Non-Oriented Electrical Steel from China, Germany, Japan, Korea, Sweden, and Taiwan Investigation Nos. 701-TA-506 and 508 and 731-TA-1238-1243 (Review) Publication 5140 December 2020 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 Julie Duffy, Investigator Daniel Matthews, Industry Analyst Andrew Knipe, Economist Emily Kim, Accountant Cynthia Payne, Statistician Jason Miller, 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 Non-Oriented Electrical Steel from China, Germany, Japan, Korea, Sweden, and Taiwan Investigation Nos. 701-TA-506 and 508 and 731-TA-1238-1243 (Review) Publication 5140 December 2020 CONTENTS Page Determinations ..................................................................................................................... 1 Views of the Commission ....................................................................................................... 3 Part I: Introduction .............................................................................................................. I-1 Background ................................................................................................................................ I-1 The original investigations ..................................................................................................... I-3 Previous and related investigations .......................................................................................... I-4 Summary data ........................................................................................................................... I-6 Statutory criteria ..................................................................................................................... I-10 Organization of report ............................................................................................................. I-12 Commerce’s reviews ............................................................................................................... I-13 Five-year reviews ................................................................................................................. I-13 The subject merchandise ........................................................................................................ I-15 Commerce’s scope .............................................................................................................. I-15 Tariff treatment ................................................................................................................... I-16 The product ............................................................................................................................. I-20 Description and applications ............................................................................................... I-20 Manufacturing processes .................................................................................................... I-23 Domestic like product issues ................................................................................................... I-25 U.S. market participants .......................................................................................................... I-26 U.S. producer ....................................................................................................................... I-26 U.S. importers ...................................................................................................................... I-27 U.S. purchasers .................................................................................................................... I-29 Apparent U.S. consumption and U.S. market shares .............................................................. I-30 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-4 Geographic distribution ........................................................................................................... II-6 Supply and demand considerations ......................................................................................... II-6 U.S. supply ............................................................................................................................ II-6 U.S. demand ....................................................................................................................... II-11 Substitutability issues ............................................................................................................. II-20 Lead times .......................................................................................................................... II-20 Knowledge of country sources ........................................................................................... II-20 Factors affecting purchasing decisions............................................................................... II-21 Comparisons of domestic products, subject imports, and nonsubject imports ................ II-25 Comparison of U.S.-produced and imported NOES ........................................................... II-28 Elasticity estimates ................................................................................................................. II-32 U.S. supply elasticity ........................................................................................................... II-32 U.S. demand elasticity ........................................................................................................ II-32 Substitution elasticity ......................................................................................................... II-33 ii CONTENTS Page Part III: Condition of the U.S. industry ................................................................................ III-1 Overview ................................................................................................................................. III-1 Changes experienced by the industry ................................................................................. III-1 Recent developments .......................................................................................................... III-2 Anticipated changes in operations ...................................................................................... III-3 U.S. production, capacity, and capacity utilization ................................................................. III-4 Constraints on capacity ....................................................................................................... III-6 Alternative products ............................................................................................................... III-7 U.S. producer’s U.S. shipments and exports ........................................................................... III-9 U.S. producer’s inventories ................................................................................................... III-11 U.S. producer’s imports and purchases ................................................................................ III-12 U.S. employment, wages, and productivity .......................................................................... III-12 Financial Experience of U.S. Producers ..................................................................................... III-14 Background ............................................................................................................................ III-14 Operations on NOES .............................................................................................................. III-14 Net sales ............................................................................................................................ III-17 Cost of goods sold and gross profit or (loss) ..................................................................... III-17 SG&A expenses and operating income ............................................................................. III-19 Other expenses and net income ....................................................................................... III-19 Variance analysis ............................................................................................................... III-20 Capital expenditures and research and development expenses .......................................... III-21 Assets and return on assets .................................................................................................. III-22 iii CONTENTS Page Part IV: U.S. imports and the foreign industries .................................................................. IV-1 U.S. imports ............................................................................................................................. IV-1 Overview .............................................................................................................................