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highly sophisticated equipment can be used to produce broad specification cast iron from mixes containing no pig iron. In such situations pig iron is nevertheless used where the prices of cast-iron scrap nears the higher price of pig iron.
The Injured Industry
Significant distinctions between molten pig iron and cold pig iron, and the inevitable resulting differences in their handling, distribution and sale, lead me to conclude that the injured industry in this case consists of and is confined to the domestic facilities devoted to the production of cold pig iron. Molten pig iron is generally produced at a constant specification, is sold on a long term price basis, is delivered in large bulk quantities on a reasonably continuous basis, can be shipped only very limited distances, does not involve casting into pigs and attendant handling problems, and must be used promptly if there is to be a utilization of its molten condition. On the other hand, cold pig iron is generally produced by a merchant pig iron producer in a wide range of specifications to meet the needs of various users. To meet these various needs it is necessary to stockpile a large inventory of each specification pig iron which in turn necessitates frequent and costly time consuming changes in the blast furnaces. These frequent changes generate off-specification pig iron which is difficult to sell at normal cold pig iron prices.
cold pig iron are less constant in the quantities purchased and the frequency of their orders, demand various specifications in small lots, and tend to make shorter term purchase contracts. The Competitive Impact
In recent years steel producers have been building new basic oxygen steel-making furnaces so as to materially reduce the melting time in making steel. For technical reasons, which need not be explained here, the basic oxygen process does not permit the use of as much scrap metal in a steel-making mix as can be used in most other steel-making furnaces. As a result of the technological improvement in steel furnaces, the conversion of the industry to the better process has created a greater supply of scrap metal in the United States which has resulted in lower prices for such scrap. In part because of the lower priced scrap, users of cold pig iron have sought technological improvements in their plants to better utilize more scrap which sells for less than domestic pig iron. As a result of these factors, the prices of domestic cold pig iron have been unstable and sales by domestic producers of cold pig iron have yielded less revenue. In such unstable market conditions, domestic cold pig iron producers have generally not been able to sell at their published prices nor to make long term sales. Indeed, they have had to negotiate many of their sales at prices lower than their published prices in
order to meet competitive conditions of the moment. With this highly price-sensitive market in mind one may readily weigh the impact of the entry of the LTFV imports into the domestic market.
Market penetration.--Imports of cold pig iron at less than fair value began in 1964 when they amounted to 1.6 percent of domestic shipments, including inter-company transfers of cold pig iron. In 1965 they amounted to 3.4 percent; in 1966 they amounted to about 12.4 percent. Thereafter, the growth in penetration ceased when imports stopped as a result of Treasury's order to withhold appraisement of future shipments, an action which could result in the assessment of special dumping duties with respect to subsequent shipments. During this period the domestic industry was operating at an average of 68 percent capacity (based on days of operation) and carried inventories of not less than 760,000 long tons of cold pig iron.
Price depressant effect.--Although the LTFV imports were sold to at least seventeen domestic users of pig iron located in various parts of the United States, about 70 percent of the imports was sold to four purchasers located in Alabama, Illinois, Indiana, and Pennsylvania. Detailed confidential data was obtained from these concerns. An analysis of the collective cold pig iron buying habits of these four purchasers is quite persuasive as to the price depressing effect of the presence of LTFV pig iron on the U.S. market.
least three of the
Prior to 1963 at /four companies used substantial quantities
In 1963, one year before
of domestic pig iron in their operations.
In 1964 the ratio became about 1 to 5. In 1965, when LTFV imports
In 1963, the four concerns bought foreign pig iron at about $18 less per long ton than the average price of their purchases of domestic pig. In 1964, the price differential narrowed to about $14.50, the adjustment being effected primarily by an increase in the average price of the foreign pig. In 1965, when the LTFV imports were first purchased by the four concerns at an average price almost $17 less than the 1964 price of domestic cold pig iron, the effect was immediate. The average price purchased by these concerns of the domestic pig/ dropped over $6 per long ton and the average price of foreign pig iron dropped 38 cents per long ton. Neither
1 As used here the term "foreign pig iron" refers to cold pig iron of foreign origin other than from the four Eastern European countries named by Treasury.
the domestic producers nor the foreign pig iron producers met the prices of the LTFV imports in 1965. In 1966, the importers of LTFV pig iron again lowered their average price by $1.03 per ton. The sellers of foreign pig iron dropped their average price below the prices of the LTFV pig iron by 40 cents per ton in an unsuccessful attempt to retain their share of the sales to the four concerns, and with the exception of off-grade
pig iron sales of domestic pig iron to the four concerns ceased. Upon the cessation of LTFV imports when customs officers withheld appraisement, the prices of domestic and foreign pig iron to the four concerns rose to appreciably higher levels.
In summary, the importers of LTFV pig iron from the four Eastern European countries are greatly underselling domestic producers of cold pig iron and are appreciably underselling importers of other foreign pig iron. This practice has caused a significant depression in prices of cold pig iron in the domestic market that was already price-sensitive when the LTFV pig iron entered it, and has resulted in an appreciably rapid market penetration. Such injury to the domestic cold pig iron industry is clearly more than de minimis.
There was some evidence that the low prices of the LTFV pig iron were also affecting the cast-iron scrap industry in the United States. However, in view of this determination of injury to the domestic cold pig iron producers, it is not necessary to pursue and weigh the degree of injury caused to the cast-iron scrap industry.