CONTENTS Page Determinations .............................................................................................................................. 1 Views of the Commission ............................................................................................................... 3 Part I: Introduction .............................................................................................................. I-1 Background ................................................................................................................................ I-1 Statutory criteria ....................................................................................................................... I-2 Organization of report ............................................................................................................... I-3 Market summary ....................................................................................................................... I-3 Summary data and data sources ............................................................................................... I-4 Previous and related investigations .......................................................................................... I-4 Nature and extent of sales at LTFV ........................................................................................... I-5 Sales at LTFV .......................................................................................................................... I-5 The subject merchandise .......................................................................................................... I-6 Commerce’s scope ................................................................................................................ I-6 Tariff treatment ..................................................................................................................... I-7 The product ............................................................................................................................... I-7 Description and applications ................................................................................................. I-7 Manufacturing processes ...................................................................................................... I-9 Domestic like product issues ................................................................................................... I-11 Part II: Conditions of competition in the U.S. market........................................................... II-1 U.S. market characteristics....................................................................................................... II-1 U.S. purchasers ......................................................................................................................... II-3 Channels of distribution ........................................................................................................... II-5 Geographic distribution ........................................................................................................... II-5 Supply and demand considerations ......................................................................................... II-8 U.S. supply ............................................................................................................................ II-8 U.S. demand ....................................................................................................................... II-18 i CONTENTS Page Substitutability issues ............................................................................................................. II-26 Lead times .......................................................................................................................... II-26 Knowledge of country sources ........................................................................................... II-27 Factors affecting purchasing decisions............................................................................... II-28 Comparisons of domestic products, subject imports, and nonsubject imports ................ II-33 Comparison of U.S. -produced and imported acetone ...................................................... II-33 Elasticity estimates ................................................................................................................. II-38 U.S. supply elasticity ........................................................................................................... II-38 U.S. demand elasticity ........................................................................................................ II-38 Substitution elasticity ......................................................................................................... II-39 Part III: U.S. producers’ production, shipments, and employment ...................................... III-1 U.S. producers ......................................................................................................................... III-1 U.S. production, capacity, and capacity utilization ................................................................. III-4 Alternative products ............................................................................................................ III-6 U.S. producers’ U.S. shipments and exports ........................................................................... III-7 U.S. producers’ inventories ..................................................................................................... III-8 U.S. producers’ storage capacity ............................................................................................. III-8 U.S. producers’ imports and purchases .................................................................................. III-9 U.S. employment, wages, and productivity .......................................................................... III-11 Part IV: U.S. imports, apparent U.S. consumption, and market shares ............................... IV-1 U.S. importers.......................................................................................................................... IV-1 U.S. imports ............................................................................................................................. IV-2 U.S. importers' storage capacity ............................................................................................. IV-5 Negligibility .............................................................................................................................. IV-6 Cumulation considerations ..................................................................................................... IV-7 Fungibility ............................................................................................................................ IV-7 Geographical markets ....................................................................................................... IV-11 Presence in the market ..................................................................................................... IV-12 ii CONTENTS Page Apparent U.S. consumption .................................................................................................. IV-16 U.S. market shares ................................................................................................................ IV-17 Part V: Pricing data ............................................................................................................. V-1 Factors affecting prices ............................................................................................................ V-1 Raw material costs ............................................................................................................... V-1 Transportation costs to the U.S. market .............................................................................. V-4 U.S. inland transportation costs ........................................................................................... V-4 Pricing practices ....................................................................................................................... V-5 Pricing methods .................................................................................................................... V-5 Sales terms and discounts .................................................................................................. V-12 Price leadership .................................................................................................................. V-13 Price data ................................................................................................................................ V-14 Price trends ......................................................................................................................... V-24 Price comparisons .............................................................................................................. V-28 Lost sales and lost revenue .................................................................................................... V-28 Part VI: Financial experience of U.S. producers .................................................................. VI-1 Background .............................................................................................................................. VI-1 Operations on Acetone ..........................................................................................................