Wiley Rein

Cut-to-Length Plate from India, Indonesia, and Korea: Why the Orders Should Remain in Place LLP

Presentation of the Domestic Industry

Alan H. Price

January 4, 2018

Overview m All three countries satisfy the requirements for cumulation

• Conditions of competition render the domestic industry vulnerable to material injury by reason of subject imports

• Revocation as to one or all of the subject countries will likely lead to

• Increases in import volumes

• Negative price effects

• The continuation or recurrence of injury to the domestic industry within the reasonably foreseeable future

Wiley Rein

LLP

Cumulation PI The ITC should cumulate all three subject countries

• In the previous reviews, the ITC cumulated imports from these countries • "Based on the likely reasonable overlap of competition among subject imports

from India, Indonesia, and Korea, and the absence of other differences in likely conditions of competition in the U.S. market that would warrant the consideration of subject imports from any one of the countries on an individual basis, we exercise our discretion to cumulate subject imports from India, Indonesia, and Korea." 2011 Review

• If the orders are revoked, imports from each of the three countries are likely to have a discernible adverse impact on the domestic industry

111 There is a likelihood of an overlap of competition Wiley Hein

LLP

Conditions of Competition • "Price is a very important factor in purchasing decisions for

CTL plate" (2015 Sunset Review)

• There is massive global overcapacity

• Subject countries are increasing capacity

• The U.S. industry was hammered by a surge of unfairly traded imports during the POR

• U.S. demand is declining

• The U.S. market is attractive because of relatively higher prices

Wiley Rein

LLP

In 2016, World CTL Plate Capacity Exceeded Production by Nearly 63 Million Tons

250

200

= 100 2

50

Source: Nucor Prehearing Brief at Exhibits 1 and 6

0

iley Relit

LLP World Capacity World Production

10.00

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

Mil

lio

n N

et T

ons

U.S. Consumption of CTL Plate Has Declined Sharply and Continues to Fall

2014 2016 Jan-Sep 2016

-6.2%

Jan-Sep 2017

Source:

Prehearing

Staff Report at

1-46

Wiley 6

Rein LLP

The Subject Countries Have the Ability to Increase Exports Rapidly

• All of the subject countries increased capacity since the last review

• The subject producers have enormous excess capacity

• The subject producers are all export-oriented

• The subject producers can quickly shift exports to the United States

A SAIL

DA DONGKUK STEEL 111 HYLII1DRI STEEL

KRAKATAll SIFF!

Wiley Rem

LLP

20

Millio

n N

et T

ons

15

10

2017 2011

25

5

o

Source: Nucor

Prehearing

Brief, Exhibit 6

Wiley Rein

LLP

Since the Last Review, the Subject Producers Have Increased CTL Plate Capacity by 40% 30

9 Subject Overcapacity

Source: Nucor

Prehearing Brief,

Exhibits 1 and 6;

Prehea ring Staff

Report at Table C-1

Wiley Rem_

LLP US Consumption

6.0

4.0

2.0

0.0

Subject Overcapacity in 2016 Was Nearly Twice

Annual U.S. Consumption of CTL Plate

18.0

16.0

14.0

The U.S. Market Is Attractive

• The United States represents a large, open market for CTL plate

• Even though U.S. prices fell throughout the POR, U.S. prices are still attractive compared to other countries

• Exports of CTL plate from the subject countries are subject to trade barriers, including in major markets like Thailand and India

• U.S. purchasers expect that imports from these countries will enter the U.S. market in substantial quantities if the orders are revoked

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LLP 10

U.S. Prices Are Very Attractive

$750

$700

$650

$600

$550

$500

$450

$400

$350

$300

$/ N

et T

on

in 2

016

Wiley Rein

LLP

All US Imports All India Exports All Indonesia Exports All Korea Exports 11

Source: Public Prehearing Report at IV-16, IV-24, and IV-28

Price Effects • The Commission found likely negative price effects in both of the preceding sunset

reviews

• "Given the likely significant volume of imports from India, Indonesia, and Korea, the importance of price in the CTL plate market, the substitutability of subject imports and the domestic like product, the price effects of low-priced subject imports in the original investigations, the underselling by subject imports during the original investigations, the first reviews, and continuing in these reviews, and the incentive that exists for subject imports to enter the U.S. market in significantly increased quantities, we find a likelihood of significant negative price effects from the subject imports upon revocation of the orders." 2011 Review

• Subject producer prices to third country markets are well below prices to the U.S. market

• Because CTL plate is sold on the basis of price, even small volumes at low prices can have a disruptive effect

• The subject countries have high rates of dumping and subsidization

• Market participants expect prices to fall if these orders are revoked

12

Wiley Rein

LLP

$850

$800

$750

$500

$450

$400

$/ N

et T

on i

n 20

16 $700

$650

$600

$550

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LLP 13

Indian Export Prices to Other Markets Are Far Below Those to the United States

United States Portugal Greece Italy Spain

Source: Prehearing Staff Report at IV-16

700

600

500 to

r%Ic 400 • _

h-

15 300

200

100

0

Korean Export Prices to Other Markets Are Well Below Those to the United States

United States Vietnam Spain Japan Philippines 1 4.

Source: Prehearing Staff Report at IV-28

Wiley Rein

LLP

All US Imports

Indonesian Export Prices to Other Markets Are Well Below the Average Price of Imports into the United States

800

700

600

`8 500

C C 400

a) 300

200

100

0

15

Spain Italy Saudi Arabia Other

Source: Prehearing Staff Report at IV-3 and IV-24

Wiley Ron

LLP

The Domestic Industry Is Vulnerable • Virtually all trade and financial indicators for the domestic industry fell

between 2014 and 2016

Production -18.5%

Capacity Utilization -18.1%

Shipment Volume

-18.7%

Average Unit Value -28.0%

Shipment Value -41.5%

Capital Expenditures -46.9%

Operating Income -96.2%

Source: Prehearing

Staff Report, Table C-1

Wiley Rem

LLP

The Domestic Industry Has Not Recovered in 2017

• Despite relief, from interim 2016 to interim 2017:

• Production and shipment volume remained flat

• Capacity utilization remained below 60%

• Operating income remained below 2%

• Capital expenditures fell even further

• Recovery in the near term is uncertain, as U.S. demand is

projected to remain sluggish and prices low

17

Wiley Rem

LLP

The Indonesian Producers Will Re-Enter the U.S. Market Given the Opportunity

• Indonesia is an export platform for CTL plate

• The Indonesian industry's capacity utilization is below 50%

• Indonesian exports of CTL plate increased by more than 150% from 2012 to 2016

• Indonesian exports are subject to trade barriers in major markets, including Australia, India, Malaysia, Taiwan, and Thailand

• Indonesia has shown the ability to move quickly into new markets, like Spain and Italy

11 Indonesia has easy access to the U.S. distribution network

Wiley Help,

Thailand Malaysia Italy Spain

60,000

50,000

40,000

30,000

20,000

10,000

0

mi 2015

• 2016

Subject Indonesian Producers Have Shown The Ability

To Move Into New Markets Very Rapidly

70,000

Source: Prehearing

Staff Report at IV-23

Wiley Rein

LLP

Mi l

lio

n N

e t T

on

s

1.8

1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

0

Indonesian Export Capability in 2017 Was Greater than All Imports in 2015

from the Countries Subject to the AD and CVD Investigations

20 Indonesia Capacity Available for Export, 2017 Imports from 12 Subject Countries, 2015

Source: Nucor

Prehearing Brief at

Exhibits 1, 6; ITC

Data Web

Wiley Rein

LLP

• POSCO in the Americas

POSCO Canada 0 0

UPI

PO SC 0

,America

Detroit Office°

Houston ---

Office(s_) —POSCO PO SCO ._ _ _ AAPC Mexico

21

Diversion Through Indonesia • CTL plate exports by POSCO are

currently subject to combined AD/CVD duties of 11.7%

• PT Krakatau POSCO is a joint venture of Krakatau and POSCO of Korea

• POSCO has an extensive distribution network in the United States

Wiley Rein

LLP

Conclusion • The main thing that has changed since the last sunset

review is that conditions for the domestic industry have gotten worse

• The subject producers have more capability than ever to export large quantities of CTL plate to the United States

• If the orders are revoked, imports from India, Indonesia and Korea will re-enter the U.S. market in substantial quantities, causing injury to the domestic industry

Wiley Rein

LLP 22