from ***.14 Petitioner reports that ***.15 Petitioner also reported that sometimes a mere perception that supplies are tightening will induce customers to place orders in excess of what they actually require and suppliers may respond by using a reservation system to avoid disruptions in the supply chain. 16
The supply response of CFS paper producers to changes in price depends on such factors as the level of excess capacity, the availability of alternate markets for U.S.-produced coated free sheet paper, inventory levels, and the ability to shift to the manufacture of other products. The evidence indicates that the U.S. supply is likely to be relatively inelastic, due primarily to the high levels of capacity utilization and lack of alternative markets.
U.S. producers’ capacity utilization increased from 90.1 percent in 2003 to 95.1 percent in 2005. This level of capacity utilization indicates that U.S. producers have little, if any, unused capacity with which they could increase production of CFS paper in the event of a price change.
Exports by U.S. producers, as a share of total shipments, increased from 5.5 percent in 2003 to 6.3 percent in 2005. These data indicate that U.S. producers have a limited ability to divert shipments to or from alternative markets in response to changes in the price of CFS paper.
The ratio of end-of-period inventories to U.S. shipments decreased from 17.2 percent in 2003 to 15.4 percent in 2005. These data indicate that U.S. producers have some inventories they could use as a means of increasing shipments of CFS paper to the U.S. market.
Five of seven responding U.S. producers reported using the actual machinery and equipment used to make CFS paper in the production of other products.
The responsiveness of supply of imports from China, Indonesia, and Korea to changes in price in the U.S. market is affected by such factors as capacity utilization rates and the existence of home markets and other export markets. Based on available information, producers in China, Indonesia, and Korea are likely to respond to changes in demand with slight changes in the quantity of shipments of CFS paper to the U.S. market. The main contributing factors to this degree of responsiveness of supply are the high levels of capacity utilization and relatively small inventories.
Chinese respondents’ postconference brief, p. 16, exh. 1 and exh. 3. *** Petitioner’s postconference brief, exh 1, p. 39. Petitioner’s postconference brief, exh. 1, pp. 38-39.