IMPORTERS’ U.S. INVENTORIES OF SUBJECT PRODUCT
Reported inventories held by U.S. importers of subject merchandise from China, Indonesia, and Korea and inventories from all other sources are shown in table VII-14. The ratio of combined subject inventories to both imports and U.S. shipments of imports combined remained within 8 to 9 percent throughout the period examined. The actual quantity of product held in inventory, however, increased by about 13,000 short tons as of September 30, 2006 compared to September 30, 2005. Most of the subject inventories reported in Commission questionnaires consisted of merchandise imported from Korea.30
Petitioner characterized the reported inventory levels as a “***” buildup and, further, asserted that even these *** levels are underreported in that several importers did not report holding inventories.31
32 Testimony at the conference indicated that inventories were most likely to be maintained by the “paper merchant” who has established warehouses where it maintains an inventory level. Both mill agents (which may be independent of or function as the local sales offices of offshore manufacturers) and/or paper brokers usually arrange for sales by the manufacturers to either paper merchants or end users. Mill agents or paper brokers do not, however, typically take possession of the product in the United States or maintain inventories.33 As discussed earlier, importer questionnaires were sent to and completed (see table IV-1) by firms that were listed as consignees on Customs documents. These firms consisted of a mix of mill agents, paper brokers, and paper merchants.
30 One reason for the relatively large inventories reported for Korea is that they include data for ***. Consequently, the inclusion of ***s data in this table is not believed to result in the double-counting of inventories even though the firm is not shown in table IV-1 (where listing its imports would result in the double-counting of i m p o r t s ) . S i m i l a r l y , a l l o f t h e i n v e n t o r i e s r e p o r t e d f o r C h i n a i n t a b l e I V - 1 4 a r e b y * * * . * * * a l s o r e p o r t e d
inventorying a substantial volume of Korean-manufactured CFS paper.
31 Several large U.S. importers (including ***) reported either maintaining no or minimal inventories in their importer questionnaire responses. (Each of these firms either reported “0" or minimal inventories in their importer questionnaire responses which suggests that they were in fact not holding inventories at their level of distribution rather than not being able to provide the requested data.) Other importers reported substantial inventories.
32 According to a letter submitted by ***, November 14, 2006, “most” offshore suppliers cannot compete in providing “just-in-time” delivery and often average 60 to 120 day lead times. Further, distributors are required to “make a very large financial inventory investment in order to buy large quantities, stock and resell an offshore CFS product. Without large inventories on hand, the distributor could not meet the demands of large printers who might require a large quantity of a particular size and substance of paper.”
Conference transcript, pp. 141-146 (Anderson, Dragone, and Cameron).