COMMISSION IMPLEMENTING REGULATION (EU) 2020/2100

of 15 December 2020

imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia following an expiry review pursuant to Article 11(2) of the Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘basic Regulation’), and in particular Article 11(2) thereof,

Whereas:

1. PROCEDURE

1.1. Previous investigations and measures in force

(1) By Council Regulation (EC) No 2022/95 (2) (‘original investigation’), the Council imposed a definitive anti-dumping duty on imports of ammonium nitrate falling at the time of the entry into force of the regulation under CN codes 3102 30 90 and 3102 40 90 and originating in Russia (‘the country concerned’). Pursuant to a further investigation, which established that the duty was being absorbed, the measures were amended by Council Regulation (EC) No 663/98 (3).

(2) Following a first expiry review and a first interim review pursuant to Articles 11(2) and 11(3) of Regulation (EC) No 384/96 (4) the Council, by Council Regulation (EC) No 658/2002 (5), imposed a definitive anti-dumping duty of EUR 47,07 per tonne on imports of ammonium nitrate falling at the time of the entry into force of the regulation under CN codes 3102 30 90 and 3102 40 90 and originating in Russia.

(3) Subsequently, a product scope interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 was carried out and, by Council Regulation (EC) No 945/2005 (6), a definitive anti-dumping duty ranging between EUR 41,42 per tonne and EUR 47,07 per tonne was imposed on imports of solid fertilisers with an ammonium nitrate content exceeding 80 % by weight, falling at the time of the entry into force of the regulation under CN codes 3102 30 90, 3102 40 90, ex 3102 29 00, ex 3102 60 00, ex 3102 90 00, ex 3105 10 00, ex 3105 20 10, ex 3105 51 00, ex 3105 59 00 and ex 3105 90 91 and originating in Russia.

(4) Following a second expiry review and a second partial interim review pursuant to Articles 11(2) and 11(3) of Regulation (EC) No 384/96, the Council, by Council Regulation (EC) No 661/2008 (7), maintained the measures in force. The duty was left unchanged, except for the EuroChem group, for which the fixed amount of duty ranged between EUR 28,88 and EUR 32,82 per tonne.

(5) The European Commission (‘the Commission’), by Decision 2008/577/EC (8), accepted the undertakings’ offers with a quantitative ceiling from the Russian producers JSC Acron and JSC Dorogobuzh, members of the Acron Holding Company and from EuroChem group.

(6) By judgment of 10 September 2008 (9), interpreted by judgment of 9 July 2009 (10), the General Court annulled Regulation (EC) No 945/2005 in so far as it concerned JSC Kirovo-Chepetsky Khimichesky Kombinat (‘Kirovo’), part of OJSC UCC UralChem (‘Uralchem’). The Council, by Council Regulation (EC) No 989/2009 (11), amended Regulation (EC) No 661/2008 accordingly. Consequently, for the company Kirovo the anti-dumping duty at the time of the entry into force of the Regulation (EUR 47,07 per tonne) applied only to imports of ammonium nitrate falling under CN codes 3102 30 90 and 3102 40 90.

(7) By Decision 2012/629/EU (12), the Commission withdrew its acceptance of the undertaking offered by the EuroChem Group because of the impracticability of the undertaking.

(8) Following a third expiry review pursuant to Article 11(2) of Regulation (EC) No 1225/2009 (13), the Commission, by Commission Implementing Regulation (EU) No 999/2014 (14), maintained the measures in force. That investigation is hereafter referred to as ‘the last expiry review’

(9) Commission Implementing Regulation (EU) 2016/226 (15) amending Implementing Regulation (EU) No 999/2014 addressed the restructuring of Kirovo as a branch of Uralchem.

(10) The Commission, by Commission Implementing Regulation (EU) 2016/415 (16), withdrew the acceptance of the undertaking for the Acron Holding Company due to the impracticability of the undertaking.

(11) Following a review pursuant to Article 11(3) of Implementing Regulation (EU) 2018/1722 (17), the Commission amended the measures in force. That investigation is referred to as ‘the last interim review’. On this basis, the fixed amount of duty currently in place range between EUR 28,78 and EUR 32,71 per tonne.

1.2. Request for an expiry review

(12) Following the publication of a notice of impending expiry (18) of the anti-dumping measures in force on the imports of ammonium nitrate originating in Russia, the Commission received a request for review pursuant to Article 11(2) of the basic Regulation.

(13) The request was lodged on 21 June 2019 by a European association of fertilizers manufacturers, Fertilizers Europe (‘the applicant’ or ‘FE’), on behalf of Union producers representing more than 25 % of the Union production of ammonium nitrate.

(14) The request was based on the grounds that the expiry of the measures would be likely to result in continuation and/or recurrence of injurious dumping of injury to the Union industry.

1.3. Initiation

(15) Having determined that sufficient evidence existed for the initiation of an expiry review, the Commission announced on 23 September 2019, by notice published in the Official Journal of the European Union (19) (‘the Notice of Initiation’) the initiation of an expiry review pursuant to Article 11(2) of the basic Regulation.

1.4. Interested parties

(16) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, exporting producers, importers and users in the Union known to be concerned, and the Russian authorities of the initiation of the expiry review and invited them to participate.

(17) All interested parties had the opportunity to comment on the initiation of the review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

1.5. Comments on initiation

(18) Following initiation, the Russian Fertilisers Producers Association (‘RFPA’) submitted that the request failed to provide sufficient evidence that the expiry of the anti-dumping measures on Russian ammonium nitrate (‘AN’) would result in the likely continuation or recurrence of dumping or injury. More specifically, RFPA submitted that since the original review request filed on 21 June 2019 (‘original review request’) provided no evidence of domestic sales being made outside the ordinary course of trade, the calculation of the dumping margin based on the construction of the normal value was illegal. RFPA further argued that the review request of 21 June 2019 did not have any evidence of dumping based on the comparison of actual domestic prices with export prices and that the applicant added such evidence only to the revised version of the request based on a deficiency letter issued by the Commission.

(19) Furthermore, RFPA claimed that the applicant’s cost calculations were based on an inflated cost of manufacturing. They also claimed that the calculations of a constructed normal value were manifestly erroneous, based on unreliable, internally inconsistent, outdated information, incomprehensible data and mere estimates of a consultant, and that the Commission failed to diligently review these calculations.

(20) The Commission initiated the expiry review based on the review request as initially submitted on 21 June 2019 and further supplemented by additional information (collectively referred to as ‘consolidated review request’). The consolidated review request, which constitutes the basis for the initiation of this expiry review, was placed in the open file and made available to interested parties for consultation. As stated in point 4.1 of the Notice, the Applicant provided in its review request evidence of a normal value based on actual domestic prices and equally constructed the normal value in case the domestic prices would not be considered as reliable and reflecting ordinary course of trade. Whether the original request was supplemented with estimated normal values on the basis of information available on actual domestic prices in the country concerned is irrelevant insofar as the Commission initiated the expiry review on the basis of the consolidated review request.

(21) Regarding unreliability of data used by the Applicant in its allegations, a review request must contain sufficient evidence necessary to support the initiation of the review. The quality of this evidence will necessarily be limited by the applicant’s ability to have access to the relevant information, which in most cases is confidential. Potential inaccuracies in the applicant’s request uncovered during the investigation however do not render the initiation of this expiry review unlawful and the Commission investigation in this case in fact confirmed that the initiation was warranted.

(22) Following the disclosure, RFPA (20) reiterated their argument that no expiry review request that would satisfy the requirements of Article 11(2) of the basic Regulation had been lodged within the legal deadline. According to RFPA, it is the original review request that constitutes the basis for the initiation of the expiry review and against which the sufficiency-of-evidence requirement has to be assessed. Acron and the Russian Government provided similar arguments after the final disclosure. RFPA further submitted that while the Union producers could have clarified the evidence provided in the original review request, entirely new evidence on the likelihood-of-dumping or injury submitted outside the legal limit (i.e. 3 months before the end of the five-year period) should be disregarded. In this context, RFPA also referred to the Decision of the European Ombudsman (21) concerning a previous expiry review as well as to the recommendation of the Hearing Officer to the Commission services to disclose the original review request in the current review.

(23) The Commission notes that no new argument was raised by RFPA. Thus, the Commission recalls its position set out in recital (20) that this expiry review was initiated on the basis of the consolidated review request. The Commission considers that the request in its version filed by the 3-month deadline contained sufficient evidence that, subject to the clarifications provided by the applicants following the deficiency process to supplement its initial request, warranted the initiation of the expiry review. This in line with the Ombudsman Decision that in relevant parts states: ‘16. The Ombudsman agrees that the three-month period is established for the administrative convenience of the Commission, which needs to assess the information provided by the applicants prior to deciding whether it should open an expiry review procedure. Logically, the Commission’s verifications during this process may involve requesting clarifications and even additional information from the applicants, thus leading to consolidated review requests. 17. However, these clarifications and additional information will not replace, but supplement the content of the original Review Request. Consequently, the latter will necessarily be used by the Commission within the meaning of Article 6(7) of the Basic Regulation when it decides to open an expiry review investigation. In fact, the Commission seems to admit this when it states, in the opinion, that it was the Review Request together with the subsequent clarifications presented as a consolidated version that formed the basis of... [the] opening of the investigation.’.

(24) Furthermore, after the definitive disclosure, RFPA and the Russian Government claimed that the fact that the consolidated review request constituted the basis for initiation was not supported by the record of the investigation.

(25) The consolidated review request was placed in the file for inspection by the interested parties at initiation stage. There is no ambiguity as to the fact that the expiry review was initiated on the basis of that request. This can be confirmed by the reading of section 4.1 of the Notice of Initiation, which clearly referred to evidence stemming from the consolidated review request.

(26) With reference to Article 5(3) basic Regulation, RFPA submitted that the Commission failed to examine the accuracy and adequacy of the evidence provided by the applicant. In that context, RFPA also noted that both, the original and consolidated review requests only alleged the existence of a likelihood of continuation of dumping, while the Commission did not make any findings as to the continuation of dumping.

(27) The Commission notes that the argument is based on a misunderstanding of the purpose of a request on the one hand and the purpose of a review investigation on the other hand. The purpose of a request is to justify the initiation of an expiry review investigation based on the evidence reasonably available to the applicant as regards continuation or recurrence of injurious dumping. As explained above, the request contained sufficient evidence to that effect. On the other hand, the purpose of the review investigation is to determine whether the expiry of the measures would be likely to lead to continuation or recurrence of dumping and injury based on the information collected from the various interested parties during the review investigation. It is perfectly factually possible and legally admissible that the evidence available to the applicant shows a likelihood of continuation of dumping while the investigation will establish, based on the information collected from and verified with interested parties, that dumping is in fact likely to recur. To this effect, point 5 in the Notice of Initiation states that ‘[h]aving determined (…) that sufficient evidence of a likelihood of dumping and injury exists to justify the initiation of an expiry review, the Commission hereby initiates a review in accordance with Article 11(2) of the basic Regulation’. The Notice of Initiation further specifies that ‘[t]he expiry review will determine whether the expiry of the measures would be likely to lead to a continuation or recurrence of dumping of the product under review originating in the country concerned and a continuation or recurrence of injury to the Union industry’. Thus, having evidence tending to show continuation of dumping is sufficient to trigger an investigation on whether there is continuation or recurrence of dumping. Therefore, this claim is rejected.

(28) RFPA and Acron submitted, with reference to the WTO panel report issued on 24 July 2020 (22) (‘DS494 Report’), that (i) the previous expiry review in this case should not have been initiated, due to a lack of sufficient evidence of the likelihood-of-dumping and hence that the Commission should repeal the anti-dumping measures on ammonium nitrate from Russia and (ii) this expiry review is vitiated by the same errors as the previous review and therefore should not have been initiated. In this context, both RFPA and Acron repeatedly referred to the review request as lodged on 21 June 2019 and evidentiary shortcomings thereof. Similar claims were restated by RFPA and the exporting producers following the final disclosure.

(29) RFPA’s and Acron’s comments have to be rejected for the following reasons. First, the findings of the DS494 Report are subject to appellate proceedings and therefore the panel’s findings are not final. Second, as set out in recital (20), initiation in this expiry review is not solely based on information as received in the original review request of 21 June 2019, but also on further evidence supplemented by the applicant prior to the initiation and included in the consolidated review request (containing evidence of a normal value based on actual domestic prices as well as a constructed the normal value in case the domestic prices would not be considered as reliable).

(30) RPFA also submitted that RFPA’s rights of defence had been breached because of the Commission’s denial of access to a full version of certain annexes of the review request.

(31) All requests for access to file made in this case by the interested parties, including RFPA, have been diligently examined. The Commission ensured that revised and meaningful non-confidential versions of the disputed documents, including annexes of the review request, were provided to the parties.

1.6. Sampling

(32) In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 17 of the basic Regulation.

1.6.1. Sampling of Union producers

(33) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. In accordance with Article 17(1) of the basic Regulation, the Commission selected the sample on the basis of the largest representative volume of sales which could reasonably be investigated within the time available, considering also the geographical location. This sample consisted of three Union producers. The sampled Union producers accounted for 40 % of the production volumes of the companies that have come forward in the standing exercise and around 35 % of the estimated total production in the Union. The Commission invited interested parties to comment on the provisional sample.

(34) Some interested parties submitted comments with regard to the provisional sample. The Commission considered the comments and explained in the note added to the open file on 14 October 2019 the reasons why those comments could not be accepted. As a result, the original sample was maintained.

(35) Several interested parties reiterated and provided additional claims regarding the sample of the Union producers after the deadline to provide comments and after their initial comments had been addressed in the Note to the open file.

(36) Two interested parties reiterated their claim that the sample of the Union producers was not representative and requested the exclusion of two Union producers for which injury was found in another investigation of mixtures of urea and ammonium nitrate (‘UAN case’) (23). They claimed that ammonium nitrate solution was a semi-finished product used for both ammonium nitrate and UAN. Therefore, injury to one product would automatically translate to injury for both products. In addition, ammonium nitrate is produced with the same equipment; therefore, there is only one common cost of production. Consequently, if the ammonium nitrate production line is underutilized due to the reduced production and sales of urea and ammonium nitrate, the higher fixed cost will impact profitability of ammonium nitrate for free or captive use alike. Therefore, there are no means to break a single micro economic indicator between ammonium nitrate used for the free and captive market.

(37) The Commission disagreed with this claim. In all investigations, costs are allocated to the product being investigated only. Indeed, if there were no means to correctly and reasonably allocate the cost of production of vertically integrated producers, the information provided by any such producer investigated would be put in question (including the cooperating exporting producers in Russia of this investigation). Therefore, it is within a standard Commission’s practice that all economic indicators refer distinctively to the product in question, including the indicator of the cost of production. Accordingly, when verifying the vertically integrated sampled Union producers in question, the Commission ensured that there was a clear distinction in cost incurred for each product produced within these companies. The argument of the parties was therefore dismissed.

(38) One interested party claimed that the production of both, ammonium nitrate and urea and ammonium nitrate is not common among the Union producers of ammonium nitrate. This fact jeopardizes the sample and makes it a non-representative.

(39) The two sampled Union producers are two of the three largest Union producers of ammonium nitrate in terms of the production and sales volumes reported in the standing exercise. This fact contradicts the allegation that production of both, ammonium nitrate and urea and ammonium nitrate is not common among EU producers of ammonium nitrate, and would not be representative or typical of the Union industry. The argument of the party was dismissed.

1.6.2. Sampling of importers

(40) To decide whether sampling was necessary and, if so, to select a sample, the Commission requested all unrelated importers to provide the information specified in the Notice of Initiation.

(41) No importers came forward to provide the information requested in the Notice of Initiation.

1.6.3. Sampling of exporting producers

(42) In view of the apparent large number of exporting producers in Russia, sampling was envisaged in the Notice of Initiation.

(43) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in the country concerned to provide the information specified in the Notice of Initiation. The information requested included sales volume and value, production volume and production capacity. In addition, the Commission requested the Mission of Russia to the Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(44) Eight exporting producers in the country concerned, representing essentially the totality of the Russian AN production, provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three exporting producers which could reasonably be investigated within the time available. These producers were the largest producers as well as the largest exporters in the review investigation period (or ‘RIP’).

(45) In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned, and the authorities of the country concerned, were consulted on the selection of the sample. No comments were made. The Commission thus decided to retain the proposed sample and all interested parties were accordingly informed of the finally selected sample.

(46) The Commission selected the following three exporting producers for the sample: — Uralchem JSC (including Berezniki Azot and Kirovo-Chepetsk Chemical works) (‘Uralchem’) — EuroChem group (Joint Stock Company ‘Nevinnomyssky Azot’, Joint Stock Company ‘Azot’) (‘Eurochem’) — Acron group (PJSC Acron, PJSC Dorogobuzh) (‘Acron’)

(47) The sample represented 65 % of the reported Russian AN production in volume during the RIP, based on the replies to the sampling forms. The sample included two exporting producers, Acron and Eurochem, that had export sales of the product under review to the Union during the RIP. The third sampled company, Uralchem, only exported to the EU ammonium nitrate produced by its Kirovo branch, and not covered by the measures being reviewed as explained in recital (6).

1.7. Questionnaires and verification visits

(48) The Commission sent questionnaires to all sampled Union producers, all sampled exporting producers and all known users associations that came forward after initiation.

(49) Questionnaire replies were received from the three sampled Union producers, the three sampled exporting producers and two users of the product under review.

(50) The Commission sought and verified all the information it deemed necessary for the determination of the likelihood of continuation or recurrence of dumping and resulting injury and for the determination of the Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies/associations: (a) Union producers: — AB Achema, Lithuania — Grupa Azoty Zaklady Azotowe Pulawyu S.A., Poland — Yara France S.A., France — Union producers’ association: — Fertilizers Europe, Belgium (b) Exporting producers in Russia: — EuroChem Group AG (Joint Stock Company ‘Nevinnomyssky Azot’ (Nevinka), Joint Stock Company ‘Azot’ (NAK) and domestic trader Eurochem Trading RUS LLC) — Acron group (PJSC Acron, PJSC Dorogobuzh, domestic traders – Agronovas) (c) Related traders of the exporting producers: — EuroChem Trading GmbH, Switzerland and EuroChem Agro GmbH, Germany

(51) Due to the outbreak of the COVID-19 pandemic and the consequent measures taken to deal with the outbreak (‘the COVID-19 Notice’), the Commission was however unable to carry out verification visits at the premises of all exporting producers and their related companies. Instead the Commission performed remote cross-checks (‘RCCs’) of the information provided by the following companies via videoconference: (a) Exporting producers in Russia: — Uralchem group (including Berezniki Azot, Kirovo-Chepetsk Chemical works and Uralchem Trading House LLC) (b) Related traders of the exporting producers: — Uralchem Trading SIA, Latvia — Acron Switzerland AG, Switzerland

(52) In addition to the RCCs, the Commission cross-checked the information provided by exporting producers with the complaint and verified information provided by the Union industry and other interested parties.

1.8. Review investigation period and period considered

(53) The investigation of a continuation or recurrence of dumping covered the period from 1 July 2018 to 30 June 2019 (‘the review investigation period’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2016 to the end of the review investigation period (‘the period considered’).

2. PRODUCT UNDER REVIEW AND LIKE PRODUCT

2.1. Product under review

(54) The product subject to this review is the same as in the last interim review, namely solid fertilisers with an ammonium nitrate content exceeding 80 % by weight, currently falling under CN codes 3102 30 90, ex 3602 00 00, 3102 40 90, ex 3102 29 00, ex 3102 60 00, ex 3102 90 00, ex 3105 10 00, ex 3105 20 10, ex 3105 51 00, ex 3105 59 00 and ex 3105 90 20 (TARIC codes 3102290010, 3102600010, 3102900010, 3105100010, 3105100020, 3105100030, 3105100040, 3105100050, 3105201030, 3105201040, 3105201050, 3105201060, 3105510010, 3105510020, 3105510030, 3105510040, 3105590010, 3105590020, 3105590030, 3105590040, 3105902030, 3105902040, 3105902050, 3105902060, 3602000010) and originating in Russia (‘the product under review’).

(55) Ammonium nitrate (‘AN’) is a solid nitrogen fertiliser commonly used in agriculture, but is also used for industrial purposes such as the production of explosives (for instance used in mining). AN used both for agricultural and for explosive purposes is covered by the anti-dumping measures in force. Both types of AN have the same technical and chemical characteristics, are easily interchangeable and are considered as the product under review.

(56) Two interested parties claimed that the product scope of this expiry review and the measures should be revised. According to these parties, the Kirovo judgment (24), annulled Regulation (EC) No 945/2005 which expanded the product scope (25) compared to the initial investigation. Therefore, there was no legal basis to continue applying anti-dumping duties to these products. Furthermore, since no injury and dumping had ever been found for these additional products (collectively referred to as ‘stabilised AN’), there was no basis to examine the likelihood of continuation or recurrence of dumping. There was never dumping or injury found for stabilised AN, therefore dumping or injury can neither continue, nor recur. They further claimed that there was no sufficient evidence to conduct an expiry review with regard to imports of stabilised AN, while the Commission standing exercise and definition of the Union industry missed the producers of the stabilised AN. Following the disclosure, Acron reiterated the argument that the product scope of this expiry review was illegal to the extent that it included mixtures or the stabilised AN.

(57) The judgment in question annulled Regulation (EC) No 945/2005 only in so far as it concerned one Russian exporting producer as clarified by the Court of First Instance in Case T-348/05 INTP (26). For all the other Russian producers the applicable product scope remains the one specified in Regulation (EC) No 945/2005. The claim of the party is dismissed.

(58) Following the disclosure, several interested parties (27) reiterated the claim that there was no legal basis to apply antidumping measures to stabilised AN, since, as ruled by the General Court (28), they were not considered to be like products with the product of the initial investigation.

(59) As clarified by the Court of First Instance in Case T-348/05 INTP (29), the Judgment of the Court of First Instance of 10 September 2008, Case T-348/05 concerned only one Russian exporting producer (the applicant). Therefore, the annulment of the regulation contested by the applicant is limited to the applicant. The claim was therefore dismissed.

(60) RFPA further argued that in the alternative, the Commission’s assessment was erroneous as it failed to consider stabilised AN in its analysis. According to RFPA, the inclusion of stabilised AN within the product under review and like product would have led the Commission to entirely different conclusions with regard to the likelihood of recurrence of dumping and injury.

(61) It is recalled that, as a result of the judgment in case T-348/05, stabilised AN produced by the Kirovo branch of Uralchem is not covered by the current measures and hence was not part of the Commission dumping and injury analysis in the present case. Apart from the product produced and exported by Kirovo, the Commission analysis in the present case covered the entire product under review as defined in recital (54), which includes stabilised AN. Therefore, the argument raised by RFPA had to be rejected.

(62) Another interested party claimed that the request for review for the first time during the years of application of duties refers to the industrial grade of AN producers and the industrial grade AN producers in the Union should have formed part of the allegedly injured domestic industry in the course of the original investigation. Since they did not form part of the domestic industry at that time and therefore no injury was ever found for the industrial grade AN producers in the Union. No anti-dumping duties should apply to industrial grade AN either. Industrial grade AN should also be excluded from the product under review.

(63) This claim is unfounded. To the extent it satisfies the definition of the product under review, ammonium nitrate used for industrial purposes, and as a result the industry producing it, have always been covered by the investigations and measures. The fact the product types might have different end-use is irrelevant as long as the product is still within the definition of the ‘product under review’. This claim is therefore rejected.

2.2. Like product

(64) The investigation showed that the following products have the same basic physical and technical characteristics as well as the same basic uses: — the product under review; — the product produced and sold on the domestic market of Russia; — the product produced and sold in the Union by the Union industry.

(65) The Commission concluded that these products are like products within the meaning of Article 1(4) of the basic Regulation.

3. LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF DUMPING

3.1. Preliminary remarks

(66) In accordance with Article 11(2) of the basic Regulation, the Commission examined whether the expiry of the existing measures would be likely to lead to a continuation or recurrence of dumping.

3.2. Likelihood of continuation of dumping

(67) With respect to the Union exports, during the RIP, the sampled exporting producers sold only insignificant volumes to customers in the Union. In fact, as mentioned in recital (47), only Acron and Eurochem had export sales to the Union in the RIP. These sales were made either directly or via related traders established in Switzerland and in the Union. The third sampled producer, Uralchem only exported to the Union stabilised AN produced by its Kirovo branch, not covered by the current measures.

(68) In terms of concrete volumes, according to the data reported by Uralchem and in line with the information extracted from the Article 14(6) database (30), the majority of imports to the Union from Russia during the RIP, amounting to [50 000-100 000] tonnes, concerned stabilised AN not subject to the EU anti-dumping duty.

(69) Thus, total imports of the product covered by the anti-dumping measures (and by this review) accounted for [38 000 – 43 000] tonnes during the review investigation period, which corresponds to [0,4 – 0,8]% of the Union consumption and [0.3 – 0,5 %]% of the Russian AN production in the RIP. Moreover, these sales were limited to a small number of customers in the Baltic States, Finland and Sweden.

(70) These findings were based on verified data provided by the sampled exporting producers, the extract from the Article 14(6) database and are consistent with the RFPA submission that AN imports from Russia declined to negligible levels.

(71) As a result, the Russian export sales to the Union were not considered representative of the price (and the quantities) for which the exporting producers would sell the product under review to the Union absent any measures. Under these circumstances it is considered that the Union sales during the RIP could not be used for assessing whether dumping would be likely to continue should anti-dumping measures be allowed to lapse.

(72) In response to the disclosure, RFPA and Eurochem claimed with reference to Article 11(9) basic Regulation that since the structure of the Russian sales has not changed, the same methodology used to set the level of duty in the last interim review (31) (i.e. based on Kirovo’s export sales of stabilised AN to the Union) should have been employed for the purpose of determining the likelihood of continuation of dumping in this case. In the same vein, Uralchem argued that if Implementing Regulation (EU) 2018/1722 treated Kirovo’s stabilised AN as the best and only evidence available to set the level of the duty for Russia at large, the Commission was required to do the same in this case according to Article 11(9) basic Regulation. Uralchem further developed a separate dumping analysis limited to its sales of the stabilised AN.

(73) The Commission notes that these claims depart from a wrong premise as the Commission did not use the export price of stabilised AN from Kirovo to set the level of measures in the last interim review. In both cases, exports to third countries were the basis for the Commission’s findings. However, in the interim review, in the absence of usable Russian sales in the EU market and the need to calculate an injury margin based on sales to the Union, Kirovo’s stabilised AN sales to the Union were found to be the best proxy available to make a price comparison calculation that could be used for setting the new duty level. Furthermore, in order to make this proxy comparable to usable Russian sales to the EU, the prices of Kirovo’s stabilised AN were adjusted for the calculation of the undercutting and underselling. This is not required in an expiry review, where the assessment of the likelihood of recurrence of dumping can be based purely on actual transactions to third country sales. The Commission also notes that the methodology applied in this review followed the same methodology of using exports to third countries in the assessment of the likelihood of recurrence of dumping that was applied in the last expiry review. Thus, the Commission has fully respected Article 11(9) of the basic Regulation. Therefore, the claims were rejected.

(74) Acron and Eurochem further submitted in response to the disclosure that during the RIP, its sales to the Union were stable, at representative prices and in sufficient volumes to permit a dumping analysis and that there is no finding of dumping.

(75) This claim should be rejected. As noted in recital (67), the sampled exporting producers sold only insignificant volumes to customers in the Union. Thus, the Russian export sales to the Union were not considered representative and hence could not be used for assessing whether dumping would be likely to continue should anti-dumping measures be allowed to lapse (see recitals (69) and (71) for more details).

3.3. Likelihood of recurrence of dumping

(76) In light of the considerations set out in recitals (67)-(71), the Commission analysed whether there was evidence of likelihood of recurrence of dumping should the measures lapse. The Commission analysed the following factors: the export price for sales from Russia to other destinations, the production capacity and spare capacity in Russia as a whole, and the attractiveness of the Union and other third markets.

3.3.1. Exports to third countries

(77) All of the cooperating exporting producers exported significant quantities to third countries and provided detailed information concerning those exports. In the absence of representative export volumes to the Union, the exports to other third countries were considered for analysing the likelihood of recurrence of dumping should the measures be allowed to lapse.

(78) The Commission found that during the RIP, the sampled exporting producers sold almost 50 % (32) of their total sales quantities to third markets. Over 70 % of these third market sales were directed mainly to Latin America (Brazil, Peru, Colombia, Ecuador), but also to countries such as United States, Kazakhstan, Morocco, Azerbaijan and Zimbabwe. The export volumes to other third countries were very low.

(79) An analysis comparing the actual prices in the domestic market with the sales to third countries on an ex-works basis was made. Following the comparison, the Commission established individually for all three sampled exporting producers that the weighted average ex-works export price to their main third country markets during the RIP was lower than their actual weighted average domestic ex-works price paid or payable during the RIP.

(80) The above findings were based on verified data provided by the sampled exporting producers, which accounted for around 80 % of the total Russian AN exports to third countries. Accordingly, there was no need for the Commission to resort to export statistics.

(81) Overall, during the RIP the average ex-works export price of the three sampled exporting producers to third countries was 133 EUR/tonne, while their average ex-works domestic price was 145 EUR/tonne. Therefore, it was considered likely that, if the current measures were to be repealed, the Russian exporting producers would sell to the Union at dumped levels.

(82) Concerning the Russian domestic prices, FE claimed that a particular market situation exists with respect to AN pricing on the domestic Russian market due to a state intervention in the form of price restraints. Therefore, according to FE, domestic prices of AN were not suitable to be used in the current proceeding. Following the disclosure, FE reiterated its conviction that there is a state intervention mainly characterised by price constraints in Russia. To that effect, FE referred to numerous sources and documents authored by various public authorities, such as price lists, agreements, road maps and briefings given by public officials. However, the documents presented by FE were dated outside of the RIP and/or FE failed to explain the relevance and effect of such evidence on the domestic sales of the exporting producers and suitability of their use in these proceedings. In any event, the relevance of those documents in the context of these proceedings is questionable. Once the Commission has established as mentioned in recital (81) the likelihood of recurrence of dumping to the EU, the particular high or higher dumping level would not change this conclusion (see also recital (85) on this point). FE’s claims were thus rejected.

(83) Following the disclosure, FE argued that Brazil was the most representative example of the Russian dumping, based on public export statistical reports and local independent domestic reports.

(84) The Commission findings are based on company-specific and verified data provided by the sampled exporting producers, which were deemed more accurate and reliable than aggregate public statistics. Furthermore, the Commission performed a price analysis of exports to a number of third country markets considered to be representative of total sales to third countries for each of the sampled producers (see recital (78)). An evaluation of sales to numerous third countries was considered more representative than an evaluation of data for a single country.

(85) Moreover, FE submitted in response to the disclosure that the Commission failed to address the particular gas market situation in Russia in its dumping assessment.

(86) As explained in recitals (77) to (81), the Commission did not perform a dumping calculation in this expiry review. Hence, the Commission did not consider it necessary to assess the reliability of the costs of production (including the gas costs).

(87) In response to the disclosure, RFPA and Acron argued that the Commission failed to perform a dumping margin calculation, thus breaching Articles 11(9) and 2 of the basic Regulation which mandates the use of a standard methodology to determine the existence of dumping in the context of expiry reviews. Acron and Eurochem also argued that the Commission did not disclose any dumping calculations in this investigation, thereby violating their rights of defence. According to them, it was also unclear why the Commission compared the ex-works domestic price to the ex-works export price to third countries without actually performing a dumping calculation.

(88) The Commission did not calculate dumping on the basis of imports into the EU during the RIP because it found that the total volume of Russian exports of the product under review to the Union were unrepresentative. Therefore, this volume was not a reliable basis for a dumping calculation. As a result, the Commission could not have a conclusive finding of dumping into the EU during the RIP and, instead, assessed the likelihood of recurrence of dumping on the basis of Russian exports of AN to third markets. Reference is also made to recital (81) for conclusions drawn by the Commission from the said price comparison.

(89) In relation to Articles 11(9) and 2 of the basic Regulation, as highlighted in recital (73), the Commission used the same methodology in the last expiry review. The Commission refers to section 3.1.1 of the last expiry review Regulation (33), where it assessed in full the exports of Russia to other destinations in its analysis of likelihood of recurrence of dumping. Therefore, there was not only not a breach of Article 2 of the basic Regulation but also there can be no breach of Article 11(9).

(90) Finally, in terms of procedural rights, the Commission disclosed all the essential facts and figures underlying the comparison made, while observing parties’ rights of defence. The Commission even provided parties with additional disclosures (on 30 September and 21 October 2020) in order to further clarify and make sure that interested parties had correctly understood the Commission’s calculations. Therefore, those arguments had to be rejected.

(91) Following the final disclosure, Acron argued that its rights of defence were violated since the Commission collected more information than necessary for its assessment, in particular in the absence of the dumping calculation. First, Acron failed to explain how this fact would be in breach of its right of defence. Second, even if the Commission had all the data to perform the dumping calculation, having concluded that the export volumes were too little and therefore unrepresentative for the performance of a dumping calculation, the Commission was under no obligation to do so.

(92) Furthermore, according to RFPA and Eurochem, the Commission equally failed to perform a simple comparison of ex-works prices. They submitted that the Commission achieved the finding of dumping by adjusting the export price of Russian producers by deducting inflated and erroneous percentages of SG&A and notional profit margins. Moreover, according to RFPA, to the extent that the Commission did not perform dumping margin calculations, Article 2 of the basic Regulation does not apply. Uralchem and Eurochem further claimed that should the Commission maintain its decision to deduct the SGA and notional profit of its traders from the export price, a similar adjustment should be applied to the domestic sales price charged by the domestic trader.

(93) The Commission did not have a finding of dumping into the EU during the RIP and it did not conduct a dumping calculation in this sense. Contrary to RFPA’s claim, the Commission performed a comparison of ex works domestic and Russian export prices to third markets. While it is true that Article 2 of the basic Regulation applies to dumping calculations, the Commission disagrees with the interested parties that it would be prevented from applying those provisions by analogy when conducting a price comparison on the basis of third country prices. For the sake of making a fair and objective comparison, the Commission decided to make, among others, adjustments in line with the provision of Article 2(10)(i) of the basic Regulation. Similar adjustments were not applied to the domestic sales price via a domestic trader as the domestic traders essentially served as the domestic sales arm of the producing entities. Therefore, for the purposes of the price comparison, no SG&A and profit adjustment was warranted for the domestic sales.

(94) Acron submitted in response to the disclosure that the deduction of profit and SG&A costs for their affiliated trader was manifestly wrong in a price comparison aimed at calculating undercutting.

(95) First, Acron seems to confound the issue of undercutting calculation and price comparison made for the purposes of analysing likelihood of recurrence of dumping. Second, as explained in the company specific disclosure and in recital (93), the adjustments made for the affiliated importers/traders were made for the purpose of ensuring a fair price comparison, in line with the provisions of Article 2(9) and 2(10)(i) respectively.

(96) According to Uralchem and Eurochem, the Commission failed to sufficiently justify adjustment to the export price under Article 2(10) basic Regulation. Uralchem and Eurochem further submitted in reply to the disclosure that a deduction of a 4 % notional profit margin departed from the methodology employed in the interim review case R674, where a 2,4 % notional profit margin was deducted and that such deduction was therefore not in line with Article 11(9). Acron also submitted that the notional profit for a trader in a commodity market was a clearly overstated premium, and that it should not have been deducted at all.

(97) In the present case and in line with the company-specific disclosure, adjustment was made for SG&A costs (including mark-up) of Uralchem’s and Eurochem’s traders under Article 2(10)(i) as the functions of these traders were similar to those of an agent. The traders promote and sell outside of Russia the AN manufactured by the plants of the producers and the entities are designated as trader in the corporate chart of the exporting producers’ group. The traders therefore clearly conduct business on behalf and in the interest of the Uralchem and Eurochem group and adjustment was therefore justified.

(98) Regarding the notional profit actually deducted from the export prices, given the lack of cooperation from unrelated importers in the present investigation, the Commission used the profit margin of an unrelated importer from a more recent investigation on a similar nitrogen fertilizer, UAN, of 4 % (34). Contrary to the parties’ claim, the Commission did not err in using 4 % rather than 2,4 % notional profit margin in this review. In fact, the methodology used by the Commission was exactly the same in both reviews: given that there was no cooperation from unrelated importers, the Commission used the profit margin found for unrelated importers in a contemporary case concerning another chemical product. Therefore, the use of the 4 % profit was in accordance with Article 11(9) of the basic Regulation, which requires the use of the same methodology, not the same (outdated) profitability.

(99) Some interested parties argued that the Commission should have used monthly exchange rates instead of an RIP average when making the price comparison and/or compared prices on a product-by-product type basis.

(100) The Commission analysed these claims and found a similar price difference even if monthly exchange rates would have been used and if the comparison would have been made on a product-by-product basis. Furthermore, all product types were considered for the price comparison and even though the comparison was not made specifically per product type, almost the totality of sales to third countries were of a single product type.

(101) Eurochem submitted several claims concerning its individual calculations of domestic sales prices, relating to the deduction of credit costs and the calculation of the allowances of the plants. Furthermore, Eurochem provided several arguments relating to its individual calculations of export sales prices, relating to alleged miscalculations of freight expenses. These claims were rejected. For confidentiality reasons, further details on the Commission’s reasoning were provided in a separate document to the company only

3.3.2. Production capacity and spare capacity in Russia

(102) In order to establish production capacity and spare capacity in Russia, the Commission used verified data from the sampled companies and data reported in response to the sampling forms for all the other Russian exporters. In addition, the total spare capacity of Kirovo was included in the spare capacity calculation as the spare capacity of other types of ammonium nitrate currently excluded from the application of the anti-dumping measures can very easily be used for producing ammonium nitrate currently falling under CN codes 3102 30 90 and 3102 40 90.

(103) In line with previous investigations, the highest actual volume of production observed in the period considered was taken as a basis for the capacity calculation of the sampled companies, unless the installed capacity was higher than actual production.

(104) Following the verifications and RCCs of the sampled producers, the data was adjusted for Acron group. The adjustment resulted from the fact that it is the production and capacity of the prilling towers, the principal bottleneck in the production of the solid AN (rather than the production and capacity relating to an intermediate product) that is decisive for determining the production and spare capacity in this case.

(105) The Commission found that the production capacity in Russia in the RIP amounted to over 10,5 million tonnes, with a spare capacity of 440 000 tonnes. This latter figure corresponds to over 6 % of the Union consumption of in total around 6,9 million tonnes. The findings in this case were consistent with the last interim review, where production capacity in Russia was established at around 11 million tonnes, with spare capacity of 600 000 tonnes.

(106) Furthermore, it is noteworthy that the AN production capacity in Russia further grew by an additional almost 400 000 tonnes after the RIP, following an upgrade of the existing production equipment by some of the sampled exporting producers.

(107) Therefore, spare capacity exists in Russia and the production capacity of the Russian exporting producers further increased following the RIP. If these capacities were fully directed to the Union market, significant volumes would be exported to the Union.

(108) In response to the disclosure, FE disputed the Commission findings on production and spare capacity in Russia. FE claimed that the production capacity of the Russian AN producers was over 11,7 million tonnes and that Russian spare capacity was 1,6 million tonnes. FE’s claim was based on estimates of an expert. On the other hand, the Commission findings are based on figures submitted directly by the Russian producers to the Commission, accounting for the totality of the Russian AN production. These figures were moreover verified for three major producers. Therefore, FE’s estimates cannot be accepted as more reliable than those ascertained by the Commission.

(109) Following the disclosure, Acron and the Russian Government disputed the Commission method for calculating the capacity utilization. These interested parties argued that for plants producing both UAN and AN, availability of AN melt is a bottleneck and restraint and the capacity utilization should be calculated on that basis or on the basis of the actual AN production, but not based on the prilling capacity, which simply cannot be utilized in the absence of the raw material (i.e. AN melt) for the production of AN.

(110) The said argument, which appears to have been raised previously, is flawed and has to be rejected for the same reasons as in the previous expiry review (35). First, it is the capacity of the prilling towers that is the principal bottleneck and restraint in AN production as set out in recital (104). Second, in view of the possibility to easily shift the use of the AN melt from UAN to the AN production, alleged unavailability of the AN melt cannot affect the calculation of the total production capacity and the capacity utilization for the product under review. Allocation of the AN melt for production of both UAN and AN is an internal company decision which cannot form part of any objective considerations in calculating the AN production capacity.

(111) In response to the disclosure, RFPA argued that the Commission failed to appreciate that in the period between 2017 and RIP, Russia’s production capacity has decreased by 500 000 tonnes. Moreover, according to RFPA, the Commission failed to appreciate that the size and the share of alleged spare capacities in Russia as a percentage of the Union’s AN consumption has steadily declined in the last five years. Lastly, RFPA claimed that the alleged increase in Russia’s production capacities by 400 000 tonnes following the RIP should also be viewed against a major increase in domestic AN consumption in Russia in 2019, compared to 2018.

(112) The importance of existing spare capacities is not affected as such by a decrease in production capacity. RFPA’s submission also ignores the fact that following the RIP, the production capacity of the Russian producers grew back to almost 11 million tonnes. Furthermore, while the spare capacities in the RIP might have decreased over the recent period, they nevertheless remain important, in particular when considered in conjunction with the newly created production capacities. Regarding the alleged growth in domestic AN consumption in 2019 compared to 2018, even if the figures provided by RFPA were to be accepted at face value, they would show that the increase in Russian AN production in 2019 (compared to 2018) outpaced the growth in domestic consumption over the same period, and as a result that the exports remain important for the Russian AN industry.

(113) RFPA also claimed that the Commission grossly overestimated the volumes of Russian capacities that could be exported to the Union.

(114) RFPA’s claim is unsupported by any plausible evidence (see also recitals (166)-(167)) in this context. It is further recalled that the Commission analysed the likelihood of recurrence of dumping in this expiry review. The analysis set out in Section 3.3.3 demonstrates that the direction of all or majority of spare capacities of the Russian producers is a plausible threat that would be likely to materialise should the measures be allowed to lapse.

(115) Moreover, RFPA argued that the Commission breached RFPA’s rights of defence by failing to disclose the basis for the finding of the production and spare capacity in Russia. RFPA further submitted that the Commission failed to substantiate the alleged increase in capacity.

(116) First, the final disclosure specified the source of data used by the Commission, as well as the basis for the Commission’s calculation. Moreover, in case adjustments to production/capacity were made against company’s calculations and estimates, due justification was provided (see recitals (102) to (104) and (106) for more details). Furthermore, for each individual sampled producer, a specific disclosure with a detailed explanation as to how the production and spare capacity were determined in the RIP as well as following the RIP was provided. In view of the confidential nature of the company specific information on production and capacity of individual producers, general disclosure of such information was however not possible.

(117) In any event, the conclusions drawn by the Commission in this Regulation are based on considerations that were duly disclosed to the interested parties and their rights of defence were observed in full. Therefore, RFPA’s claim has to be dismissed.

3.3.3. Attractiveness of the Union market

(118) Consumption in the Union remained consistently high and the Union market is among the most attractive markets for Russia in terms of size, potential and geographical proximity to Russia.

(119) The investigation showed that the Russian exporting producers developed considerable logistical and marketing capabilities that would facilitate their access to AN sales operations in the Union market. By way of example, Uralchem and Eurochem have related trading entities established in the Union (in Latvia and Germany respectively) and Acron, and Eurochem also have related traders incorporated in Switzerland. In addition to that, Acron is affiliated with a port terminal operator in Estonia, a company named AS DBT (36), while Uralchem owns the Riga Fertilizer Terminal LLC jointly with the Riga Commercial Port (37).

(120) Furthermore, countries such as Ukraine (accounting for 7 % of global AN consumption in 2016 (38)), Australia and India (39) have imposed trade defence measures on AN from Russia. Contrary to what was alleged by the Russian industry, to date, Ukraine has not lifted the anti-dumping duties against the AN imports from Russia. These measures in other potential export markets further increase the attractiveness of the Union and would incentivize the Russian exporting producers to direct their exports at the Union, if the anti-dumping measures in the EU were allowed to lapse.

(121) RFPA submitted that Russian AN exports did not face any major restrictions in key export markets. It further asserted that unlike during the previous expiry review (40), the current additional demand for AN in third countries was a major differentiating factor.

(122) As stated above, to date, anti-dumping (or other trade restricting) measures on Russian AN imports are in place in Ukraine, Australia and India, making these markets less attractive to Russian exporters. Furthermore, contrary to what was claimed by RFPA regarding the extra AN demand in relation to the previous expiry review, the Commission findings for the RIP as well as its prospective analysis are comparable to the Commission findings in 2014, notably with respect to the large markets such as China and US. More specifically, it was found that the Russian exports of AN to China in the RIP were essentially non-existent (41). Regarding the US, while it lifted in August 2016 its anti-dumping measures on AN from Russia, the shale gas boom in the country has led to the development of capacities of US producers’ nitrogen fertilizers (42).

(123) Moreover, RFPA claimed that from 2019 until 2025 there will be a significant growth in the AN consumption in Eurasia, Latin America, Africa and Asia. According to RFPA, such increase in consumption of almost 2,5 million tonnes (43) can easily absorb any additional spare capacity that could exist in Russia. RFPA further submitted that the Russian AN market is as large as that of the Union and it continues to grow. In addition to that, according to RFPA, Asian markets taken together by far exceeded AN consumption in Europe.

(124) First, the projected increase in AN consumption in other regions around the world does not mean that the Union market would not remain attractive or even more attractive than those markets. Moreover, contrary to what RFPA claims, Russian AN consumption seems to have declined rather than grown (see recital (130) for more details).

(125) Second, even if the projected increase materialized (which is far from certain), it would concern mainly regions in which the Russian exporting producers are not active or only marginally active (Africa, Asia, Oceania, North America, Middle East) (44). Furthermore, there are no indications on the file suggesting that Russian AN producers would radically change their export preferences in a foreseeable future.

(126) Third, regarding Latin America, the main target for the Russian AN exports (accounting for approximately half of the Russian AN exports), the projected increase would be outpaced by the verified rise in the Russian production capacity following the RIP. Moreover, this increase is in addition to a spare capacity of 440 000 tonnes. Furthermore, given the fact that the Russian exporting producers are in competition with other producers, based in Latin America or elsewhere, it is implausible that the increase in Latin American AN consumption would be absorbed in its entirety or even in major part by the Russian AN producers alone.

(127) Lastly, Eurasia, for which further growth in AN consumption is allegedly projected until 2025 covers notably Ukraine (45), one of the biggest AN consumers worldwide with the consumption of AN accounting for 7 % of the global consumption (46). However, as set out above, due to the Ukrainian measures against Russian exports of AN, an increase in the AN consumption in Eurasia has only a relative relevance for the Russian producers. In view of the above, RFPA’s argument has to be rejected.

(128) RFPA further submitted that the Russian industry was not an ‘export industry’, since more than half of the AN was currently consumed domestically and importance of exports for the Russian AN industry was declining.

(129) As a preliminary observation, RFPA’s claim appears contradictory to its own argument that the projected increase in consumption outside of Russia could easily absorb any spare capacity that the Russian AN producers may have. In any event, the Roadmap for the development of production of mineral fertilizers for the period until 2025 (‘Fertilizer Roadmap’) adopted by the Russian government (47) suggests that the export ratio of nitrogen fertilizers (including AN) is planned to increase by 2 % in 2025 compared to 2016. This objective has to be seen also against the backdrop of a loss or at least significant reduction in market share of the Russian exporting producers on the European UAN (another nitrogen fertilizer) market, as a result of imposition of anti-dumping measures in October 2019 by the Commission (48). In addition to that, the comparison of the proportion of exports on the total Russian AN production between the RIP and the period of the last expiry review (49) shows stable levels of around 40 %, which in the RIP was equivalent to almost 50 % of the Union consumption. Therefore, regardless of whether the export ratio moves moderately upwards, downwards or remains stable, there is a tangible risk of redirecting significant AN volumes to the Union market in the absence of measures, especially in view of the overall attractiveness of the Union market for Russian AN producers.

(130) With respect to the domestic Russian AN consumption, based on the last interim review (50), it reached 7 million tonnes in 2016, rising from 5,5 million tonnes in 2014. In addition, as part of the same proceedings, the RFPA submitted that in 2017, overall domestic consumption of nitrogen fertilizers further increased by 8,7 % and that the Russian consumption was expected to continue increasing slightly until 2030. However, based on verified data as well as the sampling replies, the Commission established a domestic consumption of AN of 5,8 million tonnes for the RIP. This estimation largely corresponds to the figure reported by RFPA for the RIP (5,9 million tonnes).

(131) Hence the domestic consumption of AN decreased despite projected growth, which arguably also incentivizes the exporting producers to seek sales opportunities in the export destinations such as in the Union market.

(132) The conclusion on the limitations of the domestic demand for AN is supported also by the Fertilizer Roadmap. According to the Fertilizer Roadmap, the development of the Russian market of mineral fertilizers (which includes AN) until 2025 will be constrained by the low level of effective demand of agricultural producers and the lack of a culture of using mineral fertilizers.

(133) RFPA maintained that the Russian AN demand (excluding stabilised AN) reached 6,3 million tonnes in 2019 (post RIP) and that domestic AN shipments would continue their growth in 2020.

(134) As set out above, based on the information provided by the Russian AN producers for the RIP, the domestic consumption (including for the stabilised AN) did not exceed 5,86 million tonnes. This, compared to the domestic Russian AN consumption of 7 million tonnes established for 2016, indicates a drop in domestic consumption rather than its growth. Regardless of that and even if the domestic demand were to increase at the pace suggested by RFPA, the annual increase would correspond approximately to the increase of the AN production capacity following the RIP. Moreover, a steady and upward trend in the domestic demand is not guaranteed (especially in the light of the projections outlined in the Fertilizer Roadmap) and, unlike the established Russian capacities, is purely hypothetical. Furthermore, RFPA substantiated its claim on rising domestic demand by referring to a growth in domestic sales of a single producer. The observed pattern in past domestic sales of a single producer is not necessarily representative of industry-wide trend nor indicative of the future performance of the entire industry. In conclusion, the future domestic AN demand is not likely to absorb existing Russian capacities.

(135) RPFA further submitted that in the previous interim review it was concluded that the Fertilizer Roadmap ‘does not directly point to an increase for AN’ production capacity (51).

(136) While the Fertilizer Roadmap might be general in nature without including any AN-specific information, it acknowledges existing limits of domestic demand for mineral fertilizers and confirms the orientation of the nitrogen fertilizer industry (which includes AN production) on exports, relevant facts in the context of this case and which corroborate the Commission findings.

(137) The Union market remains attractive for the Russian AN exporting producers also in terms of prices. In the RIP, the price level in the Union was higher than in major third countries currently supplied by Russia. More specifically, during the RIP the average ex-works export price (133 EUR/tonne) to third countries of the three sampled exporting producers was 39 % lower than the average ex-works price of the sampled Union producers (219 EUR/tonne) (see Table 8).

(138) As a result, the exporting producers have an incentive to redirect at least part of their current export volumes from third countries (amounting in the RIP to approximately 3,4 million tonnes of AN, which is equivalent to almost 50 % of the Union consumption) to the Union.

(139) RFPA claimed that the drop in volume of Russian AN exports to the Union following the reduction of the antidumping duty in 2018 offered the best evidence that no increase in imports would occur should the measures be terminated.

(140) Limited AN imports from Russia are the result of effective measures being in place and are by no means indicative of future behaviour of the Russian AN producers in the absence of such measures. The Commission thus maintained its conclusions on the attractiveness of the Union market.

(141) Following the disclosure, RFPA submitted that the existence of trading entities in the Union did not make the Union market more attractive compared to other markets where Russian producers already have significant long-term commitments and infrastructures for AN specifically.

(142) First, presence of trading entities in or in the proximity of the Union would facilitate AN trade flows into the Union. Second, Russian producers have also logistical capabilities developed in the Baltic states (see recital (119)). Third, RFPA failed to substantiate as to how long-term commitments in export destinations other than the Union would affect the capability of the Russian producers to penetrate the Union market and to what extent the Russian producers would be dissuaded from shifting AN sales into the Union in the absence of measures. In addition to that, it is implausible that the distribution network which the Russian producers created in, for example, Latin America would be exclusively dedicated to AN (and not to other fertilizers or other chemicals). Furthermore, acquisition of production assets and/or companies outside of Russia by the Russian producers is disconnected from the issue of attractiveness of the Union market for the Russian AN producers.

(143) With respect to the trade defence measures in force in third countries and most notably in Ukraine, RFPA and the Russian Government submitted following the disclosure that the anti-dumping measures against the Russian imports of AN were terminated on 23 September 2020. Acron also noted that Ukraine recently terminated measures on AN from Russia and thus that Russian producers can sell AN to the Ukrainian market.

(144) Despite removal of anti-dumping measures, Ukraine introduced a general ban on importation of certain product categories from Russia, including the product under review, from 1 July 2019 (52). Moreover, targeted sanctions against certain individuals and entities from the Russian Federation, including against all three sampled exporting AN producers are in place in Ukraine (53).

(145) RFPA submitted in response to disclosure that the Commission included additional pieces of factual information (referenced in recital (144) above) to the non-confidential file after the 5-day deadline stipulated by section 8 of the Notice of Initiation. Therefore, according to RFPA, the Commission did not act in an impartial or fair manner and thus acted inconsistently with RFPA’s, EuroChem’s and Uralchem’s rights, in particular to good administration. RFPA further added that this failure could not be cured by a mere additional disclosure, for which interested parties were only given one day to comment.

(146) First, the claim is based on a misunderstanding of the Notice of Initiation. Section 8 and the 5-day deadline clearly concern interest parties submissions on comments provided by other interested parties. In this case, by including additional pieces of factual information on the non-confidential file, by explaining the purpose for which it intends to use such information and by allowing the interested parties to comment on such additional disclosure, the Commission acted in conformity with Article 20 of the basic Regulation. Moreover, the information provided in the additional disclosure was in public domain and hence was available to the interested parties already prior to the additional disclosure.

(147) Moreover, according to RFPA, the additional disclosure on the Russian AN import ban in Ukraine did not constitute an appropriate disclosure. RFPA argued that Commission simply explained what was contained in the additional documents placed on the file without explaining how these two documents would confirm its findings.

(148) The Commission refuted such assertion. The explanations mentioned by RFPA were a summary of the relevant information in the document, which the Commission took into account when taking its decision. Thus, the additional disclosure (essentially identical to the information in recital (144) above) clearly indicated the findings and supporting documents, which had been added to the file.

(149) RFPA further argued that the import ban did not result in a prohibition of Russian nitrogen fertilizer imports, since there have been imports of Russian-origin nitrogen fertilizers falling under the Heading 3105 (that covers Stabilized AN) in the second half of 2019.

(150) RFPA’s argument had to be dismissed. First, RFPA did not demonstrate that the import ban has not affected the product under review as a whole. While stabilised AN is part of the heading 3105, the heading covers also products other than the product under review. As such, products imported under heading 3105 may not have been part of the product concerned, thus rendering RFPA’s argument ineffective. Furthermore, RFPA failed to demonstrate that the company-specific sanctions did not constitute a trade restricting measure, especially in view of the fact that all of the sampled exporting producers were mentioned on said sanctions list.

(151) According to RFPA, there was no risk of re-direction of Russian exports from Ukraine to the EU, in case the EU’s anti-dumping measures were allowed to lapse, as measures on the Ukrainian AN market against Russia have been in place since 2008, and thus sales have already been redirected a long time ago. This assertion is incorrect. As mentioned in recital (120) above, existing trade restrictive measures on certain markets such as Ukraine increase the attractiveness of the Union if the anti-dumping measures in the EU were allowed to lapse. The fact that such measures have been in place for a certain amount of time does not contradict the fact that these markets remain closed for Russian exports, and thus make other neighbouring markets, such as the Union market, attractive in case of removal of the measures.

(152) Regarding growing opportunities available to Russian exporters outside the Union, RFPA submitted that the Union is only one market amongst many other possibilities. It also reiterated the argument that expected increase in consumption in Latin America (Brazil, Peru) and Eurasia (Kazakhstan and Ukraine), where Russian exporters are active, as well as in other prospective export destinations, would absorb the alleged future increase in Russian capacity without even considering the expected increase in domestic consumption. Acron also argued that demand for AN is growing both domestically and globally, and referred to the seasonality of demand across different regions. The Russian Government also claimed that Russian AN producers sell increasingly more in their own market and in third countries, where they invested.

(153) As set out in recital (118) above, the Union market is among the most attractive markets for Russia in terms of size, potential and geographical proximity and existing or prospective opportunities in other export markets do not detract from that conclusion. Seasonality of the product for different regions at different periods is equally not capable of altering the Commission assessment. Furthermore, reference is made to the Commission assessment in recitals (124) to (132) in conjunction with the fact that Ukraine remains closed to imports of AN from Russia (see recital (144)).

(154) Concerning the Fertilizer Roadmap, RFPA maintained that the document was neither specific to AN, nor mandatory for Russian producers. Furthermore, Acron argued that the Roadmap was merely addressed to federal agencies to implement the measures listed therein.

(155) The Commission disagrees. It cannot be denied that the document relates also to AN (pertaining to the nitrogen fertilizer family) and to the Russian producers of AN. The Roadmap is a formal document adopted by the Russian Government. Moreover, its relevance to the assessment of the Russian AN market, its producers and future developments cannot be downplayed by RFPA and Acron, in particular because the nitrogen fertilizer industry is indicated in the Roadmap as a key industry of the Russian Federation.

(156) Moreover, RFPA argued in response to the disclosure that according to the Fertilizer Roadmap, in the period between 2020 and 2025, the export ratio of nitrogen fertilizers would remain stable at 65 %.

(157) Reference is made to recital (129) for the position of the Commission on this point. As set out also in recital (136), this figure shows overall orientation of the nitrogen fertilizer industry (which includes AN production) on exports.

(158) RFPA equally claimed that the Fertilizer Roadmap foresees a significant increase in domestic use of nitrogen fertilizers. Furthermore, RFPA argued that there is nothing in the Fertilizer Roadmap contradicting the claim that any excess or additional capacity will be used to satisfy a growing domestic demand.

(159) Reference is made to recitals (132) and (134) for the Commission position. Moreover, it is observed that the claim on projected increase in domestic consumption is in direct contrast with the wording of the Roadmap, pursuant to which ‘[t]he development of the Russian market of mineral fertilizers until 2025 will be constrained by the low level of effective demand of agricultural producers and the lack of culture of using mineral fertilizers’ and ‘[t]he prospects for the development of the Russian mineral fertilizer sub-sector are directly related to the use of opportunities to increase export potential’ (54).

(160) Furthermore, in response to the disclosure, RFPA questioned the accuracy of figures on domestic AN consumption used by the Commission in assessing the evolution of Russian AN sales (see recitals (130) and (134)). According to RFPA, the Commission is comparing data that includes stabilised AN for 2016 (7 million tonnes) with the data for RIP (5,86 million tonnes) that is exclusive of stabilised AN.

(161) This allegation is erroneous. Contrary to what RFPA submits, the data for the RIP, which is based on the sampling replies of all the Russian exporting producers (and largely corresponds also to data provided by RFPA) covers all products falling under the product under review, including the stabilised AN. Moreover, both data sets were provided to the Commission by RFPA and the Russian exporting producers respectively and hence their reliability can be hardly disputed by RFPA or the Russian producers themselves.

(162) Moreover, RFPA claimed that it is meaningless to compare the ex-works export prices of Russian producers with the ex-works domestic prices of Union producers. RFPA submitted that if the likely prices of Russian imports into the Union would correspond to the export prices to other destinations, there is then no incentive pricewise to redirect exports.

(163) As set out in recital (137), the purpose of the comparison was simply to assess whether the price level in the Union was higher than in major third countries currently supplied by the Russian producers. On the basis of this comparison, the Commission found that the Union market was attractive for the Russian AN exporting producers also in terms of prices.

(164) RFPA further submitted that the Union market is not as attractive as the Commission tries to portray. This was confirmed according to RFPA by low volumes of imports from neighbouring countries, which are not subject to any import barrier.

(165) It is noted that the present review evaluates attractiveness of the Union market specifically for the Russian exporting producers and the export preferences of other countries are immaterial as part of that evaluation. These countries are not covered by this investigation and therefore the Commission is not in the position (or under any obligation) to conduct such an assessment.

(166) RFPA claimed in response to the disclosure that the Commission is inconsistent in its assessment of projected behaviour of the Russian exporting producers in Latin America (see recital (126)) and in the Union (see recital (107)).

(167) The Commission disagrees that there is any inconsistency. While the Commission rebuttal on Latin America in recital (126) concerns projected increase in consumption and its alleged absorption by Russian producers, the Commission assessment in recital (107) concerns potential direction of full Russian spare capacities without discussing any increase in Union consumption and absorption of such increase by the Russian producers.

(168) For the reasons set out above, the arguments made by the interested parties in relation to this Section are not liable to alter the Commission assessment and have to be rejected. In general, it is also observed that the factors highlighted by the Commission in this Section 3.3.3 have to be assessed as a whole and are not be examined in isolation in order to establish the level of attractiveness of the Union market for the Russian AN producers.

3.3.4. Conclusion on the likelihood of recurrence of dumping

(169) In view of (i) the existing spare capacity and further increase in the production capacity of the Russian AN producers following the RIP, (ii) the pricing practices of the Russian exporting producers in third country markets and (iii) the overall attractiveness of the Union market, it is likely that Russian AN producers would export large quantities of AN to the Union at dumped prices, in the absence of the EU measures. Therefore, the Commission concluded that there is a likelihood of recurrence of dumping should the measures lapse.

4. LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF INJURY

4.1. Definition of the Union industry and Union production

(170) During the review investigation period, the like product was manufactured by twenty-three producers in the Union. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

4.2. Union consumption

(171) The Commission established the Union consumption by adding: (i) the sales of the sampled Union producers on the Union market, obtained after verification of the questionnaire replies, (ii) the sales of non-sampled cooperating Union producers on the Union market, based on the data provided by the Union industry, (iii) imports from Russia, based on 14(6) database; (iv) and imports from all other third countries, based on Eurostat data (TARIC level).

(172) On this basis, Union consumption developed as follows: Table 1 Union consumption 2016 2017 2018 Review investigation period Union consumption (tonnes) 7 318 015 7 193 921 6 707 045 6 890 413 Index (2016 = 100) 100 98 92 94 Source: Verified data of the sampled Union producers and industry data, Eurostat (TARIC), 14.6 database

(173) The Union consumption decreased by 6 % over the period considered.

(174) The decreasing trend in demand is common for the nitrogen fertilizers, which have been experiencing stable decline in the consumption rates in the past years. The trend is likely to continue in the future due to a combination of factors. Most notable are the increasing environmental and climate change pressures on farmers.

4.3. Imports from Russia

4.3.1. Volume and market share of imports from Russia

Table 2

Import volume and market share from Russia (*1)

2016 2017 2018 Review investigation period Import volume (tonnes) [36 000 – 40 000] [10 000 – 15 000] [32 000 – 38 000] [38 000 – 43 000] Indexed import volume (2016 = 100) 100 36 102 113 Market share (%) [0,3 – 0,7] [0,1 – 0,4] [0,3 – 0,7] [0,4 – 0,8] Source: 14(6) data base.

(175) Import volumes decreased by 64 % in 2017, but then increased again and by the end of the RIP they were 13 % higher than at the start of the period considered (in 2016). Imports from Russia represented a market share of [0,4 – 0,8 %] in the Union during the period considered.

4.3.2. Prices of imports from Russia

(176) The Commission established the trend of the prices of Russian imports on the basis of data recorded in the 14(6) data base.

(177) The average price of imports into the Union from Russia developed as follows: Table 3 Import price from Russia (*2) Country 2016 2017 2018 Review investigation period Import prices (EUR/tonne) 192 259 169 175 Index (2016 = 100) 100 135 88 91 Source: 14(6) data base, excluding sales of stabilised AN by Kirovo, not subject to anti-dumping duty.

(178) Overall, average import prices decreased by 9 % over the period considered. Import prices increased by 35 % between 2014 and 2017, decreased by 35 % in 2018 and then increased by 4 % in the RIP.

4.3.3. Price undercutting

(179) A price difference between the Union industry prices and Russian imports during the RIP of around 20 % could be observed on the basis of the data contained in Tables 4 and 9. Moreover, the Commission determined the price undercutting during the review investigation period by comparing (i) the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers in the Union market, adjusted to an ex-works level; and (ii) the corresponding weighted average prices per product type of the imports from the cooperating Russian producers to the first independent customer in the Union market, established on a cost, insurance, freight (‘CIF’) basis, with appropriate adjustments for anti-dumping duty and post-importation costs.

(180) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the review investigation period.

(181) The comparison showed an undercutting of 14,3 % for the two sampled Russian exporting producers that exported AN to the Union during the RIP. When deducting the anti-dumping duty in place, the average undercutting margin would amount to 29,4 %.

(182) RFPA claimed in their submission that a fair comparison of domestic with import prices for undercutting or underselling purposes requires adjustments for differences between prilled and granular AN. Namely, there is a price difference between granular and prilled AN due to physical differences (granule size) and due to the fact the prilled AN contains more nitrogen (34 – 34,5 %), as compared to granular AN (33,5 %).

(183) This investigation confirmed that the product produced by the sampled Union and Russian producers is indeed the same in terms of granular size and nitrogen content. This claim was therefore rejected.

4.4. Imports from other third countries

Table 4

Import volume and market share

Country 2016 2017 2018 Review investigation period Total other third countries Imports (tonnes) 285 959 311 000 317 726 295 195 Index 100 109 111 103 Market share (%) 3,9 4,3 4,7 4,3 Price (EUR/tonne) 221 208 194 210 Index (2016 = 100) 100 94 88 95 Georgia Imports (tonnes) 122 883 241 376 234 208 205 293 Index (2016 = 100) 100 196 191 167 Market share (%) 1,7 3,4 3,5 3,0 Price (EUR/tonne) 208 195 184 196 Index (2016 = 100) 100 94 88 94 Turkey Imports (tonnes) 12 082 18 424 43 760 52 279 Index (2016 = 100) 100 152 362 433 Market share (%) 0,2 0,3 0,7 0,8 Price (EUR/tonne) 241 206 173 194 Index (2016 = 100) 100 85 72 80 Other third countries Imports (tonnes) 150 994 51 201 39 758 37 623 Index (2016 = 100) 100 34 26 25 Market share (%) 2,1 0,7 0,6 0,5 Price (EUR/tonne) 230 271 277 313 Index (2016 = 100) 100 118 120 136 Source: Eurostat (TARIC level).

(184) Volume of imports from other third countries increased by 3 % from 286 thousand tonnes in 2016 to 295 thousand tonnes in the RIP. These imports represented 4,3 % of the Union market share during the RIP. The main imports were from Georgia, followed by Turkey.

(185) The average price of imports from other third countries decreased by 5 % between 2016 and the RIP from 221 EUR/tonne in 2016 to 210 EUR/tonne in the RIP. Such average import prices were on average higher than the import prices from Russia.

(186) Georgia was the main country with more significant imports in the EU. Its market share amounted to 3,0 % in the RIP. Imports from Georgia increased over the period considered from 123 thousand tonnes in 2016 to 205 thousand tonnes in the RIP. During the period considered (except in 2017), their prices were on average higher than the import prices from Russia.

4.5. Economic situation of the Union industry

4.5.1. General remarks

(187) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(188) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(189) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

(190) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments and ability to raise capital.

4.5.2. Macroeconomic indicators

4.5.2.1. Production, production capacity and capacity utilisation

(191) The total Union production, production capacity and capacity utilisation developed over the period considered as follows: Table 5 Production, production capacity and capacity utilisation of Union producers 2016 2017 2018 Review investigation period Production volume (tonnes) 7 479 220 7 358 841 6 958 592 7 030 782 Index (2016 = 100) 100 98 93 94 Production capacity (tonnes) 14 768 601 14 601 686 14 598 085 14 497 300 Index (2016 = 100) 100 99 99 98 Capacity utilisation (%) 51 50 48 48 Source: verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

(192) The production volume decreased by 6 % during the period considered. The production capacity decreased by 2 % over the period considered. As a result of the stronger decrease in production volume and lesser in the capacity, the capacity utilisation decreased by 3 percentage points during the period considered.

4.5.2.2. Sales volume and market share

(193) The Union industry’s sales volume and market share developed over the period considered as follows: Table 6 Sales volume and market share of Union producers 2016 2017 2018 Review investigation period Sales volume in the Union (tonnes) 6 905 971 6 770 978 6 271 050 6 463 715 Index (2016 = 100) 100 98 91 94 Market share (%) 94,4 94,1 93,5 93,8 Source: verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

(194) Total sales of the Union industry in the Union market decreased by 6 % during the period considered. The Union industry’s market share decreased by 0,6 percentage points during the period considered.

4.5.2.3. Growth

(195) Between 2016 and the RIP, the Union consumption decreased by 6 %. The sales volume of the Union industry decreased by 6 %, which translated into a loss in market share of 0,6 percentage points.

4.5.2.4. Employment and productivity

(196) Employment and productivity developed over the period considered as follows: Table 7 Employment and productivity of Union producers 2016 2017 2018 Review investigation period Number of employees 5 020 5 132 5 161 5 214 Index (2016 = 100) 100 102 103 104 Productivity (tonnes/employee) 1 490 1 434 1 348 1 348 Index (2016 = 100) 100 96 91 91 Source: verified data provided by the Union industry and verified questionnaire replies of the sampled Union producers.

(197) Employment of the Union industry increased by 4 % during the period considered. Due to the decrease in production (decrease of 6 % over the period considered), the productivity also decreased by 9 % over the same period.

4.5.2.5. Magnitude of the dumping margin and recovery from past dumping

(198) As concluded in the recital (71), the Russian export sales to the Union were not considered representative of the price and the quantities. Therefore no dumping could be established during this period in the Union market and the magnitude of the dumping margin could not be assessed.

4.5.3. Microeconomic indicators

4.5.3.1. Prices and factors affecting prices

(199) The average sales prices of the Union industry to unrelated customers in the Union and unit cost developed over the period considered as follows: Table 8 Average sales prices in the Union and unit cost 2016 2017 2018 Review investigation period Average unit selling price in the Union (EUR/tonne) 191 199 204 219 Index (2016 = 100) 100 104 107 115 Unit cost of production (EUR/tonne) 174 176 202 198 Index (2016 = 100) 100 101 116 114 Source: verified questionnaire replies of the sampled Union producers.

(200) The Union industry’s average unit sales price to unrelated customers in the Union increased steadily by 15 % and reached 219 EUR/tonne in the RIP. The increase in prices was influenced by increase in the cost of production. The cost of production increased to a similar extent, by 14 % from 2016 to the end of the RIP. The major factor having influenced the increase in the unit cost of production was the increase in the raw material price, namely, the gas, the most important raw material for ammonium nitrate representing over 60 % of the total cost of production.

4.5.3.2. Labour costs

(201) The average labour costs developed over the period considered as follows: Table 9 Average labour costs per employee 2016 2017 2018 Review investigation period Average labour costs per employee (EUR/employee) 29 870 32 194 32 651 33 129 Index (2016 = 100) 100 108 109 111 Source: verified questionnaire replies of the sampled Union producers.

(202) The average labour costs per employee increased by 11 % over the period considered.

4.5.3.3. Stocks

(203) Stock levels developed over the period considered as follows: Table 10 Stocks 2016 2017 2018 Review investigation period Closing stocks 62 120 93 430 114 522 43 649 Index (2016 = 100) 100 150 184 70 Closing stocks as a percentage of production (%) 3 4 6 2 Source: verified questionnaire replies of the sampled Union producers.

(204) The level of closing stocks of the sampled Union producers decreased by 30 % over the period considered. In the RIP, the level of stocks represented around 2 % of its production.

4.5.3.4. Profitability, cash flow, investments, return on investments and ability to raise capital

(205) Profitability, cash flow, investments and return on investments developed over the period considered as follows: Table 11 Profitability, cash flow, investments and return on investments 2016 2017 2018 Review investigation period Profitability of sales in the Union to unrelated customers (% of sales turnover) 11,3 13,1 3,7 11,2 Cash flow (EUR) 69 934 432 81 683 756 30 443 832 72 041 192 Index (2016 = 100) 100 117 44 103 Investments (EUR) 24 830 016 34 090 768 48 685 110 39 800 944 Index (2016 = 100) 100 137 196 160 Return on investments (%) 38,1 46,9 12,3 38,1 Source: verified questionnaire replies of the sampled Union producers.

(206) The Commission established the profitability of the Union industry by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry was around 11,3 % at the start of the period considered until the year 2018, when it dropped to 3,7 % (due to the rise in cost of gas and cost of the purchased allowances of the EU emissions trading system), after which it improved and reached 11,2 % by the end of the RIP.

(207) The net cash flow is the Union producer’s ability to self-finance its activities. The net cash flowed similar trend as the profitability, it dropped in 2018 and improved in the RIP. Overall, it increased by 3 % over the period considered.

(208) During the period considered the annual flow of investments in the AN production made by the Union industry increased by 60 %, from 25 million EUR in 2016 to nearly 40 million EUR in the RIP, which represented 28 % of the total net assets related to the product in question. Investments related to compliance improvements in relation to health, safety and environmental requirements, increase in the capacity and effectiveness of the production plants.

(209) The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product followed similar trend as the profitability, it dropped in 2018 and came back to the initial 38 % level in the RIP.

(210) As in the previous investigations, the Union industry claimed that the Union industry needed significant investment and a ROCE (a financial ratio to measure a company’s profitability and the efficiency with which its capital is employed) of minimum 12 %. They have re-submitted an expert study claiming that to achieve an average ROCE of 12 %, an average pre-tax profit per tonne of 94 EUR, the equivalent of a pre-tax return on sales (ROS) margin of 36 %, is needed.

(211) The Commission noted that given that a new injury margin is not calculated in expiry reviews, the target profit is irrelevant to this case, especially when considering the Union industry was not found to be materially injured. This claim was therefore rejected.

4.5.4. Conclusion on the situation of the Union industry

(212) The investigation showed that the situation of the industry on a macro level decreased, in line with the overall decreasing trend in consumption (-6 % over the period considered), which influenced the decrease in the Union industry’s production and sales volume.

(213) The investigation has also shown that the situation of the industry on a micro level was overall positive. The economic situation of the Union industry was thus non-injurious and the existence of anti-dumping measures on the imports of the product under review from Russia was the main reason for such a positive situation.

(214) On the basis of the above, the Commission concluded that the Union industry