes experienced by the industry ................................................................................. III-1 Anticipated changes in operations ...................................................................................... III-3 Impact of the COVID-19 pandemic ...................................................................................... III-4 U.S. production, capacity, and capacity utilization ................................................................. III-5 Constraints on capacity ....................................................................................................... III-6 Alternative products ............................................................................................................ III-7 Toll production .................................................................................................................... III-8 Foreign trade zone............................................................................................................... III-8 U.S. producers’ U.S. shipments and exports ........................................................................... III-9 U.S. producers’ inventories ................................................................................................... III-12 U.S. producers’ imports and purchases ................................................................................ III-13 U.S. employment, wages, and productivity .......................................................................... III-15 Financial experience of U.S. producers ................................................................................. III-16 Background ........................................................................................................................ III-16 Operations on PVA ............................................................................................................ III-16 Net sales ...........................................................................................................................