Electrical Conductor Aluminum Redraw Rods from Venezuela, Invs. 701-TA-287 and 731-TA-378 (Remand)

CERTAIN ELECTRICAL CONDUCTOR ALUMINUM REDRAW ROD FROM VENEZUELA Determination of the Commission In Investigation No. 701-TA-287 (Preliminary) Under the Tariff Act of 1930, Together With the Information Obtained In the Investigation USITC PUBLICATION 2008 AUGUST 1987 Determination of the Commission In Investigation No. 731-TA-378 (Preliminary) Under the Tariff Act of 1930, Together With the Information Obtained In the Investigations United States International Trade Commission / Washington, DC 20436 UNITED STATES INTERNATIONAL TRADE COMMISSION COMMISSIONERS Susan Liebeler, Chairman Anne E. Brunsdale, Vice Chairman Alfred E. Eckes Seeley G. Lodwick David B. Rohr Staff assigned: Brian Walters, Office of Investigations Deborah McNay, Office of Industries Bill Shpiece, Office of Economics Chand Mehta, Office of Investigations John Kingery, Office of the General Counsel Robert Eninger, Supervisory Investigator Address all communications to Kenneth R. Mason, Secretary to the Commission United States International Trade Commission Washington, DC 20436 i CONTENTS Determinations of the omnjssion--------------- Views of the camnission--------------------Infcmnation obtained in the investigations: Introductinn------------------------'Ihe product: 1 3 A-1 Description ard uses:------------------ A-1 Marrufacturin;J prooessseses------------------ A-3 U.S. tariff treatment------------------ A-4 Nature an:i extent of alleged unfair illp:>rts---------- A-5 Allegedly subsidized .ilrg;x)rts,--------------- A-5 Alleged sales at Ill'PV------------------ A-5 'Ihe producers in Venezuela-------------·-----· A-6 U.S. producers------------------· A-10 U.S. illp:>rters,---------------------- A-13 'Ihe u. s. market: Channels of distribltion---------------- A-13 Apparent U.S. oonsunpti A-14 OJnsideration of the question of a ·reasonable in:lication of material injury: U.S. production, capacity, ard capacity utilization---·--- A-14 u.s. prcducers' danestic shipnents ard i.ntrac::arpany transfers- A-15 U.S. producers' exports,----------------- A-15 U.S. producers' inventories,--------------- A-16 u.s. producers' inp:>rts ard p.1rchases of ilrported aluminum rod- A-17 Employment ard wages:----------------- A-17 ·Financial experience of U.S. producers,----------- A-20 . Investment in property, plant, an:i equipnent.------- A-20 capital experxlitures--------------- A-23 :ReSearch ard developne.nt-------------- A-24 ln'pact of hrp:,rts on U. s. producers' gi:'CMth, investment, an:i ability to raise capital----------------■ A-24 Consideration of the question of a :reasonable in:lication of threat of material injury--· ------------------- A-25 U.S. inventories of aluminum :rod fran Venezuela A-26 '1be potential for "product-shiftin:J'' · A-26 Consideration of the question of the causal relationship between . alleged material injury ard btp:)rts fran Venezuela: U.S. inports-------------------- A-27 Market penetratia,----------·--------- A-27 Prices-,---------------------- A~Jo Sales markets .. -------------,--- A-31 Transportation costs:------------------- A-34 Questionnaire price data --------· ·----- A-35 Excharge rates--- ____________,_ ·• --- --- A-43 Lost sales/lost :revenues,-----------· . A-44 Apperw.x A. Federal Register notices-,---·------------ B-1 Appem.ix B. Witnesses awearil'Y:J at the conference------- B-7 Apperw.x c. Alumirnnn :rod: production, capacity, capacity utilization, domestic shipnents, intraa:mpany transfers, an:i total domestic shipnents, by f.inn.s-----, ------ B-9 Appemix D. U.S. wire an:i cable shipnents an:i inp:,rts for consunption- B-13 Appeix1ix E. Sources of alumirnnn prices--------------- B-17 ii ii CONl'Em'S Figures 1. Average Metals Week u. s. market prioe for alumiirum, al'Xl the average 3-m:mth-option aluminum prioe traded on the I.omon Metal Exc:ilarge, by oonths, January 1984-June 1987------- A-32 2. U.S. producers' net fabrication prices for product 1, by shipnent size al'Xl by quarters, January 1984-u'une 1987----- A-40 3. u. s. producers' net fabrication prices for product 2, by shipnent size am by quarters, January 1984-u'une 1987----- A-40 4. u. s. illp:>rt:ers' net fabrication prices for product 1, by shipnent size al'Xl by quarters, January 1984-u'une 1987----- A-42 Tables 1. Aluminum rod: Venezuelan production, capacity, capacity utilization, danestic shipnents, e,cport shipnents to the United states, arxi exports to third oamtries, by firms, 1984-86, interim 1986, al'Xl interim 1987------------------- A-9 2. Aluminum rod: u. s. producers, their shares of total danestic shipnents, am mill locations, by firms, 1986,-------- A-11 3. Aluminum rod: u.s. producers' dcnestic shipnents arxi intracxmpany transfers, imports for COl1$Ullption, arxi apparent U.S. CX>llSUllption, 1984-86, January-March 1986, arxi January-March 1987------ A-14 4. Aluminum rod: U.S. production, capacity, arxi capacity utiliza- tion, 1984-86, January-March 1986, arxi Jarrum:y-Mardl 1987---- A-15 5. Aluminum rod: u.s. producers' danestic shipnents, intrac:x:n:pn:,y transfers, am total dc:mestic shipnents, 1984-86, January-March 1986, arxi January-March 1987--------------- A-16 6. Al\Dllinum rod: U.S. producers' imports f:can Venezuela, arxi p.n:dlases of foreign-produced aluminum rod, by firms, 1984-86, Januaxy-March 1986, ard Januaey-March 1987--------------- A-18 7. Al\Dllinum rod: Average number of producticn arxi related 'W0X'kers producirg aluminum rod, hours wrked, wages arxi t.ota1 o::111£eiisation paid to such employees, arxi labor productivity, hoorly oarpensation, am unit labor oosts, 1984-86, January-March 1986, and Januaxy-March 1987------------------------- A-19 a. Incane-am-loss experience of u .s. producers on their operations producirg aluminum rod, aooounti.n; years 1984-86, am interim periods emed Mar. 31, 1986, and Mar. 31, 1987-------- A-21 9. selected in:x:me-am-loss data of u.s. producers on their operations producin; aluminum rod, by fll.'DIS, aooountirg years 1984-86, am interim periods erced Mar. 31, 1986, arxi Mar. 31, 1987--- A-22 10. Investment in property, plant, arxi equipment arxi capital experrlitures by 6 U.S. producers of aluminum rod, aooountirg years 1984-86, am interim periods erced Mar. 31, 1986, arxi Mar. 31, 1987--- A-23 11. Aluminum rod: U.S. inp:,rts for OOilSUllption, by principal sources, 1984-86, January-March 1986, am January-March 1987------ A-28 iii iii CDNTENTS Tables-continued 12. Al.umimnn rod: ~ u.s. oansumption, iqx>rts, am market penetration, calculated on the basis of quantity am value, 1984-86, Januaey-March 1986, am Jarruaey-Marc:h 1987---,-- A-29 13. Al.umimnn rod: Open market sales transaction practices by U.S. producers am inp:>rters, by types, 1984-86,--------,- A-34 14. Al.umimnn rod: weighted-average net delivered sellin:J prices of product 1 (diameter of 0.375 inch) :reported by U.S. producers am ill'lporters of Venezuelan aluminum rod sold to unrelated p..irchasers, am average margins of urnersel.lin:J (oversellin:J) by the subject iqx>rts, by shipnent size am by quarters, January 1984-June 1987------------------ A-37 15. Aluminum rod: weighted-average net delivered sellin:J prices of product 2 (diameter of 0.470 inch) reported by U.S. producers am ilnporters of Venezuelan aluminum rod sold to unrelated p..irchasers, am average margins of urnersel.lin:J (oversellirq) by the subject inports, by shipnent size arxi by quarters, Jamary 1984-u\lne 1987------------------ A-38 16. Imexes of the naninal am real exc:.han]e rates between the u. s. dollar am the Venezuelan bolivar, am imexes of producer prices in the united states am Venezuela, by quarters, January 1984-March 1987-------------------- A-44 c-1. Aluminum rod: u.s. production, capacity, am capacity utilization, by fil:ms, 1984-86, January-March 1986, arxi January-March 1987- B-10 c-2. Aluminum rod: U.S. producers' danestic shipnents, intracxmpany transfers, arxi total daoestic shipnents, by finns, 1984-86, January-March 1986, arxi January-March 1987--------- B-11 Ir1. Aluminum wire am cable: u .s. producers' danestic shipnents am u. s. illports for oansumptim, 1984-86------------- B-14 1r2. Aluminum wire: U.S • .i.lllports for consumption, by principal sources, 1984-86, Jaruary-May 1986, am Jarruaey-May 1901------- B-15 Ir3. Aluminum cable: U.S • .i.lllports for oansumptim, by principal sources, 1984-86, Januaey-May 1986, am Januai:y-May 1901------- B-16 Note.-Infonnation that would reveal the confidential operations of imividual concerns may not be p.lblished arxi therefore has been deleted frail this report. such deletions are in:licated by asterisks. iv 1 UNITED STATES INTERNATIONAL TRADE cnfflSSION Washington, DC Investigations Nos. 701-TA-287 (Preliminary) aJ'X} 731-TA-378 (Preliminary) CERrAIN EI.ECr.RICAL a:NIXJ~ AIIJMIN0M REmAW ROD m:M VENlmJEIA Y Deter.minations On the basis of the record y developed in investigation No. 701-TA-287 (Preliminary) , the camni ssion unanimously dete:rmi.nes~· y plrsuant to section 703(a) of the Tariff Act of 1930 (19 u.s.c. { 167lb(a.)); that there is a reasonable imication that an in:iustry in the united . states is materially injured or threatened with material injury by reason of il1p)rts frail Venezuela of electrical cxniuctor aluminum redzaw :red, provided. for in item 618.15 of the Tariff .· Sdledul.es of the united states, that are ··alleged to be subsidized by the Government of Venezuela. on the basis of the record y developed in investigation No. 731-'FA-378 (Preliminary), ·· the ('hmmissim unanimously determines, y p.i:rsuant to section 733(a) of the Tariff Act of 1930 (19 u.s.c. { l673b(a)), that there is a reasonable imication that an in:iustry in the United states is materially · injured or threatened with material injury by mascri of il1p)rts frail Venezuela . . . of electrical ocn:tuctor aluminum redraw :rod, provided for in ital 618 .15 of the Tariff Sdledules of the united States, · that are alleged to be sold in ·the united states at less than fair value (IrrFV) • y For p.u:poses of these investigations the tem "electrical ccn:iuctor alumimmt redraw rod" refers to wrought reds of aluminum which are electrically ocnluctive arxi contain not less than 99 percent of aluminum by weight. y '!be record is defined in sec. 207.2(i) of the camnission's Rules of Practice am Procedure (19 CFR { 201.2 (i)). y <llairman Li.ebeler not participatin;;J. 2 2 Backgrourd on July 14, 1987, ·petitions -were filed with the camn.ission and the Department of caranerce by Southwire catpany, carro11ton, Get>rgia, allegirxJ that an imustxy in the United states is materially injured or threatened with material injury by reascn of subsidized imports of electrical oomuctor aluminum redraw red tran Venezuela and by reason of IlI'PV inports of electrical cxniuctor aluminum rairaw .rod fran Venezuela. J.coordin;Jly, effective July 14, 1987, the 0::mni ssion Jnstituted preliminazy ca.mtervailirxJ duty ard antidunpirxJ investigations to .~ whether there is a reasonable imication that an~ in the United states is materially injured, or is th.1;:eatened with material injin:y, .o;- . the establishment of an imustry in the United states is materially retan:Jed, by reason of inports of such merchanilse into the united states. Notice of the institution of the o::amn:ission's investigation ardof a ?]blic conferen::e to be held in .oomection therewith was given by postin;J · copies .of the notice in the (?ffice of the secretary, u.s. Internatiaial Trade Ccmnission, washi.n:;atan, Dq, and by plblishm;J the notice in the Federal Register of July 22, 1987 (52 F.R. 27593). '!be CXll'lference was held in Washin;Jtan, X,:X::, on August 6, 1987, and all .persons who requested the ORX>rtunity ~ permitted to aR')88.r in person or by counsel. 3 VIEWS OF THE C<H1ISSION 1/ We determine that there is a reasonable indication that: an industry in the United States is miiterially injured, or thr.eatened with material inj1.,1ry, by reason of imports of electrical conductor aluminum redraw rod from Venezuela that are allegedly subsidized and, allegedly · sold i.n the Uni tad States at less than fair value (LTFV) . . Like Product/Domestic Industry The Commission is requirod to make its "like product" and "domestic industry" determination on ,a ca.;e-~y'.-case basis. ?J The imported product under investigation is electrical conductor aluminum redraw rod designed for use in the manufacture of electrical conductor wire and strand,!d cable. ~/ !/ Chairman U.ebeler did not tako part in these d,~terminations. 2/ Section 771(4)(A) of the Tariff Act of 1930 defines "industry" as the "domestic producers as a whole of a like product, or those producers whose collective output of the like product constitutes a · major proporl:iol"I t>t' ' the total domestic production of that product . . , .11 19 U..S.C. § •167Z(4)(A) ·. .''like product" is defined as "a product which is like, or i.n the absence of like, · most similar in characteristics and us€is with th,~ article s.ubject to investigation." SQction 771(l0); 19 lJ.S.C. § L6/J(l0). [/ Antidumping Petition at 22. The Departino.nt of Commerce's notice of investigation defines the scope of investigation as certain electrical conductor· aluminum redraw rod from Venezuela which j s electrically conductive and contains not less than 99 percent aluminum by wei<~ht as provided for in TSUSA item numbers 618.1520 and 618.1540. 52 Fed. Reg. 29558 (Aug. 10, 1987). 4 Petiti.oner argues that the domestic like product is exclusively electrical conductor aluminum redraw rod ("EC rod") and that; aluminum redraw rod intended for mechanical, nonelectr·ical uses ("mechanical rod"), such as fencing and scro.ening, should not be included within the like product definition. 1.1 According to petitioner, the primary distinguishing physical characteristic of EC and 1nechanical rod .,is th.e high degree of purity required of l:::C rod in order to achieve optimal electrical conductivity. EC rod must be 99 percent or greater aluminum by weight, §/ while mechanical rod, which is often made from scrap, has a higher tlloy content. Respondents suggest th~t the like product include both EC and mechanical §.Irod. They claim that 4 !llclljor producers other than Southwire can and do switch back and forth bet.\Afeen EC and mechanical rod production, and at a . 71 "moderate cost. 11 - Respp;ngents acknowledge that there are distinct uses Y . AntidLU11pi ng Petition at 22. Petitioner's Post-Conference Brief at 5-8. 5/ Report of the Commis~ion ("Report") . at A-l; Petitionf.lr' s Post-,,Conference Brief at 6. §./ Transcdpt of the conference ( 11 Tr.ll) at 109. Respondents' Post-Conference Brief, E>.eh, 1 at 30. ?./ Tr. -at 109. 5 for the two prod1Jcts; _!!/ howc!ver, they ·offE!r the ' analogy oif car tires in different sizes. One car may neP.d a 14-inch tire ahd ·another a 15-inch tire, and, although the two tires are not interchangeable, they aremant.ifactured in 9/ the same manner &nd are one like product. - We find one like product consisting of EC rod. Both petitioners and respondents agree that there &re important physical differences between the EC and mechanical rod. Also, there is very limited overlap in rod uses as EC rod could be used for some limited mechanical applications, but it is almost never used in such a manner. lO/ Mechanical rod is not acceptab]e for electrical lli uses. - With respect to the manufacturing characteristics, there is i I evidence that a mi 11 designed to produce EC rod cannot ~ converted to produce mechanical rod because EC rod rolling mills are not able to apply the force 12/ necessary to roll mechanical rod alloys. -- However, it remains unclear as to the ease or cost of switching from mechanical to EC rod producti<>n and back again. Based on these important differences in physical characteristics and uses, we determine that mechanical rod is not part of th~ like product. ii ~~- at 133-34. In Venezuela, mechanical rod is apparently used to some extent for electrical conduction. Jd. at 132. ii Tr. at 134. 10/ Petitioner Southwire states that less than one percent of its EC rod is used for mechanical purposes . Tr. at 30. ' !!I Tr. at 132~ Thus, respondent's car ·tire analogy is not apt. Unlike EC and mechan·ical rod, tires of different sizes perform · the same function, albeit on wheel rims of different sizes, and are manufactured in th'e same manner. _!~/ Report at A-4. 6 6 Therefore, the domestic indt1stry consists <>f the domestic facUities · of the seven ·companies that 1:>'roduced EC rod in the United States during the period of · investigation. ·131 · Co.ridi ~ion of tho Domestic Industr,1 In determining the condition of the domestic industry, the Commjssion considers, among other factors, domestic consumption, U.S. production, capacity, capacity utilization, shipments, employment, wages, and prof i tab i .li ty . JY Apparent u.s; consumption of EC rod dropped 18 percent from 1984 to 1986. Consumption -Fell 10 percent during January--March 1987 compared with the same peri_od of 1986. ! 5/ U.S. production declined from 363,275 tons in 1984 to 279,173 tons in 1986, a drop of 23 percent. During January-March 1987 production fell 19 percent to 70,243 tons from 86,648 tons during January-March 1986. Average capacity to produce EC rod fell from 513,953 tons in 1984 to 503,786 in 1986. During interim period 1987 average capacity dropped 15 percent compared to ,U/ For purposes . of these preliminary investigations; we have determined not to exclude any domestic pro~ucers from the dom'-lstic industry as llralated parties" under section 771(4){8), 19 U.S·,.C. § 1677(4}(8). If .these investigations return to th~ Commission for final 'invP.stigations~ we will fully explore this issue. JY 19 lJ.S.C. § 1677(7)(C)(iii). 15/ Report at A-·14, table 3. 7 7 · . . d 1986 161interim per10 . ·- Capacity uti.lization remained low throughout the __17/ period. Total domestic shipments dropped from 367, !:>30 to11s in 1984 to 305,023 tons in 1985 to 279,170 tons in 1986 . .!J!/ Shipments continued to drop in the interim 1986-1987 comparison from 86,269 tons to 72,581 tons. The number of production and related workers employed by U.S. producers of EC rod fell fr6m 188 in 1984 to 147 in 1986, a decline of 22 percent. There was an additional 7 percent decrease in employment in the .1986--1987 interim comparison. Hours worked, and total · compensation paid to these workers followed the same declining trend as the other indicators. 191 However, productivity improved markedly. Six firms, accounting for virtually all domestic production of EC rod in 1986, furnished income-and-loss data on their operations producing EC rod. • Total net sales (including both intracompany transfors and merchant market sales) foll from $317.4 million in 1984 to $233.5 million in L986. 201 -----·----16/ Id. at A-14, A-15, table 4. 17/ Id. Capacity utilization has moved downward from 67 percent in 1984, to 56 percent in 1985 and 55 percent in 1986. Capacity utilization was 63 percent in the interim 1987 period, compared to 65 percent in interim 1986. 18/ Id. at A-15, A-16, table 5. 19/ Id. at A-17, A-19, table 7. 20/ A majority of EC rod is transferred in intracompany captive markets. This proportion fell from 79 percent in 1984 to 70 percent in 1986, Report at A-15. The merchant market -consists of·sales between unrelated compal'lies, whether or not the purchaser is another integrated producer. Respondents state that the merchant and captive markets are equivalent and must be viewed as a whole. Respondents' Post-Conference Bdef, Exh. lat 31-32. 8 8 Sales fell 8 percent in interim 1987 compared to interim 1986. ?1/ U.S. producers report~d operating losses of $1.1 million (-0.5 percent of net sales) in 1985 compared to an operating income of $16.0 million (5.0 percent of net sales) in 1984. In 1986, U.S. firms earned an aggregate operating income of $8.4 million, equivalent to 3.6 percent of Mt salP.s . .'?:...?/ The operating income margin was 1.4 percent in interim 1987 compared to 0.7 percent in interim 1986. Thus, there was a distinct recovC!ry in operating income in 1986 and early 1987 over lowl98o levels. · However, net operating income in 1986 and interil1l 1987 was much lower in absolutC! tC!rms and as compared to net sales (less than 2 percE."nt of net sales) than it was in 1984. Based on the indications of poor perforinance discussed above, we find a reasonable indication that the domestic industry is materially injured. 231 Reasonable Indication of Material Injury by Reason of Allegedly Unfairly Traded Imports In determining whether there is a reasonable indication of material injury by reason of alleg<!qly unfairly traded EC rod from V<mezuela, the statute directs the Commission to consider the volume of imports, their 21/ Id. at A..:.20, A-21, table 8 . Net trade sales dropped 27 percent from $99.8 million in 1984 to $73.1 million in 1985, then rose to $95.6 million in 1986. Such ' sales increased by 8 percent to $27. 9 mi 11 ion in interim period which ended March 31, 1987, compared with $25.7 million tn the same period of 1986. Id. Intracompany transfers declined from $217. 6 million in 1984 to $143.5 million in 1985 to $138.0 million in 1986 . .(n interim period 1987 intracompany transfers dropped from to$34.2 million from $42.1 million in interim period 1986. 22/ Id. 23/ Vice Chaiman Brunsdale finds that the.re was a reasonable indication of material injury to the domestic industry based upon preliminary evidence. However, she plans to examine this issue carefully in any final examination, since there is some evidence of improvement in the domestic industry. 9 9 effect on prices, and thei.r g~Mra l impact on dorn~stic produc,~rs of the like 24/ product. -- Imports of EC rod from Venezuela increased from 27,524 tons in 1984 to 56,477 tons in 1985, Falling back somewhat to ti0,022 tons in 1986. 251 As a share of U.S. consumption, imports from Venezuela rose from 7 percent in 1984 to 15 percent in 1985 and remained at that level of market penetration in', . 26/ 1986. - Imports in the first quarter of 1987 , increased both in absolute . 27/ h and relative terms over the levels in the first quarter of 1986. -- Te increase in imports during the period of investigation occul'.'red at a time of 24/ 19 u.s.c S 1677(7)(8). 25/ Report at A-27. Respondents argued that the Commission should make a negative preliminary determination becausa, jnter _!l_li~, patitioner Southwire was instrumental in the creation of sural, the Venezuelar:i company accounting for the large majority of imports, and, ' therefore, Southwire was responsible for its own injury. There are conflicting clah1s as to Southwire's control over Sural's pricing policies. Southwire divested itself of i.ts interest in Sural in March 1985. lt is unclear how relevant this prior ownE:lrship is to the Commission's determinations. While Southwire is tha only petitioner, it is not the only domestic producer. ThE:l Commission's det~rminations are based on its assessment of the impact of the imports on the industry as a whole. Furthermore, we note that imports in 1985 and 1986 were considerably higher than in 1984, the last full year of Southwire's partial ownership of Surat. 26/ Report at A-27. 27/ There is som~ ~v idence of a fall in ,exports to the United States in the interim period of 1987 as reported by the thrP.e Venezuelan producers of aluminum rod . Report at A.:...9. table 1 . (The large majority of the interim data in this table is reported on a January to July bcu is . ) 10 10 f 11 . . d t. . . ZS/. . . d d .a. 1n9 ornes 1c consurnpt1oh - · an pro uct1on. Thus, the drop in U.S; production exceeded the drop in U.S. consumption. We note that the largest increase in imports occurred in 1985 coinciding with large price decreases and a sharp decline in domestic · industry profitability. Respondents argue that their increased sales are overwhelmingly to , 29/ integrated U.S. producers - who have shut down their rod mills due indirectly to the low prices for primary aluminum. The low price for a 1uminum lE."d these companies to shut down their sroolters. Once the. smelters are shut down, the nearby rod mills also shtJt down because rod mills must b~ near a l t b . J 30/sme ter o e econom1ca .. - Therefore, respondents maintain it is primarily the price of aluminum, combined with other mark~t dynamics, that has caused an increase in imports. Respondents also argue that declining consumptiol') of EC rod and the des:i.re by domestic producers to utilize aluminum smelting capacity for other higher value-'-·added products contributed to the decisions to close rod mills and move out of down ·stream wire and cable i.!/ Indications are that domestic consumption will either fall or stagnate in the future. EC · rod is used for production of e.lP.ctrical conductor , wire and cable. High voltage transmission wire is the largest market for such products. Due to tho essent-ial.ly complete electrification of the Uni.ted States, most EC rod currently produced (and the wire and cable made from it) is aimed primarily at the replacament marl<d. · EC '· rod is not us~d as heavily· in the housing and building market, wh£>re copper wire is used roughly 90' percant of the tima. Tr. at 30-31. 29/ Integrated production cor1sists of smelters producing a.]urninum ingots, rod mi.lls turning such ingots into rP-draw rod, and wire and cable faci li.ties redrawing the rod into the end product. 30/ Respondents' Post-Conf'-lrence Brief at 7, Exh. 1 at 2, 17. 11 11 . 31/ production. -·- There is obviously ·a relationship between the price of aluminum and the price of EC rod because aluminum accounts for a lat~e part of the cost of m,.k 1· ng EC rod. ~J_/ -r~ . l b . J t' h · b h . '• ,,ere is a so an o v1ous re .a ·ions 1p · ~tween t e price of aluminum and decisions to shut down smelters. However, this d~es not explain why domestic wire and cabl<~ manufacturers who formerly purchast~d (either int<ffcompany or intracompany) from the closed mil ls began purchasing EC rod from Venezuelan instead of domestic supplier's. · The U.S. EC rod industry, as a whole, operated at a low rate of capacity utilization - throughout the period. 331 Even assumi.ng that it is uneconomical to re-;open port ions of productive capacity for small orders or short --te rm contracts, 34/ there is considerable unused domestic capacity, and the quantity of sales accounted for by imports from Venezuela represents a considerable portion of domestic consumption. l!>./ An examination of the available pricing date\ indi.cates that underselling by Venezuelan imports was ~J/ Tr. at 75-76. ]1/ Repor·t at A-36. 33/ Report at A···--15, hble 4. 11/ Respondents' Post-Conference Brief, Exh. 1 at 13-15. 35/ Vice Chairman BrunsdalE.'! also notes that the alfoged margins in this case are high •···- petitioner a l.legE.'ld t.\ subsidy margin of over 70 percent and dumping margins riilnging from 15 to 33 percent. Vice Chairman BrunsdalE.'! believes that tha magnitude of the dumpirig or sus idy margin is one factor, among others; that should be considered in determining whether unfair imports are a ciilus.e of material injury. 12 12 . 36/ d d'most evident in 1985 for both open market prices - an 1rect imports. 37 I Venezuelom underselling during< 1985 coincided with a doubling of subject imports, a large drop . in U.S. pr-oduction .and negative operating 38/ income fo.r U.S. production. It also appears . that the domes.tic price of EC rod has not risen to 1984 levels despite the rise in the price of a.luminum in the past year. J.21 lhis may be due, in part, to the . presence of increased Venezuelan imports. 40/ In sum, we find that there is a reasonable indication that the imports of allegedly ·un .fai.rly tra<fod · l:C rod fro!ll Vene.r.uela arP.. causing materi.o.l injury to the domestic industry. 36/ Repor-t ~t A-37, Table 14. 37 I Id .. at A-·41. See als..Q. Id. at A- ·40, fig. 'l and . A-42, fig. 4. (Comparison of U.S. producers and U.S. importers nQt fabrication prices). 38/ Vice Chairman Brunsdale does not give weight to the "underselling" evidence gathered thus f~r in these investigations. She notes that the price information gathered in these investigations does not show consistent "underselling. 11 A number of the price comparisons between imports and the domestic products reveal that imports have a higher nominal price, especially in 1986 and 1987. Thus, she believes she has no basis to conclude that imports had consistently lower nominal prices during the period of investigation. · She will need to see in the final investigation whether unfairly traded imports have an effect on import prices resulting in an adverse effect on domestic • prices or s,des. 39/ ,, Report,. at A-36-A·--40. This may explain why the domestic ind1Jstry' s operating income racovered in 1986 from a loss in 1985 but is below . the 1984 levels both absolu .tely . and relative to net sales. Id. at tables 8 and 9 . 40/ The relationship of EC rod prices to ~luminum prices wi 11 be examin~id further in any final investigations. 13 13 Reasonable Indication of Threat of Material Injury By Reason of Allegedly. . _U_n_fa_ir_l_y.__T_r_·a_d_e_d_I_m.._p_o_r_t_s__ _ _____ __ ____ _ .___.___ ___ ____ In determining whether there is a reasonable indication of a threat of material injury, the Co111mission considers, amonq other factors: (l) mny rapid increase in market penetratior1 of the imports and the likelihood that such penetration will reach an injurious leval; (2) any ~ubstanti~l increase in , ' " - inventories of the imported product; (3) the like] ihood of increased imports . . in the future becausP. of increased c~pacity or existing underutilized capacity in the foreign country; and (4) the probability that futur~ imports will have . · ' · : . ' · · 41/ a price depressing or suppressing effect in the domestic market. -- As discussed above, imports have increased significantly during the period of investigation. 421 While there was an 11 percent decrease from 1985 to 1986 in absolute terms, the market penetration rate held at 15 percent .. 43/ in those years, up from 7 percent in 1984. There were both ralative and absolute increases in the first quarter of 1987 compared to the first quarter of 1986. Of importance in our analysis of import penetration rates is the fact that the primary producer of Venezuelan F.C rod, Sural, is purchasing U.S. wire and cable facilitios, , the downstr~am consumers of 1-:C rod . .1~/ This may ill 19 U.S.C. § 1677(7)(F). We note that export subsidies hav~ been alleged. We wi 11 consider this factor should the Department of Commerce determine that such subsidies in fact exist. There is no . potential for "product shifting" as that term is usad in 19 U.S.C. § 1677(l)(i=)(i)(VIII). 42/ Report at A-27. 43/ Id. 44/ Tr. at 123-29. 14 14 ensure market share for VehezucHan EC rod and · may per-mi t siJbs tantial increases. There have been wide fluctuations in inventories of V~n~zuelan EC rod. 4-61 There was a sharp increase in inventories at the end of the first ' quarter of 1987 . In the event of any final investigations, we will reexamine this issue to see if the increase in first quarter 1987 inventories represents a trend that will lead to substantial levels of inventories. With respect to capacity and capacity utilization in Venezuela, there is some conflicting evidence and testimony. It cippaars, however, that in the near future there will be increased capaci.ty to produce EC rod in 47/ Venezuela. -- We note that there are other markets . available for present .. . . 48/ and potfmtially increased future production of EC rod from VP.nec::uelc1 . ..- However, the Venezuelan industry is very expor-t oriented and the United States 45/ Respondents stated that they were also purchasing U.S. rod mills. Tr. at 123. However, testim,im)' indicates that it is not feasible to operate a rod mill utilizing cold ingot transported any distance. Tr. at 106-07; Respondents' Post-Conference Brief at 7, ~xh . 1 at 2. Thus, it appears unlikely that Sural will become a domestic producer of EC rod. Sural has not indicated plans to purchase any U.S. smelting faci..lities; however, they potentially could purchase hot metal if there were adjacent smelters operated by someone el~e. · !~/ Report at A~ 26. 11/ Report at A·...; 6-·A-·8. Little specific information may be discussed due to ,. the conf:i.dentiality of individual co1npany data and plans, , ill/ Respondents Post-Conf'-lrencE:l Brief at 17. 15 1. s t L J t . 1 k f' l t 491;~e .arges. singe mar et ·or Vonezue an expor:s. -- Wmezuelan industry's longer term program inc ludt)S moving into higher value products, the main priority at the present time app.;1rent.Ly is production of ~QI basic for-ms such as EC rod. Thert) are indications th,;it future imports may have a price suppressing effact. As discussed in . the previous portion of the opinion, the increased fovels of EC rod from Venl)ZU~>.la may have prm,ented EC rod prices from increasing sufficiently to offset the recent incn!ase in aluminum ingot prices. However, this issue will warrant further examination in the event of any final investigations. Bc1sed on our analysis of the foregoing factors, we determine that there is a reasonable indication that the domestic EC rod industry is threatened with material injury by reason of the allegedly unfairly traded imports from Venezuela . .1'1/ Report at A-9, tab le 1. 50/ Report at A-6. We also note that the Vene7.uelar1 government has authorized expansion of aluminum production, which will incrP.ase supplies potentially available for EC rod production. Id. at A- .. 7-A-8. 16 A-1 A-1 INFORMATION OBI'AINED m 'IHE INVFSl'IGATIONS Introduction on July 14, 1987, oamsel for soothwire eo., carro11ton, GA, filed .coontervailirg am antidumpirg petitions with the u. s. International Trade c.amni.ssion (camnission) an:i the u.s. Department of camnerce (CQmnerce). The petitions allege that an imustey in the United states is materially injured or threatened with material injury by reason of inp:)rts of electrical corductor aluminum redraw rod y frail Venezuela that are alleged to be subsidized by the Government of Venezuela an:i sold in the United states at less than fair value (IJI'FV) • Aooo:rclin;Jly, effective July 14, 1987, the Cormnission instituted investigations Nos. 701-TA-287 (Preliminaz.y) am 731-TA-378 (Prelimiruny) urrler the provisions of the Tariff Act of 1930 to determine whether there is a reasonable inti.cation that an irxiustxy in the United states is materially injured or threatened with material injury, or the establishment of an imustl:y in the United states is materially retarded, by reason of such illp:>rts. Notice of the institution of the camnission' s investigations am of a conference to be held in connection therewith was given by postirg copies of the rttice in the Office of the Secretary, U.S. Intemational Trade Cormnission, washin;Jtan, DC, am by plblishirg the mtice in the Federal Register of July 22, 1987 (52 F.R. 27593). y '!he conference was held in the Ccmnission's hearirg roan on August 6, 1987, at which time all interested parties -were afforded the ~rtunity to present information for consideration by the 0:;mmi ssi..on. 'JI '!he Product Description am uses '!he product umer investigation, electrical comuctor (EC) altnninum redraw rod, is a solid room. product that is lorg in relation to cross section; 0.375 inch or greater in diameter; produced by continuous casting followed by size-rollirg, or by rollirg fran EC-cast inpt; am suitable for drawirg into electrical oomuctor wire. !/ Nearly all EC rod is manufactured fran EC alloy, with a 99. 45 percent alumirrum content an:i traces of other constituents such as copper, magnesium, man:JalleS8, arxi titanium. Alumirrum rod for electrical comuctor purposes JtDJSt have an electrical corrluctivity specification of 61 to 62 percent of equivalent size copper con::luctor. W '1he importe:i an:i danestic products are generally irrt:ercnar¥:Jeable for specified uses, with product y For purposes of these investigations, the tenn "electrical corrluctor aluminum redraw rod" refers to wrought reds of aluminum. which are electrically cornuctive am contain not less than 99 percent aluminum. by -weight, provided for in item 618.15 of the Tariff Schedules of the United states (TSUS). y Copies of the camnission's arxi Cmmerce's Federal Register notices appear in app. A. 'JI A list of witnesses testifying at the conference is shown in app. B. y Altnnirnml statistical Review for 1985, The Aluminum. Association, 1986. ,2/ Rhea Berk et al. , "Aluminum: Profile of the Irrlustry," Metals Week, 1982. A-2 A-2 distin::tions ai:pn-ent in the p.irity of the aluminum alloy used for producing aluminnn rod. Hc:Mever, higher p.irity is not necessarily of benefit to a :manufacturer if QlStaner specifications, such as tensile stren;Jth am oorx:luctivity, can be met with a la.,.ier p.irity alloy at a lower cost. 1/ EC rod is an intermediate product that is generally drawn into bare EC wire, which is tl'\en strarxied together arourd a steel or alumirrum core to fonn bare aluminum strarrled cable produced in AA1.£ (all-aluminum alloy comuctor), AAC (all-aluminum oorrluctor) , ACSR (aluminum oom:uctor, steel reinforced) , or ACAR (aluminum oorxiuctor, alloy reinforced) • '!he numerous types of cable are designed to meet certain specifications for oon:osion resistance am st:rergth-t:o-,Jeight ratios, sag characteristics, am anpacity. '!he cable is prirclpally used in primary and seoomary transmission lines, nearly 100 percent of which are alumimnn, to distribute low-- and high-voltage electrical power generated by utilities. Since the united states is essentially electrified, cable repl~it for large transmission projects has become an illp:,rtant market. y other secondaey cq:plications of EC rod are for use in electrical wire for households or other b.rl.l.din;Js, and wire that generates an electranagnetic force in electrical motors, solenoids, and other electranechanical devices. Although EC ?.'Cd can also be usei in limited mechanical applications such as fex:ing, screenin;J, and screw madline stock, these are generally considered uneoonanical uses of the product sin=e medlanical alumimnn rod is specifically designed for these applications; mechanical ?.'Cd is o»iq-sed of certain alloys that provide the higher st:rergth ani flexibility required for this market. 'JI However, mechan:i.cal rod cannot generally be used as a substitute for EC rod in the electrical oorrluctor market sinoe its metallurgical <Dlp'.)Sition {often scrap metal) is not suitable to o:niuctivity. W ~ is the au.y other metal effective as an electrical oom:uctor and substitutable for aluminum. Although aluminum has an electrical comuctivity specifiQt.tion only 6l. to 62 percent of the International Annealed Cq:per standaX'd, its lower specific gravity (less than one-third that of ocpper) enables aluminum to oomuct nearly twice as m.rh electricity (or for twice the distan0e) as copper for equal weights. Nearly all power transmission lines utilize aluminum cable; the weight of copper inhibits its use in ovemead utility applications. ~ However, copper is mre COlll)etitive with aluminum in the housing and building electrical wiring market, tmere ocpper has traditiooally been the ~ material, acoountirq for ai:proximately 90 percent of the market. §/ Price differentials often detemine which material will be used in ~ 1/ Transcript of conference held in connection with investigations Nos. 101~-281 am 131~-378 {transcript), p. 42. Y Ibid. , p. 31. y Ibid., p. 30. W Ibid. , p. 132. Also see postconference brief on behalf of the Venezuelan irnusb:y, Aug. 12, 1987, exhibit 1, p. 30,. . 2/ Transcript, p. 36. §/ Ibid. , p. 42, A-3 A-3 applications; copper's current lower cost makes replacercent with aluminum ecananically .unviable. l/ In addition, purchasers of alumimnn electric wire for lOOtors have reportedly switched to~- Y Manufacturing processes Many danestic rod manufacturers are vertically inte:Jrated from the smeltin:j of raw materials to the production of rod, arxi same also strand wire into cable. ;v Continuous castin;J is the IOOSt camw::>nly used process to manufacture aluminum rod, primarily because of its energy efficiency. To 111ill'lllfacture the m::>lten metal used in the continuous castin:J process, alumina is smelted in pot.lines, where electrical energy is passed through cart:,on anodes suspemed in aluminum pats to cxmvert the dissolved alumina into aluminum, which cx:>llects at the bottan of the pots, arxi oxygen, which combines with the anodes am is releasai as carl:>on dioxide. Alumina am electrical ererg'f are the two major oatp:Jnents of alumirrum production; each represents ~tely one-third of the erxi product's cost. 'Ihe molten aluminum metal is transfern?d in ladles or SCM (irx]ot) molds fran the alumirum smelter to the rod mill, which is usually located adjacent to a smelter to facilitate mav:irg the mlten metal to the castirq equipnent arrl to eliminate the high transportation costs arrl invento:ey levels associated with aluminum irxJot shipnents. Y 'lhe n:>lten metal is directed onto a thin steel strip in a large castmJ wheel arxi cooled as the metal circles uniergroun:i; it then resurfaces as a continua.ls solid bar. '!his cast section is then fed directly into a nnmber of :roll:irg mills and draw benches where the bar is redlx'8d in size am drawn through dies into ~ proper rod size. 'lbe process is essentially the same when :roll:irg fran cast irx]ot, but this :method requires reheatin:J the :irgot before runn.irq it through a bloc:anmJ mill to reduce the irgct to the right size for rollin;J. 'Ibis stock is again :reheated to the right :roll:irg tenperature before be:irg fed into the :rollin] mills am draw benches for further rmuction and sizin]. One starxl-alone rod nanufactu:rer, Alcan's Williamsport, PA, facility, purchases aluminum bar from its canadian smelters to be used as :rollin;J stock. ~ To transform aluminum rod into wire, it is then redrawn through another series of dies to reduce its c:rcss-sectional dimension am increase its l/ Ibid., p. 36. y Ibid., p. 107. y :i:ostconferenoe brief on behalf of the Venezuelan industry, Aug. l2, 1987, em:ibit 1, pp. 2 am 16. Y Ibid. , p. 7. 'lhe importance of these cost savin;Js can be attributed to the low value added in aluminum rod production-lo percent or less of its total cost-am the significant proportion of its cost attributable to prilllaey alum:irrum. ~ Postconference brief on behalf of the Venezuelan industry, Aug. l2, 1987, p. 7. A-4 A-4 lerqth. J,./ Wire is stranded together to fonn cable, the largest outlet for aluminum. wire. Wire is generally stranded arourd one central or core wire, theret,y increasin;J the ·cable I s size as J1Dre wires are concentrically strarxied a:rourxi the core. Wire, arxl particularly cable, are higher value-added products than rod because of the oanplexity of additional production operations .perfo:r.med on wire an:i cable and their manufacture to irxlividual custaner specifications. Accordirq to a u. s. rod mill manufacturer, a rod mill designed to produce EC rod cannot be converted to mechanical rod production because its rollin;J mills are not able to apply the force necessa:cy to roll mechanical rod alloys, which contain a higher level of magnesium for increasEd strength. However, a mechanical rod mill could be adapted to produce EC rod since its alloys are easier to roll. V A mechanical rod mill that prcxiuces rod f:rcm scrap may :require upgradirg to produce the level of p.irity an:i alloy specifications required for EC rod. 'JI Several danestic rod mills have been reported to shift production at a m:)derate oost between mecllanical an:i EC rod to ~lect c.han;Jin;J market oorrlltions. Y However this shiftin;J fran mechanical to EC rod incurs the costs associated with. down time; for that :reason, :mst rod manufacturers prefer to specialize in one type of rod. ~ c.onversion of an EC aluminum rod production line to EC arxl mechanical cx,pper rod production would require the replacenent of fumaoes to blen:i different alloyin; agents and the replacement of rollin; mill and draw bench JOOtors am drives with those of greater strength to attain a higher degree of torque to make the ocpper rod. §/ u. s. tariff treatn'ent U.S. ll\lPOrtS of the EC aluminum rod, hereafter "aluminum rod," covered by these investigations are classified in item 618 .15 of the TSUS. Although this tariff categoJ:y eno::mp=\.Sses aluminum rod other than the electrical con::iuctor-type subject to the investigations, petitioner believes that "substantially all, if not all, aluminum rod inported f:ran Venezuela in i:ecent years is i.nterrled for use, an:i used, in electrical applications." 1J Inp:>rts J,./ 'Ihe Aluminum Association defines wire as a solid wrought product that is lon;J in :relation to its cross section; square, :roun::i, ~ar, hexagonal, or octagonal in shape; an:i whose diameter or greatest perpenlicular distance between parallel faces (except for flattened wire) is less than 0.375 inch. y Conversation with. official from * * *, Aug. 11, 1987. 'JI Post.conference statement of petitioner SOUthwire c.o. , Aug. 12, 1987, p. 7. Y Transcript, p. 109 • .2/ Postoonference brief on behalf of the Venezuelan irdustzy, Aug. 12, 1987, eKhibit l, p. 18. §/ Transcript, pp. 40-41. 1J Petitions in investigations Nos. 701-TA-287 am 731-TA-378, p. 5. A-5 A-5 f:ran Venezuela classified in TSUS item 618 .15 are currently assessed a 1110St-favored-nation (MPN) (col. 1) rate of duty of 2. 6 percent ad valorem. y Nature and Extent of Alleged Unfair Inp::>rts 'lhe petitioner alleges that inp)rts of aluminum rod fran Venezuela are bein;J subsidized by the Government of Venezuela and, additionally, are being sold in the United States at IlI'FV. 'lhe specific allegations presented in the petitions, are briefly summarized belCM. Allegedly subsidized imports 'lhe petitioner specifies 16 programs that it believes confer subsidies, bolmties, or grants on exports of alumirnnn rod fran Venezuela. 'lhe petitioner believes that a full investigation of subsidy programs will reveal a net subsidy well in excess of 70 percent. y In its notice of initiation of investigation, CCIDmeroe irxlicated that it will investigate all but one of the programs listed in the petition to determine whether or not these programs constitute subsidies (aw. A.). Alleged sales at I.II'FV 'lhe petitioner used foreign-market value to calculate alleged IlI'FV margins. Two foreign-market values of alumirnnn rod were calculated by usin;J data on sales to kx:everx:a and CABEL, two Venezuelan electrical wire and cable producers. '!he u.s. price of aluminum rod fran Venezuela was calculated usin;J census B.lreau (census) inp>rt statistics. By cx,mparin;J the Venezuelan hane-market prices on sales to Accevenca and CABEL with the F.A.S. value of u .s. inports of aluminum rod fran Venezuela as reported by Census, petitioner derived IJI'FV margins of 15,10 percent and 33.42 percent, respectively. y JI Inp::>rts f:ran Venezuela qualify for duty-free entry into the United states m:der the Generalized system of Preferences (GSP) ; such trea'bnent, however, was suspen:1ed because inports of Venezuelan aluminum rod had surpassed levels alla.ved urrler the program. Petitioner filed a petition with the Office of the United states Trade Representative on June 1, 1987, seeking withdrawal of duty-free treatment urrler the GSP for aluminum rod, wire, and cable fran Venezuela and several other countries. '1he rates of duty in col. l are MFN rates applicable to inported products fran all countries except those Conmmist countries and areas enumerated in general headnote 3 (d) of the TSUS, unless eligible for preferential treatment as irxlicated in the Special rates of duty colurm by the symbols "A" (GSP), "E" (caribbP..an Basin Econanic Recovecy Act (CBERA) ) , or "I" (Israel) . y Petition in investigation No. 701-TA-287, p. 24. '1/ For a carrq>lete discussion of petitioner's allegations regarding sales at Ill'FV, see petition in investigation No. 731~-378, pp. 9-14. A-6 A-6 'Ihe Producers in Venezuela 'lhe petitions named seven Venezuelan canpanies carryinJ out various stages in the production of primary aluminum am aluminum rod; Aluminio del caroni, S.A. (Alcasa); Bauxita Venezolana C.A. (Bauxiven); Corrluctores de Aluminio del caroni, C.A. (cal:lelum); In:lustria de Comuctores Electricos, C.A. (Iconel); In:iustria Venezolana de Aluminio, C.A. (Vena.lum); Interamericana de Alumina, c.A. (Interalumina); am SUramericana de Aleaciones Iaminada, c.A. (SUral). Alcasa am Vena.lum, the two primary aluminum prcxiucers in Venezuela, are in part state awned. 'Ibey operate urrler the holdllrJ caupany/development authority CC>rporacion Venezolana de Guayana (CVG), which also owns iron ore, steel, hydroelectric power, bauxite, am ferrosilioon operations. Interalumina, also operatirg as part of CVG, produces all of the alumina used in Venezuela. Another CVG-oontrolled oampany, Bauxiven, is developinJ Venezuela's bauxite :reserves am is ~-to reach its full capacity of 3 million metric tons per year by the seooni half of 1988. Y Accordin] to petitioners, SUra1, Ioonel, am Cabelum are believed to produce aluminum rod for export to the united states. y It is difficult to discuss the aluminum rod iniustry in Venezuela without first djsoJSSi.Iq its aluminum iniustry. Aluminum is Venezuela's secorn largest export after petroleum, am its aluminum imustry is the fifth largest in the world in terms of exports. Venezuela's aluminum imustry is relatively new. Venalum, for example, began operations in 1978; however, it is already the seoon:l largest primary aluminum production plant in the free 'WOrld. 'JI '!he Venezuelan Gavemment owns 80 percent of Venalum, with the remainin;J 20 percent held by a consortium ocnprised of Showa Aluminum Iniustries Lt.d. , Kobe Steel U:d. , sumitalD Aluminum Smeltfn3' Co. , Mitsubishi Metal Corp. , Ryoka Light Metal Imustries, am Marubeni. eorp. tJnjer a 10-year contract that expires in April 1988, these Japanese fll111S receive 60 percent of Venalum's actual yearly production. sural takes another 20 percent of its production, am the remain:inJ production is urner contract to a rumber of finns, includi.rq General Motors eor:p. am National Aluminum Corp. Enrique castells, President am Chief Executive Officer of Vena.lum, says that the Japanese are very interested in switch:irq to a joint-venture basis~ the present contract expires. y Mr. castells said that because of the country's ambitious smelter expansion plans, Venezuela will have to fin:i larger markets in the united States, Europe, am Asia. Mr. castells irxli.cates that Venezuela's lcn,Jer tenn program includes addin;J fabricatirq capacity to upgrade the product mix, but the main priority will ha firxlil'Y:J markets for ingot am other basic fonns like rod, bar, am extrusion billet. ~ CVG has received Government authority to expam aluminum production from 420,000 to 630,000 metric tons by 1988 am is currently studyi.rq a plan to y Department of state ajzgram fran the u.s. Embassy, caracas, Venezuela, July 11, 1986, p. 5. y Petitions in investigations Nos. 701-TA-287 am 731-TA-378, at pp. 6-7. 'JI ''Venezuela's All.Ullirrum Plans," Mining Magazine, December 1986, p. 543. y Roberta c. Yafie, ''Venezuela's Alumimnn Imustry Seeks to Upgrade World Rankin]," .Anerican Metal Market, Oct. 16, 1986 • .2f Bob Regan, ''Venalum SeekinJ Agreements in Bid to Penetrate us Market," Anerican Metal Market, July 1, 1987, pp. 1 an:i 16. A-7 A-7 expani production to over 2 million metric tons by the ·year 2000. Alumirnnn produced in this volume will provide 25 percent of Venezuela's total foreign currency excb.an;Je inc:x:m:!. y Venezuela I s 32-cent-per-pouni production cost for aluminum is the world's lowest. 'Ihis compares to 51 cents in the united states and 44 cents worldwide. 'lbere are several reasons for this substantial cost advantage. First of all, Venezuela has the tt.10rld' s lowest cost electric power, 5 mils y per kw as cxmpared with a U. s. average of 20 mils per kw and a worldWide average of 13 mils per kw. y Unlike many other c:amtries, the Venezuelan aluminum imustry does rot canpete with household consumers for a limited annmt of electricity. '!his is because the local power oc:apmy's electric capacity is devoted primarily to imustrial use. Because electricity costs can contribute nearly one-third to the total smeltin:j costs of aluminum, Venezuela's abJn:lant supply of low-cost electricity is an ilrportant resource. Natural gas is also inexpensive in Venezuela. Although natural gas is :relatively UJUlll)Ortant for smeltin:J, it is inp:>rtant for the production of finished and semifinished products such as aluminum rod. Although Venezuela has achieved its low-cost status by .inp:n:tin:J the bauxite used in the production of aluminum, it will soon be able to use its own danestic sources of bauxite. As mentioned above, Bauxiven is developin:J danestic bauxite :reserves, which, when fully operational, are projected to save Venalum $25 million per year. y Also contril::utirg to the low cost is Venalum's lc:M debt-equity ratio. Its 0.88-to-l debt-equity ratio is the lowest in the world for the aluminum industry; the industry average is 2 to 1. ~ 8ural is Venezuela's lai:gest private sector aluminum cx:apny and its largest private sector exporter. Of the three Venezuelan aluminum rod producers named in the petitions, 8ural is by far the largest exporter, aooamtirg for roughly 90 percent of total Venezuelan exports of aluminum rod to the united States in 1986. §/ until March 1985, the petitioner, Sa1thwire caupmy, owned a 49-peroent interest in SUral. 1J SUral has two alumirum rod 1/ Enrique M. castells, ''Taoorrow' s Aluminum Irdustry," paper presented. to the Venezuelan American Association am the COJncil of the Americas, in New York, oct. 9, 1986. Skillings' Mining Review, Nov. 29, 1986, p. 5 y A mil equals one-tenth of a cent. y castells, op. cit., pp. 4-5. y Yafie, op. cit. ~ For a further diSaJSSion of the aluminum industry in Venezuela, see u.s. Department of c.ammerce, International Trade Administration, Al.umirrum Mill Products: Import Problem/Export Potential, July 1986, Washi.n3ton, DC, pp. 60-68; Department of state airgram fran the u. s. Emba.ssy, caracas, Venezuela, July 11, 1986; am petitions in investigations Nos. 701-TA-287 and 731-TA-378, exhibit 9 and emibit 7, respectively. §/ Transcript, p. 62. y Petitions in investigations Nos. 701-TA-287 and 731-TA-378, p. 7. For a further discussion of Southwire's interest in sural, see transcript, pp. 24-29, 63, am 75-83; postconference statement of petitioner Southwire eo., Aug. 12, 1987, pp. 38-45; am affidavit of Alfredo Riviere and Relm G. Butler, Aug. 12, 1987. A-8 A-8 mills; a "properzi mill," and a southwire SCR mill similar to southwire' s Hawesville, KY, mill. l/ SUral and the m::,re than 160 other private aluminum finns in Venezuela have t:ra.Jble buyin;J as much aluminum as they WCA.11.d like f:ran Alcasa and Venalum. A . state Department airgram states that the problem stems f:ran a multiple-pricin;J system whereby AlalSa and Venalum receive mre for export sales than they do for daoestic sales as a l'eSUlt of excharqe rates and Government export bonuses. A private carpB1'1.Y, Alusur, headed by SUral, plans to construct a 115, 000 metric-too-per-year smelter to SlJR)ly SUral 's rcxi and wire plant. It will be ooupled with a 60, ooo metric-tan-per-year expansion in wire and rcxi capacity at SUral. Once started, these plans for expansion are expected to take J years to oe11plete. V Mr. Alftedo Riviere, President of SUral, in:licated that SUral has ·been expan:lin;J its capacity to produce :mechanical aluminum :rod and cxmtra.ctin;J its ability to produce electrical ocniuctor aluminum :rod. SUral is also · interested in exparxiin;J its pi:esel'l08 in the united states tlu'0ugh acq.iiri.Jq closed rcxi, wire, and cable facilities. One of the reasoos 8ural wishes to establish rcxi facilities in the united states is because it wishes to take advantage of utility markets closed to finns that produce utility cable f:ran foreign-produced aluminum rcxi. 'J/ * * *. y * * * * * * * Available infonnation ai the producers of aluminum rcxi in Venezuela is presented in table l. l/ Transcript, p. 39. Y Department of state aizgram f:ran the u.s. Embassy, caracas, Venezuela, July 11, 1986, p. 4. 'J/ Transcript, pp. 123-130. y * * *· A-9 A-9 Table l Alumimnn rod: Venezuelan production, capacity, capacity utilization, domestic shipnents, e,cport shipnents to the United States, an:i exports to third c::olmtries, :by firms, 1984-86, interim 1986, an:i interim 1987 y Interim Deriod- Item 1984 1985 1986 1986 1987 Production: calJellJlll •••••••••••• s1lort tais •. *** *** *** *** *** ... ICD18.l Y ......•......... do •••• *** *** *** *** *** SUra.l 'J,/ ••••••••••••••••• ck) • ••• *** *** *** *** *** 'l'cta.l. ••••••••••••••••• •do ..... *** *** *** *** *** Percentage charge •••••••••••• *** *** *** capacity: calJel'lDD •••••••••••• sllort t:a'ls •• *** *** *** *** *** Ic:::x::»r1e,l. JI . . • • • • • • • • • • • • • •ck:>• • • • *** *** *** *** *** SUra.l ~ ••••••• .•••••••••• do •••• *** *** *** *** *** 'l'cta.l. • • • • • • • • • • • • • • • • • •do • • •• *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** capacity utilization: calJelum ••••••••••••••• percent •• *** *** *** *** *** ICD18.l ••••••••••••••••••• do •••• *** *** *** *** *** SUra.l •••••••••••••••••••• do •••• *** *** *** *** *** Avera.ge •••••••••••••••• do •••• *** *** *** *** *** Danestic sales: cal::>elllDl •••••••••••• sllort t:a'ls • • *** *** *** *** *** ICD18.l ••••••••••••••••••• do •••• *** *** *** *** *** SUra.l §/ ••••••••••••••••• do •••• *** *** *** *** *** 'I'cta.l • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** EMports to the United states: calJel\Dll •••••••••••• s1lort ta,s •• *** *** *** *** *** Ia::1118J. • • • • • • • • • • • • • • • • • • •do. • • • *** *** *** *** *** S\Jra.l •••••••••••••••••••• do •••• *** *** *** *** *** 'I'cta.l • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** Exports to third countries: cabelllID. •••••••••••• sllort ta,s •• *** *** *** *** *** Icx,I'lel ••••••••••••••••••• do •••• *** *** *** *** *** sura.l ••••••••••••••••••• ado •••• *** *** *** *** *** 'I'otal • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** Percentage d'larlc;Je • • • • • • • • • • • • • • *** *** *** y * * *·y * * *· y * * *· y * * *·w * * *· §/ * * *· Source: C'.anpiled from data provided :by c:x,unse1 for S\Jra.l, Iconel, an:i cabelum. A-10 A-10 U.S. Prcxiucers 'lbeze lN8r8 seven producers of aluminum rod in the United states durin;J the period umer investigation; Aloan Aluminum Co:cp. (Aloan), Aluminum Co. of America (Alcoa) , Fssex Wire arxi cable (Fssex) , Kaiser Aluminum arxi Cllemical Co:cp. (lfaiSP.r), Norama Aluminum, Inc. (Norama), Reynolds Metals Co. (Reynolds) , arxi SOUthwire Co. (SOUthwire) • 'lhe shares of 1986 danestic production of aluminum rod accnmted for by these producers am the location (s) of their production facilities are shown in table 2. In additiai, there lN8r8 several other U.S. producers of aluminum rod in the recent past; Anac::orm, capital Wire & cable (capital)' am I.Olisiana Wire & cable (Io.lisiana) • staff was ·tmable to contact Anac:xn:a or I.ouisiana. staff contacted capital to ct,tain information reganlin;J its production of aluminum rod am the ccnlitions surraniiDJ its exit fran the irxlusb:y. * * *. y capital, located in Plano, TX, * * *. Y In its 1986 annual report, capital irxlicated that it is not operatin;J its continuous castirq aluminum rod llli.ll becElJSe the price of aluminum rod is currently less than the cost to pirdlase aluminum in;Jot arxi process it into rod. 'lhe petitions note that the rod mill has been dismantled am shipped to Bogota, Columbia. ~ Aloan cable. Division of Aloan Aluminum corp.-• * *· Aloan produces alumirrum rod at its red mill in Williamsport, PA. It also produces aluminum wize am cable at plants in Bay st. I.Duis, MS; sedalia, M:>; arxi Williamsport, PA. * * *• Y Aluminum co. of America.-Dlrin;J the period of investigation, Alcoa produced aluminum red at its plants in Vamouver, WA; Massena, NY; arxi Roclodale, TX. Alcoa closed its smelter operations in Vamouver in June 1986. '.this smelter was sold to Venalco, Inc., a c::x:q:>a'l"\Y _formed by an iniepement g%Qlp of investors frail cambridge, MA. * * *. Alcoa also produces aluminum cable in Massena am vamouver. * * *. 'lhe American Metal Market reports that Alcoa has set plans to witlmaw fran the aluminum rod business arxi sell its cable proouction facilities in Massena, NY, arxi Vancouver, WA. It reports that Alcoa has signed a letter of intent to sell these facilities to a newly formed oa,pmy called Alutech. It also reports that at least one of the Alutech investors is believEd to be a Venezuelan. ,21 .l/***· V" * *·V Petitions in investigations Nos. 701~-287 am 731~-378, pp. 49-50 am 54, arrl pp. 39-40 arxi 44, respectively. ~ * * *·~ Bcb Regan, "Alcoa Aims to Ieave Corxiuctor Business By cable units Sale," ~ioan Metals Market, Jan. 20, 1987. * * *· A-11 A-11 Table 2 Aluminum rod: u.s. producers, their shares of total domestic shipments am mill locations, by firms, 1986 Share of reported total danestic shipments Fim in 1986 1/ Mill location(s) Petitioner: *** Nan-petitionin;J firms: Alcan Aluminum Corp. 'JI ••• *** Aluminum a:apany of ~c:a 'J,/ •• •-• •••••••••• *** Essex Wire and cable ~ ••• *** Kaiser Aluminum and Chemical Corp. 'JI •••••• *** Norarm Aluminum, Inc.'J/ •• *** ~lds Metals co. 'JI •••• *** l/ Intracxmpany transfers am danestic shipaents. y * * *· y * * *· JI***· ~ * * *· ~ * * *· 11 * * *· carrollton, GA. Y Hawesville, KY. Williamsport, PA. Massena, NY. Rcckdale, T.X. Vancouver, WA. V Booneville, m. ~ Taoana, WA. C!lalmette, IA. 1/ New Madrid, H). Iorr;Jview, WA. sooroe: Caipiled £ran data sul::lnitted in respanse to questiana.ires of the u.s. Intemational Trade OnD1sslai. F.ssex Wire and cable.-Essex, located in Booneville, m, * * *· l/ :Kaiser Aluminum an:l Chemical COrp.-:Kaiser's aluminum rod plant is located in Taoalla, WA. * * *· Z/ Kaiser also produces aluminum cable in Bay Minette, AL; Portsllcuth, RI; an:l San I.ean:iro, CA. 'JI Norama Aluminum. Inc.-* * *• Norarm produces aluminum rod at a plant in New Madrid, H:>. Norarxla operates an aluminum smelter at the same location. * * *· l/ * * *· y * * *·y Also, see American Metal Market, June 30, 1987, and J'uly 9, 1987. * * *. A-12 A-12 Reynolds Metals Cgnpany. -Reynolds produces aluminum rod at its plant in 1.on;3View, WA. Beynolds also operates an aluminum smelter at the same location. It also produces aluminum cable at this location as well as a plant in Malveni, AK. * * *· y * * *· y Reynolds owns a 15. 75-percent minority stake in the Venezuelan aluminum producer Alcasa. Alcasa recently acquired a .so-percent stake in Reynolds' aluminum plant in Mons, Belgium. Reynolds, General Motors, and Alcasa recently agreed to set up a joint ccanpany in Ve.nezuela to produce half a million aluminum ttmee1 rims annually for the U.S. :market. 'JI . , Southwire Co.--'llle petitioner, Southwire, is the nation's largest privately owned rod, wire, ard cable producer. * * *· South.wire manufactures c:qp3r am aluminum rod am electrical wire an:i cable. South.wire is also :involved in a joint venture called National-South.wire Aluminum Co. (NSA) to produce pd.mazy alumi.nuni. * * *. NSA' s aluminum smelter supplies Southwire' s Hawesville, KY, alumi.nuni rod plant, which is located immediately next door. South.wire receives approximately * * * short tons of aluminum a year fran NSA. * * *• NSA's smelter in Hawesville, KY, an:i Alcan's Sebree, KY, smelter p.lrchase approximately 70 .percent of the power produced by the Big Rivers Electric Co., which is located in sight of the Hawesville facilities on the Ohio River, 'lhe two smelters pay sane of the highest electricity charges in the united States an:i have been facirg higher rates as the financially troubled utility struggles to waro off foreclosure proceedin;Js by the united states Justice Department. JI Respoments allege that South.wire cannot compete with other law-cost producers, · both danestic an:i foreign, because of the high electricity costs paid by NSA' s smelter •. ~ . South.wire helped develop continuous rod castirg technology for the aluminum am copper imustries. Its patented South.wire Continuous Red (SCR) Systems are used worldwide. In fact, South.wire states that more than one-half of all the redraw rod consumed in the western world is made on 47 different Southwire rod systems in production in 18 countries. * * *· §/ * * *• 1/ Its Hawesville, KY, plant is currently its only production facility for aluminum rod. Roughly * * * percent of its aluminum rod production in 1986 was used captively at its wire and cable plants in Hawesville, KY; carrollton, GA; and Flora, IL. 1/ * * *· y * * *· ' . y ''Venezuela's Aluminum Ambitions," Minirq Journal, Dec. 12, 1986, p. 424. y "Alcan, National South.wire Spared Higher Costs, 11 Metal Bulletin, Mar. 24, 1987, p. 9, am ''BEA Move Clouds Big Rivers Rate Talks, 11 Metals Week, May 11, 1987. For a furtller discussion of Big Rivers Electric and the alumi.nuni smelters at National-Southwire and Aloan, see Metals Week, Nov. 17, 1986; American Metal Market, Nov. 26, 1986; Metals Week, May 11, 1987; and post conference brief on behalf of the Venezuelan irxiust:cy, Aug. 12, 1987, exhibit 2. W Transcript, p. 76. §/ Prcx:lucer's questionnaire response, South.wire Co., Aug. 3, 1987. 1J * * *· A-13 A-13 u. s. Inp:>rters lnp:)rters' questionnaires were sent to 11 U.S. importers (nonproducers) an14 u.s. producers of aluminum rod(***,***,***, am*••). Acoordin;J to the U.S. OJstans Service's net inport file (arrF), these canpanies illp:>rted virtually all of the aluminum rod fran Venezuela durin;J the period covered by the investigations. six of the iDp:)rters respomed to the questionnaire in:licatin;J that they do not inport the subject product fran Venezuela. 'lhe remainin;J ilDporters (~ * •; * * •: * * •; * * •: an:i ***)returned a OC111Pleted ilDporters• questionnaire. * * *. * * * * * * * Because the U.S. producers that imported aluminum rod, with few exceptions, oonsumed the . rod in the production of wire an:i cable, there were no :relevant sellin;J prices to report an:i they reported imports in the oorrespornjn;J section of the producers' questionnaire. canbined ilDports by • * *, * * *, * * *, ard * * * aOOOlll'lted for*•*,••*, ard •••percent of total reported imports of aluminum rod fran Venezuela in 1984, 1985, am 1986, respectively. n.trin;J the Januazy-March 1986 ard 1987 interim periods, these u.s. producers' ilDports aocamted for * • • ard • * * percent, respectively, of total import.s fran Venezuela. For further info:rma.tion regamirq such ilDports of aluminum rod fran Venezuela, see the section of the report entitled "U.S. producers' imports am ?]rChases of imported aluminum rod." 'lhe u. s. Market Channels of distribution As mentioned above, aluminum rod is an intermediate product that is generally drawn into wire or cable. Most U.S. producers of aluminum rod have facilities that also produce wire an:i cable. n.trin;J the period umer :investigation, the share of total danestic shipnents of aluminum rod that was captively consumed by U.S. producers of aluminum rod in the production of wire an:i cable an:i other dc7.mstream products (as measured by intraoanpmy transfers), steadi Jy fell fran 79 percent to 69 percent (tables 5 an:i C-2). Merchant market sales of aluminum rod are generally carried out by the u. s. producers. A-14 A-14 Amarent u. s . .OC>nSlnnpt;i,gn Apparent U.S. OOl'lSUlTPtion of aluminum rod declined fran 411,975 tons in 1984 to 339,051 tons in 1986, or by 18 percent (table 3). Apparent U.S. oonsunption fell by 10 percent durirq January-March 1987 canpared. with that durirg the oorresporxlirq period of 1986. Table 3 Aluminum rod: U.S. producers' danestic shipnents ard intraoatpany transfers, :iJ1port:s for oonsunption, ard apparent U.S. c:onsmiption, 1984-86, January-March 1986, ard Jamm:y-March 1987 (Short tons) U.S. U.S. u.s. producers' producers' imports Apparent danestic intracompany for U.S. Period shianents transfers oonsunption Q;)J']SUnption 1984 •••••.•..••• 77,419 290,111 44,445 411,975 1985 •••••••••••• 71,807 233,216 66,816 371,839 1986 ••••••.••••• 83,206 195,964 59,881 339,051 January-March- 1986 •••••••••• 25,125 61,165 11,921 98,211 1987 •••••••••• 22,489 50,092 15,793 88,374 sarroe: ODpiled fran data sumitted in response to questionnaires of the u.s. International Trade omni ssi on. Calsideration of the Question of a Reasonable Imicatioo of Material Injuey u,s, production. capacity • . am capacity utilization u.s. production of aluminum rod declined fran 363,275 tons in 1984 to 279,173 tens in 1986, or by 23 percent (table 4). rurirq January-March 1987 prcx:u±icn fell 19 percent · to 70,243 tons fran 86,648 tons durirq January-March 1986. Average capacity to prcduoe alumirnn rod fell slightly between 1984 and 1986. Average capacity durirq January-March 1987, however, fell 15 percent fran that durirq the oorrespon:lin;J period of 1986. Productioo am capacity data by firm are presented in table c-1. A-15 A-15 Table 4 Aluminum rod: u.s. production, capacity, am capacity utilization, 1984-86, Jaruaz:y-March 1986, am January-March 1987 Jarruarv-March.-- Item 1984 1985 1986 1986 1987 Production: QJant.ity . .•.•....•. s1'1ort tons • • 363,275 300,166 279,173 86,648 70,243 Percentage chan;;Je •••••••••••••• -17 -7 -19 Average capacity over period: QJant.ity .••••...... short tons •• 513,953 518,786 503,786 130,539 110,760 Percentage charge •••••••••••••• +1 -3 -15 capacity utilization l/. percent •• 67 56 55 65 63 l/ capacity utilization rates were calculated usin;J . data from fims that provided infcmnation on both production am capacity. One finn, accamtin;J for between * * * and * * * percent of total danestic shipments (danestic shipnents plus :intracanpmy transfers) durin;J 1984-86, did not report infonnation on capacity. Salroe: Ccllpiled fran data sul::mitted in response to questionnaires of the U.S. International Trade camnission. u.s. producers' dcmestic shipnents am · intraoa;gpany transfers '!be quantity of u. s. producers I danestic shipnents of aluminum rod sporadically rose fran 77,419 tons in 1984 to 83,206 tons in 1986, or by 7 percent (table 5) • '!be value of danestic shipnents also rose sporadically durin;J 1984-86, risin;J 3 percent over the period. - unit values of danestic shipnents, however, fell 12 percent durin;J the period. '!be quantity of U. s. producers I intracarpany shipments of aluminum rod fell steadily fran 290,111 tons in 1984 to 195,964 tons in 1986, or by 32 percent. 'lhe value of :intracanpmy shipments fell 39 percent durin;J the same period. 'lhe percent of total danestic shipnents of aluminum rod aooounted for by intracaipmy transfers (on a quantity basis) steacUly fell from 79 percent in 1984 to 70 percent in 1986. Shipnent data by fims are presented in table c-2. U o S, producers I exports * * *, * * *, an:l * * * were the only u.s. producers of aluminum rod that reported ellpOrt:s durin;J the period covered by the investigations. Exports were equivalent to less than l percent of U.S. producers' shipments durin;J each period of the investigation. As shCMl in the follCMi.nj tabulation, exports of aluminum rod by these producers fluctuated widely durin;J 1984-86: * * * * * * A-16 A-16 Table 5 Aluminum rod: u. s. producers' danestic shipnents, intracx:arpany transfers, am total danestic shipnents, 1984-86, Jarruazy-March 1986, am Jarruazy-March 1987 Januarv-March-- .Item 1984 1985 1986 1986 1987 Innestic market shiprents: Qllanticy••••••••••• sllort. t:a-m •• 77,419 71,807 83,206 25,125 22,489 Percentage change •••••••••••• -7 +16 -10 _Val\le ••••••••••• 1,000 doilars •• 96,115 76,869 98;903 27,587 27,689 Percentage charge •••••••••••• -20 +29 - y Unit value y ........ . per tan •• $1,450 $1,174 $1;273 $1,245 $1,244 Percentage change •••••••••••• -19 +9 - y Intracx:npany transfers: 'JI Qllanticy ••••••••••• sllort. 'ta'ls •• 290,111 233,216 195,964 61,165 50,092 Percentage change •••••••• .•••• - -20 -16 -18 Value ••••••••••• 1,000 dollars •• 405,960 280,570 246,676 74,682 63,596 Percentage charge •••••••••••• -31 -12 -15 Unit valu.e, . .....• .••••• per tan .• $1,399 $1,203 $1,259 $1,221 $1,270 Percentage change •••••••••••• -14 +5 +4 Total danestic shipnents: Qllanticy•••••.••••• sllc:>rt. "t:als •• 367,530 305,023 279,170 86,290 72,581 Percentage charge •••••••••••• -17 -8 -16 Vall.le ••••••••••• 1,000 dollars •• 502,075 357,439 345,579 102,269 91,285 Percentage change •••••••••••• . -29 -3 -11 Unit value y ........ . per tan •• $1,409 $1,197 $1,263 $1,227 $1,262 Percentage change •••••••••••• -15 +6 +3 ],/ less than O. 5 percent • . Y Unit values were calcglat.Ed usin;J data fran fi.nos that provided information on :both the quanticy and value of danestic shipnents and intracall)any transfers. * * *. y u .s. producers of aluminum rod used various methods to value their intracx:npany transfers. See report p. A-20. Source: carpiled fran data sul::anitt.Ed in response to questionnaires of the u.s. Int.emational Trade camnission. u. s. producers' inventories U.S. producers' yearem inventories of aluminum rod fell 32 percent durin;J 1984-86. Dlrin;J the period covered by the investigations, inventories as a percent of total danestic shipnents fell fran 4 percent to 2 percent, as shown in the follc:,,,,ing tabulation: A-17 A-17 Em of period Ratio of inventories to inventories total domestic 'shipnents y Period ' (short tons) (percehe) 1984 •••••••••••••••••••••• 13,767 4 1985.................. ... . . 9,970 , 3 1986 •.•...•...•...•....... 9,393 3 January-March- 1986 •••••••••••••••••••• 10,124 Y 3 1987 •••••••••••••••••••• 6,968 Y 2; -- lf Total danestic shipnerits equal dctnestic market shipnents plus intra.canpany transfers. Ratios were .calculated usin;J data ' :fran firms that provided infonnation on both inventories an:i shipnente;. · One finn, acx::O\.ll'ltin; for between * * * an:i * * * percent of total dcmestic shipnents durin;J 1984-86, did n:,t report infonnation an 'inventories. · ·••:••· y calculated on the basis of anmJ.a1:ized shi~. · u. s. producers' imports am p.m::hases of imported aluminum rod Four U.S. producers ·of aluminum rod (* ·1' *, * * *, -* * *, an:i * * *) reported inp:)rts of alumi:rium rod fran Venezuela (table 6). * * *·' i· ~ ~ Petitioner ai:gues that integrated producers of ·rod an:i cable, such as sout:hwire, have had to inport alununum rod to remain cx:.uq:etitive with oc:mpmies like Alooa am Kaiser that have increasin;Jly used in'ported aluminum rod in their production of wire am cable. SOOthwire also ·c:ontenis .. that u. s. produoers have shutdown 'am dismantled their aluminum rod facilities an:i, therefore, when south.wire's need for alumimnn rod exceeds the production capacity of its Hawesville, Ki, rod facility, it has been unable to p.m::hase the needed rod fran oc:mpmies such ·as Reynolds, Alcan, or Noran::la, an:i still keep its oosts in line to cx:.uq:ete with Alcoa .an:i Kaiser. 1/ Enployment am wages 'Ille n.nnber of p:rocluction an:i related workers employed by u. s. producers of aluminum rod fell f:ran -188 in 1984 to 147 in 1986, or by 22 percent (table 7). Hoors worked, wages, an:i total c:::cmpensation paid to these workers followed a similar trerx:l durin;J 1984-86. Prcxluctivity increased roughly 8 percent durin;J 1984-86, rut fell 7 percent durin;J January-March 1987 c:anpared with that in the corresporrling period of 1986. Unit labor costs fell in each period, fallin;J 11 percent durinl the period urner investigation. '- 'Ille production and related workers at four of the six u. s. producers respomin:J to the Camnission' s questionnaire are represented by a union. 'lhese four fll111.S accounted for*** percent of total danestic shipments of aluminum rod in 1986. 1/ Petitions in investigations Nos. 701-TA-287 an:i 731-TA-378, apperxilx. A-18 A-18 Table 6 Aluminum rod: u .s. producers' inp:,rts fran Venezuela, am pm::hases of foreign-produced alumirum rod, i:,y finns, 1984-86, Janum:y-March 1986, am Janum:y-March 1987 (Short talS) Januarv-Man::h.-- Item 1984 1985 1986 1986 1987 Illports fran Venezuela: l/ Aloan •••••••••••••••••••••••••• *** *** *** *** *** Alc:x:>a.. • • • • • • • • • • • • • • • •·• • • • • • • • • *** *** *** *** *** Fssex: y ................. ~····· *** *** *** *** *** l{a.isex 'J,/ ••••••••••••• .•• , ! ••••• *** *** *** *** *** Norarm••••••••••••••• ·••••••••• *** *** *** *** *** ~lds ••••••••••••••••• , ••••• *** *** *** *** *** Salthwh:e J/···········~······· *** *** *** *** *** 'l'Otal •••• . ·• .•••••••••. ' ••.••• *** *** *** *** *** PUrd1ases of f~ aluminum rod fJ:an-- Venezuela: Aloan ••••••••••••••••• , •••••• *** *** *** *** *** Alc:x:>a. •••••••••••••••• -. ••••••• *** *** *** *** *** Fsse>c y ............ , .. , ..... *** *** *** *** *** l{a.iser ••••••••••••••••••••••• *** *** *** *** *** lfo:J:'al"'da • ••••••••••••• ~ ••••••• *** *** *** *** *** ~lds ............• ~ ....... *** *** *** *** *** Salthwh:e • ............ ~ ••••••• *** *** *** *** *** 'l'ota.l •• ••••••••••• ! ~ ~ ~ ••••• *** *** *** *** *** otller oamtries: Alcan ••.. ......•.•........... *** *** *** *** *** Alc:x::,a.-,2/ • • • • • • • • • • • • ' ~ • ' • • • • • *** *** *** *** *** Fssmc y ............ , ........ *** *** *** *** *** FaiseJ:- •. .....••••••••••••••.• *** *** *** *** *** ~-............ -~ ~- ..... *** *** *** *** *** ~lds ......•.•... '!: •••••••• *** *** *** *** *** Salthwh:e .•••••••••• •·• • .• ••••• *** *** *** *** *** 'lct:al. ••••••••••••• " •••••••• *** *** *** *** *** l/ * * *· y * * *·y * * *·y * * *·21 * * *· souroe: 0:npiled fran data sutmi:tted in response to questionnaires of the u.s. Intematiaal Trade Ccmnissiai. A-19 A-19 Table 7 Aluminum rod: Average m.nnber of production arxi related workers producing aluminum rod, hours worked, y wages arxi total compensation Y paid to such employees, arxi labor productivity, hoorly compensation, arxi unit labor costs, 1984-86, Januazy-Marc.h 1986, arxi January-Marcil 1987 J/ Januarv-March- Item 1984 1985 1986 1986 1987 Production arxi related workers: ~................ ·...... 188 167 147 148 137 Percentage change ••••••••••• -ll -12 -7 Boors worked by production am. related lNOrkers: ~••••••••• 1,000 hours •• 400 335 297 83 74 Percentage change ••••••••••• -16 -11 -11 wages paid to producticn am. related lNOrkers: Value •••••••• 1,000 dollars •• 5,571 4,631 4,241 1,213 1,014 Percentage change ••••••••••• -17 -8 -16 Total cx:mq:>ensatian paid ·,. to production arxi related ~rkers: Value •••••••• 1,000 dollars •• 7,163 5,939 5,357 1,567 1,301 Perc,entage charge ••••••••••• -17 -10 -17 tabor · productivity: y QJantity ••••• tons per hoor •• . 0.861 0.866 0.932 1.017 0.949 Percentage charge ••••••••••• +l +8 -7 Ha.Jrly compensation: ~ Val\le.... .....•.•• • • • • • • • • • • • • $13.93 $13.82 $14.28 $14.61 $13.70 Perc:enta.ge change ••••••••••• -1 +3 -6 unit labor CX>Sts: ~ Val.\le. -. • • • • •••••••.per 'ta\.• $20.79 $20.47 $19.35 $18.57 $18.52 Percentage change ••••••••••• -2 -5 - 1/ y Includes hours worked plus hours paid leave time. y Includes wages arxi oontributiais to SOCia1 Secmity am. other employee benefits. y Firms providirq enployment data accounted for * * * percent of total danestic shipnents of aluminum rod in 1986. ~ calculated usin; data frail finns that provided infcmnatian an both producticn am hours worked. ~ Based on wages paid excludin;J frin3e benefits. calculated usin; data fran firms that provided infonnatian on both wages paid ani hours ~rked. §/ Based on total compensation paid. calculated usizq data frail finns that provided infonnatian an both total compensation paid ani production. 11 Iess than -o. 5 percent. scmoe: 0:m'g;)iled fran data sul::anitted in response to questiamaires of the u.s. International Trade camnission. A-20 A-20 Financial experience of u. S. producers Six firms, aocountirg for virtually all u.s. production of aluminum red in 1986, fumished incane-ard-loss data a,. their operations producirg aluminum rod. * * *· 'lhe aggi:egate financial data of the other five U.S. producers are presented in table 8. A summary of financial data for each irdividual cc:mpany is shown in bble 9. 'lhe ag-;J?:egate net trade sales of aluminum red dropped by 27 percent fran $99. 8 millioo. in 1984 to $73. l millioo. in 1985, am then rose to $95. 6 millioo. in 1986, an increase of 31 percent fran the 1985 sales level. SUch sales increased by 8 percent to $27. 9 millioo. in the interim period emed March 31, 1987, canpared with $25. 7 millioo. in the correspcnlirg period of 1986. Intracanpany transfers of aluminum red declined fran $217. 6 millioo. in 1984 to $138. 0 million in 1986 am fran $42. l millioo. in interim 1986 to $34. 2 millioo. in inter.im 1987. * * *• Total net sales declined by 32 percent frail $317. 4 million in 1984 to $216. 6 million in 1985, am then increased to $233. 5 millioo. in 1986, still below the level of 1984 sales. SUch sales fell by 8 percent frail $67. 8 million in the interim period of 1986 to $62 .1 million in the interim period of 1987. U.S. producers reported operatin;J losses of $1.l million, or 0.5 percent of total net sales, in 1985 canpared with an operatin;J incame of $16.0 million, or 5. o percent of net sales, in 1984. In 1986, U. s. firms earned an aggregate c:peratin;J incame of $8. 4 million, equivalent to 3. 6 percent of net sales. '!be c:peratin;J incame increased frail $458,000, or 0.7 percent of net sales, in the interim period en:ied March 31, 1986, to $840,000, or 1.4 percent of net sales, in the correspon:lirg period of 1987. iWO firms reported operatirg losses in 1984 am 1986; \thlereaS, three firms sustained such losses in 1985. Only one fim suffered operatirg losses in the interim period of 1987. Incalle-arrl-loss data on overall establishment operations are not presented because * * *. Investment in property. plant. and eguipment.-six u.s. producers provided data concemirg their invesbqent in facilities enployed in the production of all products of their establishments, as well as in the pI'O(iuctioo. of aluminum red (table 10) • '!he aggregate invesbnent for aluminum red, valued at <X>St, increased from $38. o million in 1984 to $41. 1 million in 1986 am to $41. 2 million in the .interim period emed Maroh .31, 1987. '!he book value of such facilities increased frail $15.6 million in .1984 to $16.2 million in 1985, then declined to $15.2 million in 1986 and $14.9 million in the interim period erxied March. 31, 1987. A-21 A-21 Table 8 Incane-an:i-loss experierx:e of U. s. producers cm their operations producin:J aluminum rcxi, acx:ountirq years 1984-86, ard interim periods enied Mar. 31, 1986, an:i Mar. 31, 1987 Interim period en:ied Mar. 31- Item 1984 1985 1986 1986 1987 Net sales ,:'rade •••••••••••••• 1,000 dollars •• 99,777 73,105 95,564 25,737 27,859 IlltraocD1pany transfers •••••• do •••• 217,629 143,541 137,984 42,059 34,217 'l'0t:al. :net sales ••••••••••• do ·•••• 317,406 216,646 233,548 67,796 62,076 cost of goods sold •••••••••••• do •••• 295,831 212,881 219,192 65,764 59,835 Gross profit •••••••••••••••••• do •••• 21,575 3,765 14,356 2,032 2,241 General, sellin:J, an:i admin- istrative expenses 1,000 dollars •• 5,556 4,840 5,961 1,574 1,401 Operatfn; incane or (loss) 1,000 dollars •• 16,019 (1,075} 8,395 458 840 Depreciation arxl amortization e,cpet'lSe included above 1,000 dollars •• 2,031 2,344 3,053 819 645 cash-flc:M fran operations ••••• do •••• 18,050 1,269 11,448 1,277 1,485 As a share of net sales: Gross profit ••••••••••••• percent •• 6.8 1.7 6.1 3.0 3.6 qieratin:;J incane or (loss) •• do •••• 5.0 ( .5) 3.6 .7 1.4 OOst of goods sold •••••••••• do •••• 93.2 98.3 93.9 97.0 96.4 General, sellin:J, arxl adminis- trative expenses ••••••• percent • • 1.8 2.2 2.6 2.3 2.3 Sa.u:ce: Corpiled fran data sul::mitted in response to questionnaires of the U.S. Intematiaw. Trade Q:mni salon. A-22 A-22 Table 9 selected. incane-ard-loss data of U.s. producers ai their q,eratians producin:;J alumimm rod, by finns, aooamtin;J years 1984-86, and interim periods emed Mar, 31, 1986, and Mar. 31, 1987 Jtffl Net trade sales: Al.can •••••••• 1,000 dollars •• Mcx:,a, •••••••••••••••• •do .... Ka.iser'. • •••••••••••••• do • ••• Norarda. •••••••• ••••••• 00 •••• -·············do·-··'l'ota.l •••••••••••••• • do •••• Yntraca1pany transfers: Al.am l/ ..... 1,000 dollars •• Al.cx:a. • • • ••••••••••••• do • ••• Kaiaer •••••••••••••••• do •••• HoranSay •••••••••••• do •••• -·············do·-··'l'ota.l • ~·• • • • • • ••••••• ck> • ••• Total net sales: Al.can •••••••• 1,000 dollars •• Al.c::x:la.. • • • ••••••••••••• clc • ••• Kaiser. . .•••...•...... do • ••• Jfal::'arda. ••••••••••••••• do •••• scuthwire ••••••••••••• do •••• 'lcta,l. ••••••••••••••• do •••• Gross profit or (loss): Al.am •••••••• 1,000 dollars •• Al.cx:a. • ••••••••••••••• do • ••• Kaiaer ..•••••.•••••..• do •••• lfal:arda ••••••••••••••• do •••• -·· •.• •••••••• •c:ic> • ••• 'lcta,l. • • • • • • • •••••••• clc, • ••• OperatmJ in=a1le or (less): Al.can •••••••• 1,000 dollars •• llcx::,a. . • • • • • • ••••••••• &:, • • • • xa.iseJ:. . ••....••.•..•. ck> • ••• Jlclr:arm • ••••••••••••• •c:10 •••• -·············do····Total • • • • • • • •••••••• a:, • ••• As a sham of total net sales: Gross profit or (loss): Alcan .••...•••••. peroent •• Al.cx::aa. • • • • • • • • • • • • •• c:lo • ••• Jl:a,,iseJ:" ••••••••••••• • &:> •••• Noran.1a ••••••••••••• do •••• -···········do····Total or average •• do •••• ~tin; incane or (loss) : Alcan ••••••••••••pexcent •• Alcx::aa • • • • • • • • •• • • • •• ct:,• • • • 1984 *** *** *** *** *** 99,777 ***...*** *** *** 217,629 *** *** *** *** *** 317,406 *** *** *** *** *** 21,575 *** *** *** *** *** 16,019 *** *** *** *** *** 6.8 *** *** 1985 *** *** *** *** *** 73,105 *** *** *** *** *** 143,541 *** *** *** *** *** · 216,646 •••*** *** *** *** 3,765 *** *** *** *** *** (1,075) *** *** *** *** ***1.7 1986 *** *** *** *** *** 95,564 *** *** *** *** •••137,984 *** *** *** *** *** 233,548 *** *** *** *** *** 14,356 *** *** *** *** *** 8,395 *** *** *** *** *** 6.1 Interim period errled Mar. 31- 1986 1987 *** *** *** *** *** 25,737 *** *** •••*** *** 42,059 *** *** *** *** *** 67,796 *** *** *** *** *** 2,032 *** *** *** *** *** 458 *** *** *** *** *** 3.0 *** *** *** *** *** 27,859 *** *** *** *** *** 34,217 *** *** *** *** *** 62,076 *** *** *** *** *** 2,241 *** *** *** *** *** 840 *** *** *** *** *** 3.6 ... *** *** *** *** *** *** *** :Kaiser~·············do···· *** *** *** *** *** NoraJlda ••••••••••••• do .... *** *** *** *** *** -···········do····-*-*-*-----*-*-*-----*-*-*-----*-*-*-----·-·~•.;....__Total or average •• do.... 5.0 (.5) 3.6 • 7 1.4 Source: CCllpiled f%'a1l data sul::mitted in response to questiamahes of the U.S. Int.ema:tiaal. Trade o:mn:I ssia,. · A-23 A-23 Table 10 Investment in property, plant, and equipment and capital expen:iltures by 6 U.S. producers of aluminum rod, accountirq years 1984-86, and interim periods enied Mar. 31, 1986, and Mar. 31, 1987 (In t.housanjs of dollars) Interim period enied Mar. 31-- Item 1984 1985 1986 1986 1987 Investment in property, plant, and equipment: All products of the establishments: Ol:"igira.l cost. . . . . . . . • • • •.. . • • • *** Book value •••••••••••••••••••• *** Aluminum rod: Ol:"igira.l cost ••••••••••••••••• Book 'Va.llle •••••••••••••••••••• capital experm.tures- All products of the establishments: 37,966 15,643 *** *** 40,448 16,226 *** *** 41,110 15,214 *** *** 39,849 15,761 *** *** I.arxi and land improvements. • • • *** - *** - *** Buildin] or leasehold noprovements................ 7,309 2,906 *** ••• Mac:hinery, equipne.nt, and fixtures •••.•••••.•••••••• *** *** *** *** Total ....................... *** *** 35,528 *** Aluminum rod: I.arxi and land ill'lprovements •••• Buildin] or leasehold noprovements................ 989 Machinery, equipne.nt, and *** *** *** 41,171 14,897 fixtures •••••••••••••••••• _*_*_*_____.,..2._.9._6=5.____1..,_1 .,._08=3,___**-*-------=l-=-09 Total....................... *** 2,965 1,083 · *** · 109 Source: canpiled :Eran data sul:mitted in response to questiamaires of the u. s. Inten'lational Trade canmission. capital expen:litures.--six firms furnished data relative to their capital expen:iltures for land, buildirxJs, and machineey and equipnent used in the :mamifacture of all p:roducts of the :reporting establishments and such expemitures for the :mamifacture of aluminum rod. 'Ihese data are also presented in table 10. capital expen::li:tures relative to alminum rod declined in each period, fran $* • * million in 1984 to $1.l million in 1986 an:i fran $***in interim 1986 to $109,000 in interim 1987. A1IOOst all capital expen:iltures were for machinery and equipnent. O'verall establishment capital expen:ilture folla.Jed. a trerd silllilar to the aluminum rod capital expemitures, declinil'q fran 1984 to 1986, b.1t in::reased in interim 1987, oanpared with such overall expemitures in interim 1986. . A-24 A-24 Research am deyeloguent. -'!he same six finns . supplied data concernin;J their research am developnent expenses for their aluminum rod operations, as shewn in the followin;J tabulation ( in thousams of dollars) : * * * * * * * * * * * * * * _ Impact of inports on U.S. prcxiucers' cp:owt:h. investment, arxi ability to raise capital.-'lhe Omnission requested U.S. prociucers to describe am ~lain the actual am potential negative effects, if any, of imports of aluminum rod fran Venezuela on their finn' s grc7,lth, investment, am ability to raise capital. '!heir responses are presented below. Kaiser.-•**· Reynolds.-***• Southwire.-• * *· A-25 A-25 Consideration of the Question of a Reasonable Indication of 'ltlreat of Material Inju:cy section 771(7) (F) (i) of the Tariff Act of 1930 (19 u.s.c. § 1677(7)(F)(i)) provides that- In detennin.in;, whether an in:iustty in the United States is threatened with material injmy by reason of imports (or sales for inportation) of ~ merchamise, the camnission shall c:xmsider, moon;;J other relevant factors .l/- (I) If a sullsidy is involved, such infonnation as :may be presented to it by the administerin;J authority as to the nature of the subsidy (partio.llarly as to whether the subsidy is an export subsidy irronsistent with the Agreement) , (II) ~ increase in production capacity or existi.rq unused capacity in the exportin;J oc:mxtry likely to result in a significant increase in imports of the :merc:harrlise to the United states, (III) ~ rapid increase in United states market penetration an::l the likelihood that the penetration will increase to an injuricus level, (IV) the prd:)ability that imports of the mercharxli.se will enter the united states at prices that will have a depressin;J or suppressirq effect an domestic prices of the merchamise, (V) ~ substantial increase in inventories of the merc::harxiise in the united states, (VI) the presence of umerutilized capacity for producin;J the :merc:harrlise in the exportin;J oomi:tJ:y / (VII) ~ other denw:>r!strable adverse tren:is that im.icate the probability that the ilrq:,ortatian (or sale for importation) of the merc::han:iise (whether or not it is actually bein;J bnported at the time) will be the cause of actual injm.y, and .l/ Section 771(7) (F) (ii) of the act (19 u.s.c. § 1677(7) (F) (ii)) provides that "Any detennination by the Ccmnission U1'Kler this title that an .irrlustry in the United States is threatelled with material inju:cy shall be 111ade on the basis of evidence that the threat of naterial injmy is real an::l that actual injm.y is .imninent. such a determination may not be made on the basis of mere conjecture or supposition." A-26 A-26 (VIII) the potential for product-shifting if production facilities a.vned or controlled by the foreign manufacturers, which can be used to produce products subject to irwestigation(s) under section 701 or 731 or to final orders under section 736, are also used to produce the merchami.se under investigation. 'lhe available information on the nature of the alleged subsidies (item (I) above) is presented in the section of this report entitled "Nature and extent of alleged unfair :i.nports;" the ~ilable data on foreign producers' operations (items (II) and (VI) above) are presented in the section entitled "The producers in Venezuela;" · am. information on the volume, U.S. market penetration, and pricin;J of inp:>rts of the subject merdlarxlise (items (III) and (IV) above) is presented in the section entitled "Consideration of the question of the causal relationship between alleged material injuey am. U!p)rts fran Venezuela." Available information on U.S. inventories of the subject products (item (V)) and on the potential for ''produ.ct-shiftin;J" (item (VIII)) follows. U. s. inventories of aluminum rod fran Venezuela As shown in the follc:Ming tal:ul.ation ( in tons) , u.s. inp:,rters and those U.S. producers that :i.nported. and/Or p.m::hased inp:,rted aluminum rod, reported broad charges in inventories of :in-ported aluminum rod fran Venezuela: * * * * * * 'lhe potential for ''Product-shifting'' 'lhe potential for ''produ.ct-shiftin:J" is not an issue in these investigations since there are no knc:Mn products subject to investigation(s) or to final orders that use production facilities that can be shifted to produce EC aluminum rod. 'lhe staff, however, offers the followin:J canments on the :mamifacturin:J process. As noted in the section of the report entitled ''Marrufacturin;J processes" (p. A-3), a rod mill designed to produce EC rod cannot be converted to mechanical rod production. A mechanical rod mill, however, could be adapted to produce EC rod (p. A-4) • A-27 A-27 Consideration of the Question of the causal Relationship Between Alleged Material Injw:y am :rnp,rts fran Venezuela U.S. inports .l/ Venezuela is by far the largest source of aluminum rod imported by the United states, acx:xuntirq for 84 percent of total U.S. imports of alumimnn red in 1986. . Ilnports of aluminum rod fran Venezuela increased frail 27,524 tons in 1984 to 56,477 tons in 1985, or by 105 percent (table ll) • In 1986, imports of aluminum :rod from Venezuela fell to 50,022 tons, or by ll percent fran 1985 levels. ruring January-March 1987, illlports fran Venezuela irx::reased 34 percent fran i1rports durirg the c::orrespon:imJ period of 1986, to 13,149 tons. Market penetration As a share of ~ u.s. oansunpticm, inp:>rts frail Venezuela rose fran 7 percent in 1984 to l5 percent in 1985 and 1986 (table 12) • DJriJYJ Jammry-March 1987, illlports fran Venezuela acxx:,unted for l5 percent of ~ ocrisunptian, up fran 10 percent durin;J the oorrespaxUn;J period of 1986. Calailated on the basis of value, market penetration by i1rports of aluminum red fran Venezuela follam a similar treni. ]/ Aluminum rod is an inter:mediate product generally used in the production of electrical wire am cable. Data · on shipnents am inports of aluminum. wire ard cable are presented in cg:>. o. A-28 A-28 Table ll Aluminum ro:i: l/ u.s. illport:s for ccnsuq,tian, b'f prirx:ipal sa.iroes, 1984-86, January-March 1986, ani Jaruary-March 1987 y Jarnmy-March- SOlroe 1984 1985 1986 1986 1987 Q.lantj.ty (talS) v~...•....... •.••· ····••·. 27,524 56,477 50,022 9,836 13,149 ~-.·...... •.• ........... l,648 1,350 2,945 398 741 ~lavia ........... •"• .....~ ... 3,011 2,263 1,468 302 317 lJrlit:a:i .~-• • • • • • • • • • •'•••• 541 729 1,392 282 524 Belgium am Lnxentx:mg •••••••• 1.,681 1,553 1,153 187 624 BJ:a.zil ••••• .- •••••••••••••••••• 6,747 1.,360 620 153 79 'la.iwan ••••• ·-· •••• • ••• •,• • •• ·• •. o 131 448 105 104 ~-....................... i,107 646 445 97 66 si;:a.in. ••••••••••••••••••••••••• 146 489 365 192 0 .All ot:llel:" ••••••••••••••••••••• 2.Q3~ l.1818 J.,022 3§9 188 'l\::Jtal ••••••••••••••••••••• ii.HS §§.Bl§ 2~,881 n.~21 l2,793 :Yal~ (l,OQO dollars} 3/.. VetleZ\liela. • • • • • • • • • • • • • • • •·• •.-.· • 43,~3 61,513 61,495 ll,142 15,922 .A:l:gerJt.ira ••••••• ~- -. • • • • • • • •'•• ·. • 3,596 2,,53~,. 4,597 705 1,412 ~lav'ia. ••••••••••••••••••• :~ 7,,619 s;oss 3,269 715 684 unit:a:i Rirg:km~ •••••••• ~ •••••• 2;02a , . 2,565 5;559 864 1,844 Belgium am I.nveznbc,n;g •••••••• 3,988 3,019 ' 2,234 364 1., 250 Bl:i!lzil .•...•••.••...•••..••... ll,934 2,040 1,032 242 129 'l'ai.'Wall. • • • • • • • • • • • • • • • • • • • • • • • 228 760 173 186 ~-....................... 2,371 1,261 932 190 121 si;:a.in. ••••••••••••••••••••••••• 365 1,082 830 424 All ottler ••••••••••••••••••••• 61414 t.§1~ a.121 ~;,!2 492 'l\::Jtal ••••••••••••••••••••• iU,,498 84,lii ~3.4~~ 15.75;!. 22.0~0 unit value (cer 'tall VetleZ1l8la. • • • • •• • • • • • • • • • • • • • • $1,569 $1,089 $1,229 $1,133 $1,211 Al:g'erlt.i.rla ••••••••••••••••••••• 2,182 1,876 1,561 1,771 l,906 ~lav'.ia. •••••••••••••••••••• 2,530 2,247 2,227 2,368 2,158 uni'teci ~-• • • • • • • • • • • • • •• 3,749 3,519 3,994 3,064 3,519 Belgium and Utxenix::1'll:g ••••• , , • 2,372 1,944 1,938 1,947 2,003 Bt:'a.zil •••••••••••••••••••••••• 1,769 1,500 1,665 1,582 l,633 'l'a.iwari. • • • • • • • • • • • • • • • • • • • • • • • 1,740 1,696 1,648 l,788 Fl::!lrlics •••••••••••••••••••••••• 2,1"2 1,952 2,094 1,959 1,833 SIJa..in ••••••••••••••••••••••••• 2,500 2,21.3 2,274 2,208 Al.l ot1ler ••• • • • • •. • • • • • • • •••• • 3,146 ~,651 2.§62 ~.~26 ~.617 A-vm-age. • • • • • •. • •. • • • • • ••• 1,834 1,259 1,393 1,321 1,396 JI Irx::looes imports '\ll'der TSOSA item 610.is20 am 61B.154o. y Because of a lag in ~, official bp:)rt statistics include sane 11 can:y-over'' data for merchal'Xiise .mported, htt JXYt rep::>rte::i, in prior periods (usually the previous month) • Beginnin;J in 1987, camnerce extemed its monthly data cx:apilatian cutoff date by abalt 2 ~ in order to significantly J:eall08 the amo.mt of c:arry-cver. 'Iherefore, official statistics for Jan1Ja%Y 1987 include data that woold p::m,ia.sly have been carried CNer to Febl:uaJ:y 1987. HcM!vm", in order to avoid an ~ overstatement of the January 1987 data, the can:y-over data :frail 1986 that w::w.d have been ir.cluded in January 1987 official statistics as of the previc:us o.Jtoff date have been excluded. camnerce isolat:a:i these +!!86 ,c:ax:ry-o.-er data ard has not .irx:l.uded them in official statistits for 1986 or Jaruu:y 1987, ,siooe their inclusion in either· period woold result in an ~ a.,erstatement, With respect to iDports frm Venezuela, this can:y-over amcunted to 3,151 taw, with a C.I.F. duty-paid value of $3.751 millicn. 'lhe carcy-c:,.,,er of total jJq:,orts amounted to 3,287 talS, with a c.I.F. duty-paid value of $4.031 millia,. V l'.qlort values are C.I.F. duty-paid values. Scuroe: Ccllpiled fran official statistics of the u.s. Department of Onneroe. Not:e.-Because of~, figures may net add to the totals shown. A-29 A-29 'l'abla 12 Aluminml rod: AtPrent O.S. ccnlUlll'tiat, .taparta, and mrkat penetratia,, calculatecl cm the basis. of quantity and value, l/ 1984-86, J~ 1986, and J~ 1987 1,/ iim11ry-Mara1- SgJroe 1984 1985 1986 1986 1987 Total~ u.s. ~: Quantity •••••••••••• ta,s •• 411,975 371,839 339,051 98,211 88,374 Pezcantage c:harga .•••••••• -10 -9 -10 lqarta trm Vanazuala: Quantity•••••••••••• ta,s •• 27,524 56,477 50,022 . 9,836 13,149 Pezcantage c:harga ••••••••• +105 -u +34 :Dipl.tts trm all acmces: Quantity••••••••••••ta,s •• 44,445 66,816 59,881 ll,921 15,793 P8r0arlt:age c::hanga ••••••••• +50 -10 +32 W panettatia'l by bipn:tatraaVanazuelaV percatt .• 7 l5 15 10 l5 llmcat panetratia, by iJlp:rt. trail all ~ percmlt •• ll l8 18 12 l8 'l'ot:al ~ u.s. CXl'1SUll¢ial: value •••••• 1, ooo d0llars •• 583,573 441,583 429,008 118,020 113,325 PIIZcal1taga c:harga .•••••••• -24 -3 -4 :Dipl.tta trail Venezuela: value •••••• 1,000 dollara •• 43,183 61,513 61,495 U,142 15,922 Pezcantage c::hanga ••••••••• +42 JI +43 :DlpJ.tta trail all 110Ur08S: value •••••• 1,000 dollars •• 81,498 84,144 83,429 15,751 22,040 Pezcantage c:blnga ••••••••• +3 -l +40 JlarJcet penetrat.ial by iDparts trm vanezuela pm:ceut •• 7 14 14 14 W pareb:aticn by iDparts frail all 8ClJr08S perCeTtt •• 14 20 20 13 l9 JI n.p:n:t values are C.I.F •. cl.Jty'-pid values. 1,/ As n::,tec1 in table ll, t'oobDte 2, m carry-cwar data haw been acluded frail 1986 an:! Jumry 1987 official stat:lstica. rncl.uimJ ·these :blpcrts in J~ 1987 tigl.lres wculd result in a total ~ u.s. CXDIIJqJticn of 91,661 taw, valued at $117.356 mill.i.a'l. ihl nsultin;i m1'klrt peuat:caticri by .1Dpalts trm Venezuela wculd be 18 percent, calculated ai the basis of quantity, an:! 17 peroent, caloilated C11 the basis of value. 'J/ Respondents ugue tliat U.S. 0ansus lm'ea\l statistic& IWIStata the actual volume of iDpart:a, m1 that using exports to the Unitecl states by the 3 produoarB of alUlllinm l."Cd in Venezuela am mxa nalistic. (See postocmferance brief ai behalf of the Venezuelan irdust:%y, Aug. 12, 1987, p. 29.) As llhcwn in table 1, Venezuelen experts of aluminum rod to the United states during 1984-86 -were * * * ta1s, * * * tc:rm, and * * * taJS, respectively. Usmg auch data, :marlcet paarttatim by Dpmts of al.umin.ml rod frail Venezuela durln;J 1984-86 was * * * pelOBllt, * * * peroent, and * * * percent, respectively. 2ecause the 3. Venezuelan .producers aui:piyin;r apart data to the onm1asia, used dltfcant interim periods than the Je:rua.ry-March pericds used t,y the omn1ssicn for t:base imastigatiaw, interim 1986 mi interim 1987 figures will mt l:le C!J SC,JBsed here. JI Iw than o. 5 pm:oait. Scmce: Ocllpiled t.raD otfid.al lltati8tic:a of the U.S. Daplrt:mant of Oiiii+tl'08 (illp:,rts) an:! trClll lkta IIUbdtted in reapa,ae to~ of the U.S. Intematirml. T.mda 0Cnm1 Mien, A-30 A-30 Prices Aluminum rod is sold on a per pourrl basis. U.S. producers generally quote their prices delivered, although freight allowances (generally l to l.5 cents per poun:1) are given to aey oanpmy willing to pick up the rod with their own trucks. Importers may quote their prices either on a f.o.b. port of entry or on a delivered price basis. '!here are two major canponents to the final sellirq price of the alumimnn rod: the fabrication price am the aluminum metal value. 'Ihe fabrication price (also known as the fabrication adder) is the chal:ge to the buyer of convertirq priJDaey aluminum to aluminum rod. '!he fabrication adder varies slightly with the diameter of the aluminum rod; larger dia:neter rod is oore expensive to fabricate. However, ll'DSt producers canmented that in large orders the premium price asscx:::i.ated with a larger diameter rod would disappear. The fabrication adder also usually includes all inlard shipping costs to the pm::haser. Petitioner ha$ argued that the fabrication adder is the JOOSt iltportant oanponent in sales negotiations. 'J,/ Saithwire charges that the Venezuelans are quotirg lower fabrication adder prices, am are thereby taking away sales fran U.S. producers. Petitioner states that the metal value is detennined by whatever price exists for primary aluminum the lOOllth prior to shipnent of the aluminuJn rod. Since llDSt sales are multiple shipnent orders, neither party knows 'Atlat the exact total delivered price will be until shipment ocx::urs. '1he metal value generally aocoonts for over 85 percent of the total sellin;J price of the rod and therefore strongly influences the final price. one pm::haser contact:ed :made referen:::e to this fact by referrirq to the product as "skinny in;Jot." y 'Ihe price of aluminum declined 41 percent fran January 1984 to November 1985, frail 76.1 cents per poun:1 to 45.l cents per poun:1. 'J/ Aluminum prices have generally risen durin;J 1986-87, am presently exceed January 1984 levels by aver 12 percent. nirirq the last 7 months, al\lll\inum prices have increased fraa a~tely 54 cents per pou:rxl to over 80 cents per pa.un, an increase of 48 percent. Y Although the metal value of aluminum is acx:epted by the industzy as a fixed cu11onent of the price for aluminum rod, which fluctuates with cpen market activity, parties state that various sources are used by the irrlustry to set the metal price. Arn the prices ftan these sources vary fran each other. ~ '!he in:lusb:y plblication entitled Metals Week, lists two prices, the market rate am the transaction rate. 'lhe market rate represents the price of u.s.-produoed aluminum on a delivered basis to the u.s. Midwest. 'lhe transaction rate also measures the price of alumirmm on a delivered basis to the U.S. Midwest, but takes the daily cash settlement price for aluminum JI Transcript, p. 52. y * * *·'JI Based on Metals Week u.s. market price for aluminum. y Based on a U.S. market price of over 80 cents per poum, as :reported for the secorxi week in August by "' * *, Metals Week, Aug. 11, 1987. ,21 Transcript, pp. 51-s2, am * * *. A-31 A-31 traded on the Iarlon Metal ExcharXJe (I.ME) and adds a premium representing transportation costs to the U.S. Midwest. 'lwo prices that are considered representative of the world price for aluminum are listed on the I.ME. Here, alumim.nn is traderl on a cash (spot) basis and a 3-:month-option price basis. Y 'Ihe sources of aluminum metal prices are further discussed in aw- E. u. s. producers and importers sellirxJ to the open market generally use the Metals Week 100l'l1:hl.y average market price from the l'l¥)l'lth prior to shipment as their source for metal value in their sales of aluminum rcrl. u. s. producers that inp:)rt directly frCl1l Venezuela, hc1.veV'er, use the I.ME 3-nx:>nth or I.ME cash price to detemi:ne metal value. In addition, suppliers are known to average tt«> sources together, or to select a specific week's or day's price quote for aluminum as the basis for metal value in U.S. sales. As shC1NI1 in figure l, the tt«> prices used JDOSt often, the Metals week market price and the I.ME 3-month price, generally followed the same trerxi aver the period of investigation, decl~ in the first 2 years and climbirxJ in the seocni 1-1/2 years. However, the price of metal on the I.ME has generally been less than the Metals Week market price by l to 10 cents per pam. y Hence, shifts in the umerlyirxJ basis for settiJq the value of metal lIBY have affected price trerxm durinj the period of investigation. Sales markets '!here are essentially tt«> markets for aluminum rod in the United States; a captive market 'Where the rcrl producers supply their electric utility wire and cable manufacturirg divisions with the finished rod, and an open market where rod is sold to unre1ated pn:-dlasers. 'lhe captive market represented 58. 4 percent of U.S. rod oonsumption in 1986, down frail 70.4 percent in 1984. In absolute te:cns, this market fell fran 290, lll tons in 1984 to 195,964 tons in 1986. 'lhe decline in the captive market for aluminum red has been attributed to the declinm;J cable market, wch was due to the near-100-percent electrification of the united states and the associated decline in production of cable by the integrated producers. Respordents have argued that this decline is also due to the expressm desires of the integrated producers to DJVe tow.rd the high em of the scale of aluminum products, i.e., those products that have a greater profit margin and potential for grc:,..,th than cable or alumim.nn rod. V n:mestic shipnents to unrelated i;::urchasers in the open market by u. s. producers aOCOlll'lted for awroximate1y 24. s percent of total 1986 aluminum rod OOl'lSllll'ption, up frcm 18. 8 percent in 1984. Direct inp:>rts of aluminum rod by U. s. rod producers accounted for 83 percent of total reported i.np:>rts of aluminum rod from Venezuela in 1986, down from 93 percent in 1984. y Alumim.nn is also traded on the New York Comnn:lities Exchange (cx:m:x). 'lhe aluminum stock \JI'rlerlyin] these sales, hcM!ver, is small and therefore not considered by u .s. producers and i;::urchasers as a good representation of :market price. Y Transcript, p. 52. V Ibid., pp. 75-76. A-32 A-32 Figure 1. -Average Metals Week u. s. market price for aluminum, an:i the average 3-JID'lth-q,tian aluminum price traded an the Larl::1on Metal Exdlan;le, by months, January 1984-v\me 1987 BOT I 1s ki\; \, .. 70 sslI I Canta j Per 60 + Pound I I ss+ !I 50 4- 1 i 45 j_ i ',I I II I I I I II I ,,.,.., \ / '\ I I ' \ , \II I ' 'IIIIII .\ 40~-t-t-+-t-+++ I 1/84 sooroe: Metals Week. - LM£ 3--Month Price --· Metal• Waek Market Price I I I · I I I I I I I I I I I I I I · I I I I I I I I I . I I , I ➔ --f 1/85 J/86 1/87 Month A-33 A-33 captive sales.-six of the seven u.s. rod producers are integrated manufacturers that use their red production in their cable operations. 'lhe aluminum rod is internally transferred to their cable facilities either on a production cost basis, or a pr£rletermined market price basis • .l/ Aluminum rod production in excess of internal consumption is subsequently sold on the open market. '!he producers, however, do try to maintain viable customer business in the~ market. If their cable operations unexpectedly need additional aluminum rod, the produoers will p.irdlase aluminum red fran other sources (irol.u::li,nJ :ilrp)rts) rather than appropriate rod already designated for custaners. y Open-market sales.-Aluminum red is ·•sold on the~ market on a spot basis, a fonnal contract basis, or as a result of vert:>al oanmitments due to ergo~ custaner-producer xelationships (evergreen arrargenents) • For spot sales, SUR)liers my quote a s~le sellin;J price for both fabrication arxl metal, or may quote the fabrication price am metal value separately. For fixed-period contract sales, the price for fabrication arxl metal value are nonnally quoted separately. A fixed-period contract generally establishes a finn fabrication price am sets guidelines on p.irchase quantities. 'lhe second price carponent, the metal value of aluminum., may fluctuate with the market price of the metal, or it may be fixed (hedged) for a specified period of time (usually not larger than 3 months) • Alternatively, in a toll arrarqement or metal oorwersion contract, the purchasers of the altnninum rod supply the input metal either to the aluminum rod plant, or to any other area specified by the red producer. Vert>al. oammitlrents due to custaner relationships are similar to a fixed period contract, rut a formal contract is not written arxl signed. Usually this type of agreement provides for a certain percentage of the ?JrChaser' s rod requirements, i.e. , 50 percent or 100 percent, and the relationship renews itself until the buyer or seller wants to renegotiate. Producers and inporters ""8re asked to est:ilnate the share of their total U.S. danestic sales in 1984-86 of aluminum rod that was sold via each of the p.irchas~ arran;rements stated above. Aggregated results are shown in table 13. A substantial proportion of u.s.-produced aluminum red was sold via Dlltiple shipnent orders by either a formal contract or an informal vemal camnitment type of arrargement. Both of these ~ts specify a fixed fabrication price arx:l a fixed metal source but allow the metal value to float. In 1985 arxl 1986, these two sales practices aCCOllllted for nearly 80 percent of all open market domestic sales to unrelated customers by U. s. producers. y .lJ See section of the report entitled "Financial experience of U.S. producers" for an explanation of the methcx:is used by the producers in valuin;J their captive production. y None of the 8 purchasers contacted in these investigations had any problems with supply fran domestic producers. y * * *· A-34 A-34 Inporters relied 110re on spot sales for their darestic shipments than u. s. producers, but used formal contracts just as often. Sales based on verbal commitments appeared for the first time in 1986, accountin;J for 25 percent of all U.S. importer sales, u .s. producers that ll1Qi)Ort directly fran Venezuela in:licated that they plrChase aluminum rod on a fcmnal oontract basis. Prior to 1985, ~ were also made on a spat basis. * * *. Table 13 Alumimnn rod: Open-market sales transaction practices by U.S. producers and importers, by types, 1984-86 (In percent) u. s. :(;!roducers u. s. inporters 'fype 1984 1985 1986 1984 1985 1986 Imividual shipnents: si;x,t:. $cl.le ••••••••••••••• 6.6 5.9 5.3 39.4 32.4 1'lll.tiple shipnents: Verbal CXIIUDitments •••••• 35.4 41.4 36.2 25.0 Fonnal COirt:racts: Fixed price (fixed ll1l8tal. values) •••••• l,O 23.5 9,2 Metal value varies •••• 27,5 38.3 41.7 l/ *** 37.l 33.4 Toll contracts •••••••• 30.5 14.5 15.8 l/ * * *· Source: Cmpiled fran data sul:anitted in response -to questionnaires of the U.S. InteJ:national Trade CcAmnission. Transportation costs Transportation oosts rarqe frail 2 to 5 percent of the total delivered price for aluminum rod sold by U.S. producers and 2 to 4 percent for illlporters. u. s. producers commented that although these costs are not considered to be a major factor in the sale of aluminum rod, freight costs do beccne increasin;Jly :inportant as distance inc:reases frail the rod plant. Since the fabrication adder, which inc:::orporates these freight costs, is usually the central point in sales negotiations, high transportation costs terrl to have a negative influence on alumim.mt rod sales. l/ Alumirnnn rod is primarily shipped by truck. '!here is generally no minimum quantity requirements for either domestically produced or imported almninum l/ For a description of haw transportation costs could play a major role in sales c:anpetition between Southwire ani SUral, see postconference brief on behalf of the Venezuelan in:iusb:y, Aug. 12, 1987, exhibit 1, table 12. A-35 rod. · 1* * *. 'Ihe leadtime for u. s. -producec;i aluminum rod ranges from 5 days to 6 weeks, although. most producers give 30 days as the typical t:inte period. 1he leadtilne for inported aluminum rod ran;res from 30 to 60 days. ouestiamaire price data 'lhe camnission request.eel u. s. producers an:i ilrqx>rters to provide quarterly price data between Januaey 1984 am ·June 1987 for two products. For each product, price data lNeI'e requested fqr .the largest quarterly shipnents (a) l.Ulder 135,000 poums an:i (b) 135,000 palJ'rls an:i aver. '!he specified products for which price data were requested are listed . belC7tl. Product 1: Electrical oon:iuctor gJ;ade (AA13~0) aluminum ra::lraw rod, 0.375 inch in diameter, oonfomirg to AS'IM specification B-233. Product 2: Electrical oon:iuctor grade (AA1350) aluminum redraw rod, 0.470 inch in diameter, oonfom:irg to AS'IM specification B-233. For each product, producers · an:i . importers were asked to report the total delivered sellin1 price, the f.o.b. · (U.S. location) price, an:i the net fabrication adder. Useable price data ' were received frail five U.S. ·producers (* * *, * * •, * * *, * • *, an:i * ·* "'l, although not for all periods or each product requested. l/ 'lhe five U.S. producers accounted ·for virtually all :ceported u.s. producers' ··q>en market .shipnents of al~ rod to unrelat.ed-p.irchasers· in 1986. . 'Ihese producers' shipnents ,of products 1 and 2 accounted for 85. o percent of the total reported u.s. producers' .shipnents of aluminum rod to the open market in 1986 (product l itself accounted for * * * percent) • '!he total quantity of the five producers' largest shipnents accounted for • • • percent of U.S. producers' ag;Jregate reported danestic shipnents of product 1 in 1986, an:i for * • * percent of u. s. producers' total :reported shipnents of product 2 · in 1986. Y Five iJrp:,rters, * * *, * • •, • • •, • • • an:i • • •, reported price data but not necessarily for all periods or each product requested. -niese importers, together with U.S. producers, aocounted for virtually all aluminum rod :ilrported fra1l Venezuela in 1986. 'Ihe . five importers' shiprmrts of products l an:i 2 acx::ounted for * * * percent of the total reportei · open market danestic shipnents of inp,rtei aluminum rod in 1986. · 'lhe importers' largest shipments acc::amted for*** percent of all reported domestic shii:m,ents· of product 1, y * * *·Y Total :reported domestic shipnents for 1986 by U.S. producers for product l were * • *. 'lhe total aJOCJUnt reported for product 2 was * * * poun:is. A-36 A-36 and for • • • percent of all reported danestic shipments of product 2 .inp:>rted fran Venezuela in 1986. y Petitioner has axgued that direct i.nports by integrated producers for their cable operations repre$8J'lt sales that otheJ:wise "'1Cllld have been made by the danestic imustry. Because these inports are not sold to unrelated custcmm;, am thereby not reported on a quarterly largest Shipoont basis in the questionnaire, the unit values of direct iltports by the U.S. producers are measured by using unit value price data for each year. Unit values of U.S. producers' danestic shipnents to mu-elated :r;,JrChasers are also measured for canparison p.lrp0S8S. Direct .inp:>rts by u. s. rod producers acc:x,.mt for over 80 percent of the total i1l1ports of Venezuelan alumimnn rod into the united States. Price treoos for sales to unrelated custaners. -Based on u. s. producers' and jJip:)rters' questionnaire responses, quarterly net sellirg prices generally fell durin;J 1984 and 1985 am clilllbed duri.n;J 1986 and Janu&:y-June 1987. '!his trem was similar to the decline and rise of alumirrum prices. Prices were generally lc::,.,m- for shipnents aver 135,000 pc::,.JmS than for shipnents urner 135, ooo pourrls for bath products smveyed (tables 14 ard 15) • For product 1, alumirnm rod of o. 375-inch. diameter, prices in 1984-85 for u.s.-•produad rod declined by 35.9 percent for shipnents aver 135,ooo pooms, fran 80. 52 cents per pa.im to 51. 60 cents per pcAJl'd. For shipnents urner 135,000 pourrls, prices declined by 33.1 percent, frail 85.14 cents per poum. to 56. 96 cents per poum. l)Jring .January 1986-June• 1987, prices climbed by 33 · percent to 68.57 cents per poom for shipnents aver 135,ooo pcums, am by 28 percent to 12.19 cents per poom for shipnents umer 13s,ooo pcums. Prices for Venezuelan inp:>rts declined • • • percent durin;J 1984-85, · fran * * * cents per pouni to * * * cents per poum. for shipnents larger than 135,000 pourrls. Prices then clilnbed to an April-June 1987 level of • * * cents per pc:oxi, an increase of * * • percent. For shipnents un:ler 135,000 pollmS, prices hit their low point in the fourth quarter of 1985 at • * • cents before generally risin:J aver the next 6 quarters to • • • cents per pc,.m, an increase of*** percent. For product 2, alUllli.num rod of 0.470-inch. diameter, U.S. procl1JOer prices for shipnents aver 135,000 poums again fell, fran •**cents per pc,.m at the beginnin;J ·Of 1984 to its low point of • • • cents ·per poum at the erxi of 1985, a decline of • • • percent. Prices generally climbed thereafter to a seocn:l quarter 1987 level of * * • cents per pourn, an increase of • * * percent. Prices for the largest quarterly shipnents um.er 135, 000 poums of product 2 likewise fell; by * * * percent, durirg the first half of the investigatory period (* * *). Prices theri rose by aver • • • percent dti:rirg the secom half of the pericxi oovered., en:lin::J at a price of * * * cents per pourn in the seoorrl quarter of 1987. y Total reported danestic shipnents for 1986 by U.S • .inp:>rters for product 1 were * * * pourrls. 'Ihe total aJOOUnt reported for product 2 was * * * pourrls. A-37 A-37 Table 14 Aluminum rod: Weighted-average net deliverErl sellin;J prices of product 1 (diameter of 0.375 inch) :reported by u.s. producers am importers of Venezuelan aluminum rod sold to unrelated pm:::hasers, am average margins of uniersellin;J (oversellin;J) by the subject inp:>rts, by shiprent size arxi by quarters, Januazy 1984-June 1987 U.S. Venezuelan Margin of umersellinq <overselling) Item price price Amount Percent --cents/Pourrl Shipnents unier 135,000 pcurrls 1984: Jan.~ ••••• 85.14 l/ l/ l/ Apr • ...:rune •.•• 77.51 l/ l/ l/ JUl.y-Sept •••• 74.79 l/ l/ l/ C>c::t.. -I>ec:: • .• • •• 57.77 l/ l/ l/ 1985: Jan.~ ••••• 64.50 *** *** *** Apr •...:rune •••• 62.54 *** *** *** JUl.y-Sept •••• 59.28 *** *** *** C>c::t. • -I>ec:: • • • • • 56.96 *** *** *** 1986: Jan.~ ••••• 61.50 *** *** *** Apr . ...:rune ..•. 70.04 *** *** *** July-Sept •••• 64.89 62.55 2.34 3.61 C>c::t.. -I>ec::. • • • • 62.34 *** *** *** 1987: Jan.~ ••••• 64.25 **fr *** *** Apr.--.June •••• 72.79 **fr *** *** Shianents over 135,000 DOlln3s 1984: Jan..~ ••••• 80.52 **fr *** .,.,. Apr.--.June •••• 72.59 **fr *** .....J\11.y-Sept •••• 60.84 *frfr *** *** C>c::t. • -I>ec:: • • • • • 55.77 **fr *** *** 1985: Jari.~ ••••• 56.77 *frfr *** *** Apr.-u'tn'le •••• 57.55 54.65 2.89 5.11 J\11.y-Sept •••• 52.51 51.96 .54 1.05 C>c::t. • -I>ec:: • • • • • 51.60 **fr *** *** 1986: Jan.~ ••••• 57.58 56.99 .59 1.03 Apr. -u'tn1e. • • • 65.03 59.11 5.92 9.10 July-Sept •••• 60.89 **fr *** *** C>c::t. • -I>ec:: • • • • • 60.23 **fr *** *** 1987: Jan.-:Mar ••••• 60.22 *** *** *** Apr. ~UI18 •••• 68.57 *fr* *** *** y No prices reported. Source: Ccrrpiled f:rcan data sul::m.tted in response to questionnaires of the u. s. International Trade Commission. A-38 A-38 Table 15 Aluminum rod: Weighted-average net delivered sellin;;J prices of product 2 (diameter of 0.470 ir.dl) reported by U.S. producers am inp::,rters of Venezuelan aluminum. rod sold to unrelated pm::hasers, arxi average margins of urrlersellin] (oversellin]) by the subject inp::,rts, by shii;ment size am by quarters, January 1984-June 1987 U.S. Venezuelan Margin of un:lersellinq (overselling) Item price price Aloount Percent ---cents/Pol.Im shianents um.er 135,000 t>OUrrls 1984: Jan.-¾-far ••••• ••• l/ l/ l/ Apr.-June •••• ••• l/ l/ l/ JUly-sept •••• ••• l/ l/ l/ C>c:t.. -I>ec:. • • • • ••• l/ l/ y 1985: Jan. -¾-far. • ••• *** l/ y y Apr. -,J\u'ie, • • • • *** l/ y y JUly-Sept •••• *** l/ y y C>c:t.. -I>ec:. • • • • *** l/ y y 1986: Jan. -¾-far ••••• *** *** *** *** Apr. -J\n'le: ..••• *** *** *** *** JUly-Sept . ••• · *** **"' *** *** C>c:t.. -I>ec: • • • • • *** *** .... *** 1987: Jan.-Mar ••••• *** *** *** *** Apr.-June •••• *** *** *** *** Shignents over 135,000 txJU1"X:ls 1984: Jan. -¾-far ••• •.• *** y y y Apr. -,J\u'ie, • ••• *** y y y JUly-Sept . ••• *** y y l/ C>c:t.. -I>ec: • • • • • *** y y y 1985: Jan.-M'ar ••••• *** y l/ l/ .Apr. -,J\u'ie, •••• *** y y y JUly-Sept •••• *** y y l/ C>c:t.. -I>elc:: • • • • • *** y y y 1986: Jan.-Mar ••••• *** y l/ y .Apr. -,J\JJ'le, • • •• ' *** *** *** . *** JUl.y-Sept •••• *** *** *** *** C>c:t.. -I>elc:: • • • • • *** y y y 1987: Jan.-Mar ••••• *** *** *** *** .Apr. -u"\me •••• *** y y y y No prices reported. Source: compiled frtm data subnitted in response to questionnaires of the U.S. International Trade Cormnission. A-39 A-39 SUfficient data for open market price trerrls in imports of Venezuelan aluminum :rod product 2 were available only for shipments un:ier 135, ooo pounds, am only for Januax:y 1986-June 1987. Prices varied fran quarter to quarter, but they did em at their highest level in the seconi quarter of 1987, at * * * cents per pourrl. To shew the trerm in fabrication prices, the influence of the aluminum metal value was remved fran u. s. producers' ani :inp:,rters' reported prices by subtractin;J the market value of the metal (for the nonth prior to the shipment of the aluminum rod l/) fran the price of each :reported shi~. 'lhe result represents an approximation of the true fabrication price, Y the alOOlll'lt above what the supplier would have received for the aluminum metal alone. F.ach derived fabrication price was weighted by the size of shipment ani aggregated for ea.ch quarter. Metals week's mnthly average market prices were used to represent the U. s. market value of aluminum for U. s. producers, ani the I.ME 3-mnth option price was used to represent the world price of aluminum for inports. Because of the differences between the prices of the bolo metal values as rx>ted above, the estimated fabrication prices of u. s. -produced am :inp:,rted Venezuelan aluminum rod are not necessarily oc:upletely cx:anparable. 'lhe treni in fabrication prices can be seen in figures 2 through 4. Y In figures 2 and 3, estimated fabrication prices are shown for u.s. producers' quarterly shipnents CNer and urxier 135,ooo pounds for prooucts 1 am 2, respectively. In :t:loth figures, the fabrication prices fluctuated between quarters but seemed to c::orn,e:ge by the en:l of the period. 'lhis held true reganlless of shipnent size. U .s. producers' net fabrication prices for product l shipnents of over 135, ooo poums rcm:red between J. 77 cents per po.m:i arn 11. 51 cents per poum in 1984, but only ra?¥Ied between 4. 39 cents per poum arn 5. 97 cents per poum for the :remainin;J 2-1/2 years ( figure 2) • 'lhe avera~ difference between the minimum arrl maxiJmim fabrication price report:Erl in each quarter was 6. 4 cents per poum in 1994 am only 1. 8 cents per poum thereafter. For shipnents umer 135,000 poums, u.s. producer fabrication prices varied oonsiderably mre than for fabrication prices of shipnents over 135, ooo pounds, but this variance became smaller toward the em. of the period. Also, a slight downward tren:i can be seen in the .fabrication prices for shipnents urxier 135,000 pourxis. For product 2, U.S. produce.r fabrication prices are even mre steady than in product l. Prices for shipnents over 135, 000 pounds rarged between * * * cents per pawn an::i * * • cents per poum, but in * * *, prices were within approximately * * *, between * * * cents per pawn am * * * cents per poum ( figure 3) • Fabrication prices for shipnents urxier 135,000 pourxis ranged from * * * cents per pourrl to * * * cents per pown. However, prices ranged between * * * cents per pourrl arn * * * cents per pourxl in 1984 but only between * * * cents per poun:i an::l * • * cents thereafter. y Order leadtime of 30 days. Y Quarterly fabrication price data were requested in the questionnaires sent to u .s. producers arrl ill'lporters for their domestic shipments. Reported data ~ insufficient to provide an adequate approximation of the fabrication adder. y Fabrication prices were not created for shipments of Venezuelan product 2 because of lack of sufficient price data. A-40 Cents Per Pound A-40 Figure 2. --u .s. producers' net fabricaticm prices for product 1, by shipnent size and by quarters, Janum:y 1984~ 1987 l - Shi!)!!!:!t• undr I 135; 000 lbs. j --· r~~t• over L_~~~-J 2 -· · -----f----f-- --·- ---+-- ➔ -- ..-+-----+- -----+-----t--···- · -t----t-- · ---t ···--·-I 84 01 84 02 84 03 U 04 BS Ql 85 02 95 03 85 04 BS Qt 96 Q2 86 03 86 Q.( 87 01 87 02 Yacr Source: catpiled fl:aa data sul::mitted in response to questiamaires of the U.S. Internaticmal Trade <mm1 ssicm. cala.llated by subtractin;J the aluminum metal value fran the total delivered prioe of the aluminum rod. Figure 3. --U .s. producers• net fabricaticm prices for product 2, by shipnent size and by quarters, January 1984-u\lne 1987 * * * * * * Source: . Cmlpilecl fran data sul:lnitt.ed in response to questiamains of the U.S. Intemational Trade omnissi.on. calculated by subt:ractin;J the aluminum metal value fran the total delivered price of the aluminum rod. A-41 A-41 In figure 4, estilna:ted fabrication prices for product 1 are shown for u. s. inporters' largest quarterly shipments of over an:l urrler 135,000 pouros. In both size levels, prices differed considerably durin:J the pericxl of investigation. For shii:ment,s over 135,000 pouros, fabrication prices ranged between * * * cents per poun1 arxl * * * cents per poum. Prices cl:ilnbed .throogh all of 1984, arn then Ul.Of.Ped into a raJ'X1e between * * * cents per pam::l an:i * *.* cents per poun1 in 1985. Prices then climbed once 100re, reach.in;J a level of * * * cents in the third quarter of 1986, before fallin:J again to its secon:i quarter 1987 level of * * * cents. Fabrication prices for U.S. importers' sh.ii:ment,s un:ier 135,000 pouros follCMed the same pattem of fallin;J arn risin;J. Fran its lOW' point of * * * cents per poum in the seoom quarter of 1985, the fabrication price increased t.o its high point of * * * cents in the secorn quarter of 1986. It then fell t.o * * * cents per pourxl in the first quarter of 1987, arxl finally rose t.o * * * cents per poun:i in the secorxi quarter of 1987. Price trems for U. s. producers' direct imports. -'lhe unit value of u. s. rod producers' direct imports for their cable operations arxl the unit value of their danestic shipnents to unrelated pll'dlasers shown in the tabulation below are based oo the producers' questionnaire responses durin:J the investi- gations. y In both of these categories, unit values declined in 1985 arn climbed in 1986, reflec:tinJ the decline arxl rise in aluminum prices. unit values for danestic shipnents declined by 15. 6 percent in 1985, ard increased by 10.1 percent in 1986. unit values for direct ilrqx)rts declined by * * * percent in 1985 arn increased by • * * percent in 1986. Danestic Direct shipnents imports -cents per poum- 1984....... 66. 03 1985 ••••••. 55.70 1986....... 61.30 65.21 *** *** If the influence of aluminum metal prices is renoved from the unit values al:x::"7e, an irrlex of the fabrication unit value can be created. As seen below, the derived fabrication unit value for domestic shipments increased in 1985 by 38.4 percent (from 4.98 cents per pound t.o 6.89 cents per poum) an:l fell by 21.6 percent (to 5.40 cents per pound) in 1986. For direct ilrports, the qposite held t:J:.ue1 the derived fabrication unit value declined by * * * percent ( ftan 7. 32 cents per poum t.o * * * cents per poum) in 1985, before increasin;J by * * * percent (to * * * cents per poum) in 1986. JI Domestic Direct shipments imports -(1984 = 100)-- 1984 ••••••• 100.0 1985 ••••••• 138.4 1986 ••••••• 108.4 100.0 ****** A-42 A-42 Figure 4. --u. s. in'p:,rters' net fabrication prices for prcxiuct 1, by shipment size am by quarters, January 1984~une 1987 * soorce: canpiled fran data submitted in response to questionnaires of the u. s. International Trade camdssion. calculated by subtractin;J the aluminum metal value fran the total delivered price of the aluminum rod. Price canparisons. -'!he reported sellin;J price data for producers' am importers' largest quarterly shipnents to imrelated custaners durmJ Januazy 1984-June 1987 resulted in 33 direct quarterly price oamparisons between -weightai-average delivered prices of danestic am inp:nted aluminum rod from Venezuela. Of the 24 cc:mparisons in product 1, the Venezuelan import was less expensive in 17 quarters (table 14) • For shipments umer 135, ooo pouros, the Venezuelan rod was less expensive in 9 of the 10 c:x:nparisons. Margins of urxiersellmJ for this categozy rcmJ8d fran * * * cents per pourxi (* * * percent) to * * * cents per pam (• • *percent). For shipments over 135,000 pouros, the Venezuelan aluminum rod was less expensive in 8 of the 14 quarters listed. Margins of umersellirg rcm:Jed fran * * * cents per pound (* * * percent) to * * * cents per pam (* * * percent) • Margins of oversellirg rarqed fran * * * cents per pourxi (* * * percent) to * * * cents per pound (***percent). Product 2 contained nine direct quarterly price comparisons; in which the Venezuelan inp:>rt was less expensive in five quarters (table 15). For shipnents under 135,000 pc:,urds, the Venezuelan rod was less expensive in four of the six quarterly oanparisons. Ma?:gins of urxierselli.rq ran:Jed fram * * * cents per pourxi (* * * percent) to * * * cents per pourd ( * * * percent) • 'Ihe two margins of oversellin;J \oJer8 about * * * cents per pourxi (* * * percent) • For shipments over 135,000 pa.ll"DS, the Venezuelan rod was less expensive in only one of the three quarters that had pric.e comparisons. A-43 A-43 Excharge rates Table 16 shows nc:minal- an:i real-excharge-rate irrlexes for the U.S. dollar ard the Venezuelan bolivar. 'lhe currency of Venezuela depreciated in nominal tenns by approxbnately 48 percent fran the first quarter of 1984 through the first quarter of 1987. All of the charge in the nanina1 excharge rate occurred in the fourth quarter of 1986 an:i the first quarter of 1987. A fixed exchange rate of 7. 5 bolivares per U.S. dollar fran 1984 through the third quarter of 1986, an:i an inflatioo rate of 51.5 percent in Venezuela, compared with 3.8-percent deflatioo in the united States durirq the same period, resulted in a real-exchan;Je-rate appreciation of 57.5 percent. When Venezuela devalued its currency in ~r 1986 to 14.5 bolivares per U.S. dollar, its real exchange rate declined · by 19. 6 percent f:ran the p:revioos quarter. Venezuela employs a multiple-exchange-rate system, which was introduarl in February 1983 ard mdified in Febnlary 1984, Deceml,P..r 1985, an:i again in December 1986. Since December 1986, a fixed official rate of 14.50 bolivares (Bs) per U.S. dollar has been awlied to most camnercial an:i f:inan:::ial transactions, to Government capital transactions, ard to newly registered private capital flows. An excharqe rate of 7.50 :es per dollar applies to essential imports an:i related sezvices, to trade an:i sezvices of ·the state-oaltrolled oil arrl iron ore sectors, an:i to servicin:J the external debt of p.lblic enterprises arrl of registered private debt, provided an excha1'ge rate guarantee premi\Dll is paid. A fluctuatin:J free-market rate awlies to tairism ard nonregistered private capital f1C71,1S. l/ hxx>:rd.in;J to respon:lents, * * *. y nn-in:J the staff conference held in connection with these investigations, Mr. Fay I.org of Southwire stated that excharqe rates were the principal reason Southwire sold its 49-percent interest in SUral ~ early 1985. I.org states that the mul.titiered exchange-rate structure in Venezuela instituted in February 1983 presented a problem in the repayment of a loan owed S1.lral an:i guaranteed by Southwire. 'IW0 rates existed: a 4.3 bolivar (Bs) per U.S. dollar Central Bank rate an:i a market rate of 11 to 12 Bs. sural could not afford to pay back the loan at the market rate, ard it had to get pemission to repay the loan at the lower rate. Meanwhile, Southwire, in beiD1 the guarantor of the loan, was beirg pressured (includin;J by legal action) to repay the debt. Yet, IDrq added, if Southwire did repay the loan, "the Venezuelan government said that there was no obligation for them to have SUral reilnhlrse Southwire." V Respon:tents, h<XEVer, argue that excharge rates were not the reason Southwire sold its share of S\Jral. * * *. y JI Intemational Monetary Furn, International Financial Statistics, August 1987, p. 532. y * * *·'JI Transcript, pp. 24-25. y * * *· A-44 A-44 Table 16 Imexes of the naninal- arrl real-excharge-rates between the U. s. dollar arrl the Venezuelan bolivar, .J,/ arrl Wexes of producer prices in the United states am Venezuela, Y by quarters, Januai:y 1984-March 1987 (January-March 1984=100} Naninal- Real- U.S. Venezuelan exch.an;Je- excl1arge- Producer Producer Pericxl rate imex rate index Price Imex Price Index 1984: Jan.~ •••• 100.0 100.0 100.0 100.0 .AI>r.-v'Ul'le ••• 100.0 104.0 100.7 104.7 July-sept ••• 100.0 112.5 100.4 112.9 oct.-Dec .... 100.0 119.3 100.2 119.5 1985: Jan.~ •••• 100.0 124.0 100.0 124.0 AI>r. -v\lrle • •• 100.0 127.7 100.1 127.8 July-sept ••• 100.0 130.9 99.4 130.l oct.-Dec .... 100.0 134.7 100.0 134.7 1986: Jan.~ •••• 100.0 143.7 98.5 141.5 AI>r. -v\lrle • •• 100.0 151.1 96.6 146.0 July-sept ••• 100.0 157.5 96.2 151.5 oct.-Dec .... 76.7 126.6 96.5 159.3 1987: Jan.~ •••• 51.9 y 97.7 y l/ Based on exchan;Je rates~ in u.s. dollars per bolivar. Y '1he real-exc:han;Je-rate m3ex is derived fran the nominal excl1arge rates adjusted by the producer price in:iexes of each countJ:y. 'lhese imexes are derived fran line 63 of the Intemational Financial statistics. y Not available. Source: Intematiaial ~ Furn, Intemational Financial statistics. Lost sales/lost revenues Fifteen allegations of lost sales am one allegation of lost revenues involving seven p.m:hase.rs were supplied to the camnission by three u.s. producers of aluminum rod. Alleged lost sales anounted to $62,433,918, involving 94,104,300 pounds, arrl lost revenues totaled $70,000. * * *· y * * * * * * y • * *. see agent agreement between sura1 am southwire, dated May 3, 1984, in the postconference brief on behalf of the Venezuelan industJ:y, Aug. 12, 1987, exhibit 6. Moreover, counsel for Southwire stated at the conference that "D:Jes SOUthwire's fonner relationship with sura1 have anything to do with all this? If anythjnJ, it might suggest narrowin;J the foous of the investigation to events occurring after March 1985-that is, after southwire divested itself of its interest in SUra1. Certainly the petitioners injmy case does not rely on events earlier than tl1at." Transcript, p. 9. B-1 B-1 APPENDIX A FEDERAL REX'iISTER NOrICES B-2 B-2 Federal Register / Vol. SZ. No. HO / Wednesday, July 22, 1987 / Notices 27593 INTERNATIONAL TRADE . COMMISSION llnvestlpllone Noe. 70t•TA-217 (Prellmlnary) encl 711-TA-371 (Prellmlnay)J Certain Electrlcal Conductor Alumlnilm · Redraw Rod From Venezuela • AGENCY: United States International Trade Commi11ion. ACTION: Institution or preliminary . countervailins duty and antidumplng investigations and scheduling of a conference to be held in connection with the inveeU,ationa. -•~ The Co~nion he"reby pvn notice of the lnatituUon or preliminary countervailirls'duty inyeitigation No. 701-TA-287 (Prelinlill-,) under aectlon · 703(1) of the Tariff Act of 1930 (19 U.S.C. 1871b(a)) to determh!,: whether there ii • reaaonable lndi~tion that an lnduetry In the Uhlted Statu la materially .· · injured, or i1 tbreatCtDed with material lnfury, or the e1tabU.1ilnent of an industry In the United States ii materially retarded. .t.,y reaeon of lmporte &om Vene~ela of electrical conductor aluminwn redraw rod.· · provided for ln .lteD:l 118.15 of the Tariff Schedules of the United Statea. that are alleaed to be 1ublldized by the .· Covemment of Venezuela. The Commiulon al.a gives notice of the inltltutlon of preliminary · . antidumplns lnvealilation No. 73t~TA- 378 (Preliminary) 11nder eection 133(a) of the Tariff Act of 1930 (19 U.S.C. · · 1873b(a)) to determine whether there la • reuonable indication that an industry in the United State, la materially .· injured. or la threatened with material injury, or the e1tabll1hment of an ind111try in the United States ii · materially retarded, by reason of . imports &om venezuefa or electrical conductor aluminwn redraw rod. provided for in Item 818.15 of the Tariff Schedules of the United Sta tea. that are aDesed to be eold In the United State, at le11 than falr value. • Far pilrpoN1 ol theN taw11i,.11ona the te1111 Melec:1rk:al ccmductor ■ lumin11111 nidrtw rod"" refert io-aht rode of 1l11111inuffl which 1n elec:triceUy conductive and coatelll IIOI Ina 1h1n 118 percent ol 1lwnlnum by we(ahL B-3 B-3 21594 Federal Register/ Vol fiZ. No. HO / Wednesday. July Z2. 1987 / Noticet As provided in 1ection1 703(a) and 733( ■). the Commilsioa mu■ t complete preliminary colUlunrailing duty and antidumpina inWl ■ liaatJona in 4,& · da)'I, or In theae case ■ by Augu1t 28. 1987. For further information concernin, the conduct of these lnveatigationa a.nd rulea of general applicalioo. consult the Commi11lon•1 rulea of pracUce and procedure, Part 1JTI. Subparta A and B (19 otl Part 207~ and Part mt, Subparts A throuab E (18 CFR Part 201). U'FECTIQ DATI: July lf. 18117. FOIi fUIITIIEI INFOIIIIATION CONT&Ct: Brian Walten (202-SD--0104). Office of Inve1tlgationa. U.S. International Ttade Coauni11lon. 7'011 Street NW., Wuhinstoe. DC ZN38. Hearma- impaired individuals ••Y obtaiD • Information on thia mallet- by ccintacUna the Commfaion•• TDD terminal cm·D- 724-4J02. Information may also be obtained via electronlc mail by calllns the Office ofliwestigations• remove bulletin board aystem for petsonal computera at zoz...m..ot03. Persona with · . mobility impairment ■ who will need special auiatlnce illpini,aa acceu to the CarorolNiaD dlould contacl the Office or the Secretary ata-5Z3-010t. IUPPLEIIINTARY IIIFOIIIIA110N: BackpoUSNI 1'bua in'1eatigati.om are being instituted In reaponae to petitionl filed on July 14. wa,. by Soutlnwe Compuay. Carrolltoa. Georgia. Particlpatioa in tile Iavestlptie.. Per9Qils wisbins lo participate In the investigation, u parties m111t file an entry of appearance with the Secretary of the Co.mmiuioa. aa provided in .I 201.11 of the CnqmjaelOJS'.I rwea (11 CFR 201.111 not later tha11 aeven(7) . days after publicatioa of thia notice in the Federal Reglller. Any entry of . appearance filed after thl1 date wlll be reiened to the Cbalrmari. who will determine whether to accept the late entry for good cause shown by Iha person desitjr111 to file the entry. Service LUii Pursuant to I 20U1{d) of th" Commission's rule, (19 CFR ffl.lt(dJ), lhe Secretary wiH prepare a aemce list contalnir111 the runnes and addrea,a of all penons, or lheir l"l!pl'esentatives. · who are parties to tbt:se lnvestigetfom upon tile expiration of the period for filir1g entries of appearance. In aecord1tm:e with II zot.11;1(c) a11d 'NI .S. · of the rules (19 CFR 20U8(c) and 'JJ:TT .3), each document filed by a party 18 UM inveatigatlofts 111119' be eel'\led DR all other putiet to lhe lnvestigationa (as identified by the NrYice list). and a certificate of aervlce musl accompany the documenL The Secretary will not accept a document for filing without a certificate of aervice. CoafelMCI , 11ie ConunlNlon'a Director of Operatlona ba1 acbeduled a conference in connection with lheae lnvestlgatlon1 for •.30 a.m. on Augull 0. 1987, at the U.S. lalematiGnal Trade Commiaaion Building. 7'01 E Street NW., Wuhinston. DC. Partiet wlahing to participate In the conletenc:e lhoald contact Brian Wallen (20WZ3-0104) not later lhu Ausust 3, 1987, lo arranp for their appearance. Partiet la aupport of the imposition of count8ffai1inf) and/or anUdllJDl)lns dutlee In tlu,ee lmeetigatlona and partlea In oppoeftion to the Imposition of audl dutiee will eacfl be coftectively allocated one hour within which to make an oral presentation at the conference. 'WdHll,I. Sabmfeelmt Any penon may aubmit to the Commlaalon on or befere Auau■ t U. 1987, a written atatement of information pertinent to the 1ubject of the inveaqatloM, aa provided In I JD'T.15 of .the Comalaaoll"a nlee (19 CPR Jll/,15). A ,tgned origlftat .tro.n.ee (HJ copiea ~ ..~ aublnlmon ....t be fited with the Seaetary to the Commlaalon In accordanca wida I 201.1 of lhe rule ■ (11 CFR 201.IJ. Al written ■at.niaalone except for eonlidential buaine• data will be available far public Inspection dwin8 regaler b...,.11 laoun (3:4& a.111. to 5:15 p.m;) In the Office of the Secretary to ae Commia,ioa. /t.w, bulnee1 lafomtalion for wbida · confidential tJeabneRt ts desired muet be submitted ,eparately. The envelope and all pagea of such aubmiasiona must be clearly labeled "Confidential Businesa Information.'" Confidential submission, and requests for · confidential treatment must confonn wida the requirements of I 20U of the Comml11lon'1 rulea [19 Cftl 201.6). Avlhorily. i,..M IAfflll&•lklM are beu,a conducllld uder lllltlaodq r,f 1M Tariff Act of 1930, lltlt VIL Tbil Mtict • ~ad plll'lluant to I '/Sf/.ll el &he Commlaaioa•1 rule ■ (19 CE'R 201.121,. . Br GNla, of &lie C.~ laaued: Jldr 11, 11167. ICanMtlaR.Ma--. Secnta,v. (FR Doc . l"-tBIM Filed 7-13-4': ~5 aml al.JIIGc:eN ....... B-4 B-4 29558 Federal Register/ Vol. 52, No. 153 / Monday, August io, ·1987 i Notices International Trade AdmlnlstraUon [A-307-7011 '· Initiation of Antldumplng Duty Investigation; Certain Electrical Conductor Aluminum Redraw Rod from Venezuela . AGENCY: Import Administration._. · International Trade Administration, Department of Commerce. ACTION: Notice. SUMMARY: On the basis of a petition . filed in proper form with the U.S. Department of Commerce, we are Initiating an antidumplng duty investigation to determine whether imports of certain electrical conductor aluminum redraw rod (redraw rod) from · Venezuela are being, or are likely to be, soid in the United States at less then fair value. We are notifylns the U.S. International Trade Commission ((TC) of tbs action so that it may determine whether imports of redraw rod from Venezuela cause, or threaten material injury to, a U.S. industry. ff this investigation proceeds normally, the ITC will make its preliminary determination on or before Auguat 28, 1987, and we will make ours on or before December 21, 1987. EFFECTIVE DATE: August 10, 1987. FOR FURTIIER INFORMATION CONTACT: Mary Martin of Jessica Wasserman, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington. DC 20230: telephone (202) 377-2830 or. 377-1442. SUPPLEMENTARY INFORIIAflON: The Petition On July 14, 1987, we received a petition filed in proper form by the Southwire Company on behalf of the U.S. industry producing redraw rod. In compliance with the filing requirements of 19 CFR 353.36, the petition aU'8eS that imports of redraw rod from Venezuela are being, or are likely to be, sold in the United States atless than fair value within the meaning of section 731 of the Tariff Act of 1930; as amended (the Act), and that such imports cause of · threaten material injury to, a U.S. - industry. Initiation of lnveatlsation Under section 732(c) of the Act, we must detennine within 20 days after a petition is filed. whether it sets forth the · allegations necessary for the initiation Qf an antidumping duty investigation, and whether it contains infonnation reasonably available to the petitioner supporting the allegations. We have examined the petition on redraw rod 1t.nd have found that it meets the requirements of section 732(b) of the · Act. Therefore, in accordance with section 732 of the Act. we are initiating an antidumping duty investigation to detennine whether redraw rod from Venezuela is being, or is likely to be, sold in the United States at less than fair · value. If our investigation proceeds normally, we Will make our preliminary determination on or before December 21, 1987. Scope of Investigation The United States has developed a system of tariff classification based on the international harmonized system of Custo1111 nomenclature. Congress la considerins legislation to convert the United States to this Hannonized System ("HS") by January t, 1988. In view cf this, we will be providins both the appropriate Toriff Schedules of the United State11 Annotated ("~USA") item numbers and the appropriate HS item numbers with C)tlr product description on a test basia, pending Congressional approvaL As with the TSUSA, the HS itelll numbers are . provided for convenience and Customs purposes. The written description remains dispoaitive. · We are requestiq petitioners to include the appropriate HS item . number(&) as well as the TSUSA item number(&) in all new petitions filed with the Department A reference copy of the proposed HS schedule is available for consultation at the Central Records Unit. Room B-099. U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Waahington. DC 20230. Additionally, all customs 9ffices have reference copies and petitioners may contact the Import Specialist at their local Customs office to consult the schedule. The product covered by thia investigation Is certain electrical conductor aluminum redraw rod from Venezuela which la wrousht rod of aluminum which ls electrically conductive and ~taina not le11 than 99 percent aluminum by weight as provided for in TSUSA itaan eumben 618.520 and 618.1540. 'Ibis product is currendy cla91ifiable under HS item numbers 7604.to.30 and 7601.29.30. United States Price and Foreign Market Value Petitioner bas~d United Statea price on Census Burealf. import 1tati1tica (IM- 146) for redraw rod imported from Venezuela. Cena111 Bureau 1tati1tica report the FAS. value of the imported soods. Petitioner based foreign market value on two Vepezuelan producer•• price quotes. Bas~d oq a comparison of United States price and foreign market value, petitioner alleged dumping margin• of 15 to 33 ,percent Aftei: . analysis of petitioner'• allegations and supportiq data, we conclude that a formal investigation is warranted. ' Notification of ITC Section 73Z( d) of the Act requires us to notify the ITC of this action and to · provide It with the infonnatton we used to arrive at this determination. We will notify the ITC and make available to It all nonprivlleged and nonproprletary information. We will also allow the rrc acceH to all privlleged and business proprietary information in our files. provided It confinna that it will not disclose such lnfonnation, either publicly or under an administrative protective order, without the express B-5 B-5 Federal Register / Vol. . 52, No. 153 / Monday, August 10, 1987 / Notices 29559 written consent of the Deputy Assistant Secretary for Import Administration. Preliminary Determination by ITC The ITC will determine by August 28, 1987, whether there is a reasonable indkation that imports of redraw rod from Venezuela materially injure, or threaten material injury to, a U.S. industry. If its determination is negative, the investigation will terminate; otherwise, it will proceed according to the statutory and regulatory procedures. This notice is published pursuant to section 732{c)(Z) of the Act. Gilbert B. Kaplan, Deputy Assistant Secretory for Import Administration. August 3, 1987. IFR Dor:. 87-18050 Filed &c7-87; 8:45 amJ BILLING CODE 3510-05-M IC-307-7021 Initiation of Countervalllng Duty Investigation: Certain Electrical Conductor Aluminum Redraw Rod . From Venezuela AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice. SUMMARY: On the basis of a petition filed in proper form with the U.S. Department of Commerce, we are initiating a countervailing duty investigation to determine whether manufacturers, producers, or exporters in Venezuela Q{ certain electrical conductor aluminum redraw rod ("redraw rod"), as desaibed in the "Scope of Investigation" section of this notice, receive benefits which wnstitute ,subsidies within the meaning of the U.S. countervailing duty law. We are notifying the U.S. International Trade Commission (ITC) of this action. so that it may determine whether imports of redraw rod from ·Venezuela cause or threaten material inturY to a U.S. industry. If this investigation proceeds . normally, the ITC will make its preliminary determination c,n or before August 28, 1987. and we wjll make OW'S on or before October 7. 1987. EFFECTIVE DATE: Atiguit 10, 1987. FOR FURTHEfUNFOIIIIATION CONTACT: Thomas Bombellcs or Barbara Tillman, Office of Investigations. Import Administration, Jnternational Trade AdminislrctliOll, U.S. Department of Commerce. UthStreet aJKI Constitution Avenue, NW., Wash~ton. DC~ telephone (20Z.) 377-3174 or 377-,~. SUPPLEMENTARY INFORMATION: The Petition number(s) as weH ff the TSUSA item .number(s) in all new petitions filed with 1 the-Department. A reference copy of the proposed Harmonized System Bchedule j is available for consultation &t the · Central Reoords Unit, Room B-099, U:S. ·-On July 14, 1987, we received a petition filed in proper form by the _ South wire Company on behalf of the U.S; industry producing redraw rod. In · compliance with the filing requirements . ✓ Department of Commerce, 14th Street n · and Constitution Avenue, NW .. of 19 CFR 355.26, the petition a eges Washington, DC 20230_Additionalty, all that manufacturers, producers, or exporters in Venezuela of redraw rod Customs offices have reference copies receive subsidies within the meaning of and petitioners may contact the Import section 701 of the Tariff Act of 1930, as Specialist et their local Customs office . amended (the Act), and that such to co1u1ult the «:hedule. imports cause or threaten material The product covered by this injury to a U.S. industry. investigation is certain electrical Since Venezuela is a "country under conductor aluminum redraw rod, which the Agreement" within the meaning of is wrought rod of aluminum which la section 701(b) of the Act, the ITC is electrically conductive and contains DOt required to determine whether imports . less than 99 percent alwninum by weight of the subject merchandise from · as provided for in TSUSA item numbers Venezuela cause or threaten material 618.1520 and 618.1540. This product is injury to 8 U.S. industry. currently classifiable nnder HS item numbers 7604 .10.30 and 6704.29.30. Initiation of Investigation Under section 702(c) of the Act, we Allegations of Subsidies must determine, within zo days after a The petition lists a number of petition is filed, whether it sets forth practices by the Government of . allegation, necessary for the initiation Venezuela {GOV) wllich allegedly · ofa coantervailing duty.investigation. confer eubsidies on manufacturers. and whether it contains information producers, or exporters in Venezuela of reasonably available to the petitioner redraw rod. We are initiating an supporting the allegations. We have investigation on the following programs: examined the petition on redraw rod • Government Financial Assistance and have found that it meets these on Terms Inconsistent with Commercial requirements. Therefore, we are Considerations initiating a countervailing duty -Government Loans on Terms investigation to determine whether Inconsistent with Commerical manufacturers, producers, OY exporters · Considerations in Venezuela of redraw rod, as -Government Loan Guarantees described in the "Scope of -Assumption .of Hard Currency Debt Investigation" section of this notice, -Tax Contributions to Cover Debt receive benefits which constitute Service Costs subsidies within the meaning of the Act. If our investigation proceeds normally, • Export Subsidies we will make our preliminary -Perferential Export Financing determination on or before October 7, (FINEXPO) 1987 . -Export Certificates Scope of Investigation -Multiple Exchange Rates The United States bas developed 8 -Perferential Pricing for Inputs used to system of tariff classification based on Produce Exports the international harmonized system of · ·• Sales Tax Exemptions ~11stoms nomenclatttre. Congress is • Import Duty Reductions considering legislation to convert the • Perferintial Tax Incentives United States to this Harmonized We are not initiating en inveatigation on System ("HS") by January 1, 1988. In the foHowing program: · view of this, we will be providi~ both Gfiemmeat F.quity hlhsiou . the approf)riate Tariff Schedules of the United States Annotated ("1SUSA '1 .Petitioner alleges that the GOV is item numbers and the appropriate HS expected to provide capital to a group item numbers with our product headed by Suramericana de Aleaciones description on a test basis.. pending Lamina dos, nA . {SURAL), a private Congressional approval. As with the company, to fund a new melter, and TS USA, the HS item numbers are that any GOV eq11ity infusions into its provided for convenience and Customs aluminum products industry .re purposes. The written deacrioptiont inconsistent with commercial remain dispositive. considerations.This new smelter would We are requesting petitionera t«> supply SURAL's aluminum rm:! and wire include the appropriate. HS item plant. In order for the Department to · B-6 B-6 29560 Federai Register / Vot.' ·sz; No. 153 / Monday, August 10, 1987° / Notices investigate an allegation on equity, the petition must contain: (1) Evidence of sovemment equity participation, and (2) a showins that such participaliQn may be on terms inconsistent with commercial considerations. Althoush the petition contains Information that the GOV, in conjunction with Austrian concems, plan, lo invest in a new smelter project for SURAL the petition doe.a not provide any evidence that SURAL. or even the aluminum industry, baa been losing money or is otherwise unattractive to private investors. Since petitioner ha ■ not provided any information that GOV equity Investments in SURAL would be inconsistent with commercial . considerations, we are not iniUatinlJ an investigation on this allegation. As a standard practice in our countervailing duty questionnaires, we ask for information on the ownership structure of each firm and for financial statements. lf the information provided in response to these standard questions shows that the GOV holds equity in SURAL, and that SURAL has incurred fmanciallosses, we will exallilne this Issue further. · Notification of ITC Section 70Z(d) of the Act requires us to notify the ITC of this action and to · provide It with the information we used to arrive at this determination. we· will · notify the ITC and make available to it all nonprivileged and nonproprietary information. We will also ·allow the ITC access to aH privileged and business proprietary information in our files, provided that it confirms that it will ri.ot disclose such infonnalion, either publicly.or under an administrative · protective order, without.the express written consent of the Deputy Assistant Secretary for Import .Adolini1tr~tloii. ' Preliminary Determination by rrc · · The ITC will de&ermin~d _by ~usust za. 1987, whether there Is a reasonable indication that imports of redraw rod from Venezuelacause·orthreaten . material injury to s U.S. industry. If its detennination is negative; this · Investigation will te~inate: otherwise, it will proceed-according te the statutory .. snit resulatory procedurei. : · •· · This notice is published pursuant to aectl~n 702(c)(2) of the Act.. · · Gilbert B. Kaplan, . Deputy Assistant Secretary for Import Administration. August 3. 1987, [FR Doc '. 87..:._18051 Filed 8-7-87; 8;45 aml 8IUINO COOIE '61D-08-II B-7 B-7 APPENDIX B WI'INESSES APPEARING AT 'lHE CONFERENCE B-8 A-8 mills; a "properzi mill," and a Southwire SCR mill similar to Southwire' s Hawesville, KY, mill. .l/ SUra1 and the ioore than 160 other private aluminum finns in Venezuela have tralble buyin;J as nuch aluminum as they waild like fran Alcasa an:i Venalum. A .state Department airgram states that the prcblem stems fran a mul.tiple-pricin;J system whereby Alcasa an:i Venalum receive more for export sales than they do for danestic sales as a result of exd'lar¥:Je rates an:i Government export bonuses. A private cxnpm;y, Alusur, headed by sural, plans to oonstruct a 115,000 metric-ton-per-year smelter to suwly SUral's rod an:i wire plant. It will be coupled with a 60, ooo metric-ton-per-year expansicm in wire an:i rod capacity at 8ural. once started, these plans for expansion are expected to take 3 years to oanplete. y Mr. Alfredo Riviere, President of 8ural, irrlicated that 8ural has been expan:lin;J its capacity to produce mechanical aluminum rcxl an:i oontractin:J its ability to produce electrical oomuctor aluminum rcxl. 8ural is also interested in expamin;J its preseooe in the united states thralgh aoquirin] closed rod, wire, and cable facilities. one of the reasons sural wishes to establish rod facilities in the United states is because it wishes to take advantage of utility markets closed to finns that produce utility cable fran foreign-produced aluminum rod. V * * *· Y * * * * * * * Available infonnaticm cm the producers of aluminum rod in Venezuela is presented in table 1. J/ Transcript, p. 39. y Department of state aizgram fran the u.s. Embassy, caracas, Venezuela, July 11, 1986, p. 4. 1/ Transcript, pp. 123-130. y * * *· B-9 A-9 Table 1 Al.umimnn rod: Venezuelan production, capacity, capacity utilization, domestic shipnents, export shipilents to the united states, arxi exports to third countries, by finns, 1984-86, interim 1986, am interim 1987 l/ Interim Deriod-- It.en 1984 1985 1986 1986 1987 Production: cabelum •••••••••••• short tons •• *** *** *** *** *** , ICXl'lel. Y . . . . . . . . . . . . . . . . do. • • • *** *** *** *** *** sural 'J,/ ••••••••••••••••• do •••• *** *** *** *** *** 'l'atal. • • • • • • • • • • • • • • • • • • do. • ... *** *** *** *** *** Percentage charge •••••••••••• *** *** *** capacity: cabel\llD•••••••••••• short tons •• *** *** *** *** *** Ic:x::l'lel Y . . . . . . . . . . . . . . . . do. • • • *** *** *** *** *** sural ~ ••••••• .•••••••••• do •••• *** *** *** *** *** 'l'atal. • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** capacity utilization: cabelum ••••••••••••••• percent •• *** *** *** *** *** Ic:x::l'lel • • • • • • • • • • • • • • • • • • • do • • • • *** *** *** *** *** sural •••••••••••••••••••• do •••• *** *** *** *** *** Avera.ge ••••••••••••••• • do •••• *** *** *** *** *** Dc:mestic sales: cabelum •••••••••••• short tons •• *** *** *** *** *** Ic:x::l'lel • • • • • • • • • • • • • • • • • • • do • • • • *** *** *** *** *** sural §/ ••••••••••••••••• do •••• *** *** *** *** *** 'l'atal. • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** Exports to the united states: cabellllD. ■ • ■ •• ■ • ■ ■ •• short tons ■ • *** *** *** *** *** ICXl'lel. • • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** sural •••••••••••••••••••• do •••• *** *** *** *** *** 'l'atal. • • • • • • • • • • • • • • • • • •do • • • • *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** Exports to third countries: c:al:::>ell.Dn •••••••••••• sllort tons .. *** *** *** *** *** Ic:x:>rle.l • • • • • • • • • • • • • • • • • • • do. • • • *** *** *** *** *** sural .••••••••••••••••••• do •••• *** *** *** *** *** 'l'atal. • • • • • • • • • • • • • • • • • • do • • • • *** *** *** *** *** Percentage charge •••••••••••••• *** *** *** l/ * * *· y * * *· y * * *· y * * *·w * * *·§/ * * *· Source: Cori'piled fran data provided by counsel for sural, Iconel, am c:al:::>elum. B-10 B-10 Table C-1 Alumirum :rod: U.S. production, capacity, arxi capacity utilization, by finns, 1984-86, Jarniary-March 1986, am Januaxy-March 1987 January-March-- Item 1984 1985 1986 1986 1987 Production: Alcan ••••.••••••••• short tons •• *** *** *** *** *** Alc::oa.. • • • • • • • • • • • • • • • • • • •do • • • • *** *** *** *** *** Essex ••• ••••••••••••••••• do •••• *** *** *** *** *** l{a,ise,r. • • • • • • • • • • • • • • • • • • do • • • • *** *** *** *** *** Norarx:la.. . . . • • • • • • • • • • • . • •do • • • • *** *** *** *** *** Reyrlc>lds ••••••••••••••••• do •••• *** *** *** *** *** Sa.lt:l1wi.re.. . . . . • • • • • • • . . . . do • • • • *** *** *** *** *** 'l'Ota.l • . • . • • • • • • • • • • . . • •do • • • • 363,275 300,166 279,173 86,648 70,243 Average capacity over period: Al.can Y . .......... short tons •• *** *** *** *** *** Alc::oa. Y . ...... -• ......... do •••• *** *** *** *** *** Fssex 'JI ...•.•••••.••.... do •••• *** *** *** *** *** I<a.iser y ................ do •••• *** *** *** *** *** Norarx:la. 2/ •••••••••••..•. do •••• *** *** *** *** *** Reyrlc>lds §/ •••••••••••••• do •••• *** *** *** *** *** Sc::lllt:llw'il y ............. do •••• *** *** *** *** *** 'l'Ota.l • • • • • • • • • • • • • • • • • •do. • • • 513,953 518,786 503,786 130,539 110,760 Capacity utilization: Alca,n, ••••••••••••••••. ~•• *** *** *** *** *** Alc::oa.. . • • • • • • • • • • • • • . . • • •do • • • • *** *** *** *** *** Essex y ................. do •••• *** *** *** *** *** l(a.ise.r. • • • • • • • • • • • • . . . . • •do • • • • *** *** *** *** *** Norarda. ..••••••••••...•• • do •••• *** *** *** *** *** Reyrlc>lds ••••••••••••••••• do •••• *** *** *** *** *** Sc:::ll'tllw'i?. • • • • • • • . . ....•• do •••• *** *** *** *** *** Avera.ge •••••••••••••••• do •••• 67 56 55 65 63 Y Based on operatin:;J the finl's aluminum rod facilities * * * hours per week, * • • weeks per year. Y Based on operatin;J the finl's aluminum rod facilities * * * hours per week, * •• weeks per year. * * •. 'JI.**· Y Based on operatin;J the firm's aluminum rod facilities * * * hours per week, * * * weeks per year. 2/ Based an opera.tirg the firm's aluminum rod facilities * * * hours per week, * * * weeks per year. §/ Based on opera.ting the firm's aluminum :rod facilities * * * hours per week, * * * weeks per year. Y Based an operatirg the firm's aluminum :rod facilities * * * hours per week, * * * weeks per year. 'lhe closure of Southwire' s carrollton, GA, :rod facility in December 1986, reducerl its practical annual capacity to produce alumimnn rod by approximately * * * tons. y * * *· Source: Corripiled from data suhm:itted in response to questionnaires of the U.S. Intemational Trade . Commission. B-11 B-11 Table c-2 Aluminum rod: u.s. producers' domestic shipments, intracompany transfers, and total domestic shipments, by finns, 1984-86, January-March 1986, and Januacy-March 1987 {Short tons} January-March-- Item 1984 1985 1986 1986 1987 Domestic shipments: .Al.ca.n ••• ••••••••••••••••••••••• *** *** *** *** *** .Al,cx:,a • ••••••••••••••••••••••••• *** *** *** *** *** Essex ••• ••••••••••••••••••••••• *** *** *** *** *** l{a.iBer' •• ••••••••••••••••••••••• *** *** *** *** *** Norarrla.. • • • • • • • • • • • • • • • • • • • • •. • *** *** *** *** *** ~lds ••••••••••••••••••••••• *** *** *** *** *** Sa.Itllw'ire. . . . . • .-• • • • . . . . . . . . . '• . *** *** *** *** *** 'lbt:a.l • •.•••••••••••.••.•••••• 77,419 71,807 83,206 25,125 22,489 Intracompany transfers: Aloan. ........................... *** *** *** *** *** Alcx:,a ••••••• • •• • ••••••••••••••• *** *** *** *** *** Essex • ••••••••••••••••••••••••• *** *** *** *** *** l(a.iser . ....•••••••••••.•..••••• *** *** *** *** *** Norarda. •••••••••••••••••••••••• *** *** *** *** *** Reynolds ••••••••••••••••••••••• *** *** *** *** *** Sa.It:11.w'il:e . • • • • • • • • • • • • • . • • • • • •• *** *** *** *** *** 'lbt:a.l •••••••••••••••••••••••• 290,lll 233,216 195,964 61,165 50,092 Total domestic shipnents: Aloan. •••••••••••••••••••••••••• *** *** *** *** *** Alcx:>a. •••••••••••••••••••••••••• *** *** *** *** *** Fssex •••••••••••••••••••••••••• *** *** *** *** *** l(a.iser' ••••••••••••••••••••••••• *** *** *** *** *** Norarda. . .•••••••••••••••••••••• *** *** *** *** *** Reyrlolds ••••••••••••••••••••••• *** *** *** *** *** Sa.It:ll.wil:e . • • • • • • • • . . . . • . • . • • • • • *** *** *** *** *** i'Ota.l •••••••••••••••••••••••• 367,530 305,023 279,170 86,290 72,581 source: Coirpiled from data submitted in response to questionnaires of the u.s. International Trade Commission. B-12 B-13 B-13 APPENDIX D U.S. WIRE AND CABLE SHllMENIS AND IMroRIS FOR CX>NSUMPI'ION B-14 B-14 Table D-1 Aluminum wire am cable: u.s. producers' net domestic shipnents am u.s. iJrp)rts for consunption, 1984-86 (Short tons} Item 1984 1985 1986 Net danestic shipnents: :Bara, wire •••••................. 4,500 3,500 3,500 ACSR l/ an:i bare cable ••••••••• 170,500 138,500 119,500 Insulated or covered wire am. cable •................... 196,500 197,500 198,000 Imports, all sources: Wi.l:e, y • •• • • • • • . • • • • • ~ • . • . • . . . . 3,326 4,671 3,545 ca.ble V ....................... 2,668 2,236 2,465 JI ACSR is aluminum ocniuctor steel reinforced cable. y Includes iJrp)rts umer '!'SUS items 618.20 (aluminum wire, not coated or plated with metal) am. 618.22 (aluminum wire, coated or plated with metal). 'JI Includes .inports umer 'IStJS item 688.20 (uninsulated. electrical oomuctors, oanprised of alumimml wire or strard spirally wound or twisted ara:an a steel or alumim.nn core) • Sa.Jroe: Danestic shipnents ccupiled :fran the Aluminum Association am inp::>rts ccupiled fran official statistics of the u.s. Department of camneroe (.inports). B-15 B-15 Table D-2 .Aluminum wire: U.S. ilrp::>rts y for consunption, by principal sources, 1984-86, January-May 1986, ard Januaty-May 1987 Jannacy-May- Source 1984 1985 1986 1986 1987 Quantity (tons) C8.rla.da •••••••••••••••••••••••• 690 933 l,406 542 967 United~--·············· 152 352 584 147 172 West Germany •••••••••••••.•••• 55 87 323 292 30 Veriezuela ••.•••••••••••••.•••• l,430 2,080 308 236 93 Y'llg'c:slav.ia.. • • • • • • • • • • • • • • • • • • • 18 118 277 66 92 Ja:pan ••••...•..••••••••• •·.•..• 307 102 197 83 47 Isra.el •••••••••••••••••••••••• 0 44 168 168 0 ~-....................... 245 354 119 87 22 Belgium and l1lxembourg•••••••• 155 184 110 56 20 Ta.i-wan • .•••••••••••••••••••••• 2 0 39 38 3 BJ:-azil • ....... .• •••••••••.•.••• 37 291 0 0 0 .All O'tller ••••••••••••••••••••• 235 128 14 2t. 100 'lbta.l. • •.•••••••••••••••••• 3.326 4.671 3.545 1.715 1.546 Value (1. 000 dollars) 3/ C8.rla.da • ••••••••••••••••••••••• 1,711 2,343 4,192 1,561 2,293 united~--·············· 491 1,183 2,487 522 596 west Germany .••••••••••••••••• 273 280 698 458 280 Veriezuela • •••••••••••••••••••• 1,960 2,004 332 223 147 Yllgc:slav.ia.. • • • • • • • • • • • • • • • .• • • • 67 428 865 222 351 Ja:pan ••••••••••••••••••••••••• 934 514 580 205 150 Israel •••••••••••••••••••••••• 192 772 772 ~-....................... 636 882 305 223 49 Belgium and IllXSDlbourg•••••••• 357 358 233 113 49 Ta.i-wan. • • • • • •·• • • • • • • • • • • • • • • • • 5 64 62 19 BJ:-azil •••••••••••••••••••••••• 186 368 .All otller'. • • • ,i • • • • • • • • • • • • • • • • 493 326 77 5 211 'lbta.l. •••••• ·••••••••••••••• 7,113 8,878 10,605 4,366 4,151 JI Includes inp::>rts umer TSUS itens 618.20 (aluminum wire, not coated or plated with metal) am 618.22 (aluminum wire, coated or plated with metal). y Less than 0.5 ton. 'JI I:rrport values are c.I.F. duty-paid values. Soorce: compiled from official statistics of the U.S. Department of CCrnmerce. Note. -Because of rouniing, figures may not add to the totals shown. B-16 B-16 Table 0-3 Aluminum cable: U.S. inp:,rts y for c:onsunption, by principal sources, 1984-86, January-May 1986, arxl January-May 1987 Januai:v-May-- .Source 1984 1985 1986 1986 1987 Quantity (tons) caJ'lada. •••••••....••••••••••••• 38 144 8 y 20 tJJ}.i-tec:i .Kirg:ian • .•••••••••••••• 10 0 11 0 0 l-1est, Geil:nlal1y' ................... 0 48 7 6 6 VeJlf3Z1.18J.a. • • • • • • • • • • • • • • • • • • • • 0 697 1,434 434 997 ~l~ia••••.•.••••••••••••• 110 66 0 0 0 Japan ••••••••....••••••••••••• 315 162 150 36 20 Belgium arxl Illxemball:g •••••••• 0 0 50 15 0 Taiwan •••••••••••••••••••••••• 1 9 8 1 9 BI'azil ...... ..... ...•.......... 1,979 303 92 52 0 SJ;)a.in ••••••••..••••••••••••••• 150 485 283 262 0 SCJI..It:tl ~. • • • • • • • • • • • • • • • • • • 0 265 403 321 y .All ot:llel:" •••••••• • •••• • ••••••• 65 57 19 19 6 'l'otal . . . . . . . . • . • • • • . . . . ... . . 2,668 2,236 2,465 1.149 1,058 Value (1,000 dollars) 3/ caJ"la.da. • ••••••••••••••••••••••• 79 438 14 3 40 uni"tec:i Ki.rgdan ••••••••••.••.•• 56 300 West Geil:nlal1y' •••••••••••••••••• 137 34 27 50 Vet1BZllela • .••.•••••••••••••••• 914 2,029 537 1,466 'Yl..gc:slay-ia.. • • • • • • • • • • • • • • • • • • • 143 108 Japan ••••••.•..•••••••••••••• .• 450 258 321 98 176 Belgium arxl Imcembourg •••••••• 109 41 'l'a.iwan. • • • • • • • • • • .• • • • • • • • • • • • • 17 25 28 5 39 BJ:a.zil • ........••••••........• 3,263 395 127 70 Spa.in.••••••••••••••••••••••••• 325 834 521 481 SOlth. l{orea. • • • • • • • • • • • • • • • • • • • 463 595 478 4 .All ot:l1er ••••••••••••••••••••• 138 306 45 39 29 '1'ata.l ••••••••••••••••••••• 4,471 3,878 4,123 1,779 lr804 JI Includes :iitports urxier TSUS item 688.20 (tminsula"tec:i electrical corxiuctors, cx:nprised of aluminum wire or strarxl spirally wourxi or twisted aroum a steel or aluminum. core) • y I.ass than 0.5 ton. 'JI Inport values are c. I. F. duty-paid values. Source: Coni>iled from official statistics of the u.s. Deparbnent of cannnerce. Note.-Because of rowxling, figures may not add to the totals shown. B-17 B-17 APPENDIX E SOORCES OF AI1lMINtlM HU:CES B-18 B-18 • • • for Metals Week, oonstructs both the u. s. market price am the u. s. transaction price for aluminum. Both measure the price of aluminum an a delivered basis to the u.s. Midwest. However, they are created differently am are based an different sources. For the Metals Week U.S. market price, • • • surveys 18 to 20 consumers, producers, and traders of alumimnn each week. He asks 'Where they had done business that -week, or if they kna.,.r 'Where business has taken place. Price am volume data are gathered am a high-lCM price ran;Je is carpiled am present:Ed as the weekly price. 'Ihe m:mthly average is the average of all the weekly 1~. In creatirg this ran;Je of prices, • • • stated that he will only drop extremes if there exists a fairly good volume of transactions that week am prices are concentrated in one rarge. However, he will not drop the extremes if the market is considered highly volatile, or if a small volume of business occurred durirg the week. 'Ihe U. s. transaction price is the daily Iaxion Metal Excl'latge (IME) cash settlement price plus a premium differential for transportation to the u. s. Midwest. It is presented an a daily basis, am is develq,ed in such a way that the price will never be lower than the U. s. market price's lCM. 'Ihe transportation premium is develq,ed an the basis of disaJSSions with people in the industry. Aluminum is traded an the IME an a 3-m:rl:h-q,t:ian am spot (cash) basis. 'Ihe aluminum that is traded an the exc.harqe is based an :r;:urity levels of 99.5 percent, as q;p,sed to 99. 7 percent used in fomul.atirg the Metals Week prices. * * *, however, dismissed that this could cause a significant price differential. * * * ca11meuted that as recently as 6 nart:hs ago, prices ~ considered sanewhat linked to the U.S. market. Hat.lever, in the last 6 ntmths, this link has declined. 'lhere have been c.hal:ges of market manipllatian, as well as a general erosion of confidence in the IME since the tin crisis of October 1985. Also, a ''backwardatian" of the market presently exists ( spot price greater than the 3-month price), "'1hich has added to the awrehensiveness of the market. At one time, • * * remarked, people in the industry wc:w.d resp:>ni to his questions in terms of premiums over the IME price; rrM, hcMever, responses have been in terms of total sellirg price. • • * ccmmented that the Metals Week price was an inflated mJJDbp...r because it was based on an average of producers, consumers, am the cnmx (traders). '!he IME, he states, is nore in line with the world price of aluminum. Sellers prefer the Metals Week because of the higher prices, but there has been a gradual evolution in the i.mustry to the IME for the purchase both of u .s. -produced rod am of ilrports.