relevant factors are considered “within the context of the business cycle and conditions of competition that are distinctive to the affected industry.”29
Production criteria suggest that the industry performed well over the POI. Capacity was marginally higher in 2005 than in 2003, and capacity was 7.4 percent higher in interim 2006 than in interim 2005. Capacity utilization was around 90 percent or higher throughout the POI. Production rose by 7.6 percent between 2003 and 2005, and production in interim 2006 was 2.6 percent higher than in interim 2005. Domestic shipments were 8.6 percent higher in 2005 than in 2003 and 5.0 percent higher in interim 2006 than in interim 2005. The value of domestic shipments rose by 11.8 percent between 2003 and 2005 and by 7.5 percent between interim 2005 and interim 2006. Export shipments rose by 27.4 percent between 2003 and 2005, and the value of those export shipments rose by 34.6 percent. As noted earlier, the domestic industry’s market share in terms of quantity was 72.9 percent in 2005, virtually unchanged from the 2003 level of 72.5 percent; the industry’s market share was modestly lower in interim 2006 than in interim 2005. The net value of the industry’s sales was 12.1 percent higher in 2005 than in 2003, and the net value of sales in interim 2006 was 7.7 percent higher than in interim 2005.30
Despite these many positive indicators, the industry’s financial performance was, at best, anemic between 2003 and 2005. Operating income as a percentage of sales was 0.5 percent in 2003; the industry recorded a loss in 2004, and operating income was 0.1 percent of sales in 2005. The industry recorded its best performance in interim 2006. Despite a slight decline in its market share, the domestic industry’s production and shipments increased, as did prices, while interim 2006 costs declined compared to interim 2005. Operating income in interim 2006 was 3.9 percent of sales.31
It is difficult to conclude that the industry’s middling performance in 2003-2005 was related to the presence of subject imports. The industry’s market share in 2005 was essentially the same as in 2003, with higher production, shipments, and prices, yet operating income was 85 percent lower. Conversely, in interim 2006, the domestic industry’s market share dropped to *** percent, but production was higher, shipments were higher, prices were higher, and operating income was significantly higher compared to interim 2005.
As noted above, subject imports had little effect on the domestic industry’s market share during most of the POI. Nor does this record indicate that subject imports had significant effects on the prices received for the domestic like product. The record also suggests no reasonable connection between the presence, volume, or pricing of subject imports and the domestic industry’s financial performance. The industry did register operating losses in 2004, and several domestic producers recorded significant losses throughout much of the POI.32 But the record suggests these losses were prompted not by competition with subject imports but primarily by producers closing older production capacity and rationalizing overall production. Evidence on the record suggests this was a worldwide, industry-wide phenomenon, with similar closures occurring in Europe and in Canada as well in the U.S. market.33 Despite these recorded losses, the industry was able to make significant capital expenditures over the POI and its R&D
expenditures increased over the POI.34
And in interim 2006, with subject import volume at the highest
recorded levels overall, the industry recorded lower costs and its first solid profit of the POI. Therefore, I find no reasonable indication that subject imports had a significant impact on the domestic industry.
29 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701- TA-386, 731-TA-812-813 (Preliminary), USITC Pub. 3155 at 25 n.148 (Feb. 1999).
CR/PR at Table C-1. CR/PR at Table C-1. CR/PR at Table VI-2. Korean respondents’ postconference brief at 15 and 17 n.75; Tr. at 105 (Mr. Anderson). CR/PR at Table VI-5.