The evidence discussed below indicates that the demand for this product is likely to be relatively price inelastic. U.S. apparent consumption increased by *** percent from 2003 to 2005. When asked how overall demand for CFS paper has changed since January 2003, all nine responding U.S. producers and 18 of 31 responding importers stated that demand has increased.17 The increase in demand was most commonly attributed to economic growth and its effect on advertising and the publication of corporate financial reports. Two U.S. producers reported that the restrictions placed on telemarketing have increased the demand for direct mail advertising. One importer also indicated that demand may be shifting more towards coated free sheet in web-roll form, as roll production becomes more efficient.18
When asked whether there are substitutes for CFS paper, all but one responding U.S. producer and most responding importers cited one or more alternatives. Coated groundwood paper and uncoated free sheet paper were named most often; other possible substitutes named included high-yield board, super-calendared papers, plastic, coated bristols, electronic media, fine art paper, and film for packaging. However, two producers reported that substitutability is limited. In particular, two producers reported that higher-end publications typically do not substitute away from CFS paper in order to retain their image and standard of quality. Moreover, petitioner noted that once a recurring publication has launched, it is slow to switch the paper it uses. One importer reported that substitutability between coated free sheet and coated groundwood is limited because coated groundwood is not readily available in sheet form. Another importer reported that substitution would be more likely in lower-end applications. Five U.S. producers reported that the price of substitutes can affect prices of CFS paper, citing time lags of three to four months. In particular, three producers reported that price increases of substitutes will have the strongest impact on lower weights of CFS paper. One producer reported that the price of uncoated free sheet paper has been increasing, which is increasing demand for CFS paper. This producer also reported that increases in the price of plastic have increased demand for CFS paper as well. Seven of 12 responding importers reported that the prices of substitutes do not affect the price of CFS paper. The five importers that reported that prices of substitutes do affect the price of CFS paper cited time lags of four to 12 weeks. One importer reported that price changes across all segments of the printing paper market tend to move in unison. 19
The extent of substitutability between domestic products and subject and nonsubject imports and between subject and nonsubject imports is examined in this section. The discussion is based upon the results of questionnaire responses from producers and importers.
17 Eleven responding importers reported that demand was unchanged and two reported that it has decreased. The importers reporting that demand was unchanged most commonly cited the growth of the internet and electronic media.
Conference transcript, p. 162 (Dragone). Conference transcript, p. 164 (Dragone).