Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia
Date: 1995-07-27
Institutions: European Commission
Subjects: USSR, anti-dumping duty, chemical fertiliser, dumping, economic survey, import

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  27.07.1995 
COM(95) 397 final 

Proposal  for a 

COUNCIL REGULATION (EC) 

imposing a definitive  anti-dumping duty on imports of ammonium nitrate 

originating in Russia. 

(presented by the Commission) 

COUNCIL  REGULATION  (EC) No 

/95 

of 

1995 

imposing  a definitive  anti-dumping  duty on imports  of ammonium  nitrate 

originating  in  Russia. 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to the Treaty  establishing  the European  Community, 

Having  regard  to  Council  Regulation  (EC)  No  3283/94  of  22  December  1994  on 

protection  against  dumped  imports  from  countries  not  members  of  the  European 
Community1,  as  amended  by  Regulation  (EC)  No  355/952,  and  in  particular  Article  23 
thereof,  which  laid  down  that  Regulation  2423/88  of  11 July  1988  on  protection  against 

dumped  or  subsidised  imports  from  countries  not  members  of  the  European  Economic 
Community3  as  last  amended  by  Regulation  (EC)  No  522/944  shall  continue  to  apply  to 
proceedings  in  relation  to  which  an  investigation  pending  on  1 September  1994  has  not 

been concluded  by the date of entry  into force  of Regulation  (EC) No  3283/94, 

Having  regard  to the proposal  submitted  by the Commission  after  consultation with  the 

Advisory  Committee, 

Whereas: 

1  O.J. No L 349, 31.12.1994, p. 1. 

2  O.J. No L 41, 23.2.1995, p. 2. 

3  O.J. No L 209,02.08.1988, p. 1. 

4  O.J. No L 66,  10.03.1994, p. 10 

A. PROCEDURE 

( 1 ) 

In June  1994, the Commission announced by a notice published in the  Official 
Journal of the European  Communities5, the initiation of an anti-dumping 
proceeding concerning  imports into the Community of ammonium  nitrate 
originating in Lithuania and Russia, and commenced an investigation. 

(2)  Anti-dumping measures with regard to imports into the United Kingdom of 

ammonium nitrate originating in Lithuania and Russia have been in force  since 
May  1994, following  a regional anti-dumping proceeding6. These take the form of 
the acceptance of undertakings which limit exports from each country to the UK to 
100,000 tonnes per year. 

(3)  The proceeding was initiated as a result of a complaint lodged by the European 

Fertilizer Manufacturers' Association (EFMA), on behalf of producers whose 
collective output of ammonium nitrate was alleged to represent a major  proportion 
of Community production. 

(4)  The complaint contained evidence of dumping of this product originating in 

Lithuania and Russia, and of material injury resulting therefrom,  and was 
considered to be sufficient  to justify  opening a proceeding. 

(5)  The Commission officially  notified the producers, exporters and importers known 

to be concerned, the representatives of the exporting countries, and the 
complainant, and gave the parties directly concerned the opportunity to make their 
views known in writing and to request a hearing. 

(6)  The Lithuanian exporter, some Russian exporters, certain importers and all 
complainant producers made their views known in writing. Several parties, 
including the Lithuanian and Russian authorities, requested a hearing; all such 
requests were granted. The European Fertilizer Importers Association (EFIA) also 
made known its views in writing and was granted a hearing. 

5 O.J. No. CI58 9.6.1994 p.3 

6 O.J. No L129 21.5.1994 p.24 

(7)  The Commission sent questionnaires to parties known to be concerned and received 
detailed replies from the complainant Community producers, the only producer and 
exporter in Lithuania and some importers in the Community. The Commission also 
received a detailed reply from one Community producer which was not party to the 
complaint; partial replies were received from certain producers in Russia. 

(8)  The Commission sought and verified all information it deemed necessary for the 
purpose of its determination of dumping and injury, and carried out investigations 
at the premises of the following  firms: 

(a)  Complainant Community producers: 

Grande Paroisse S.A., Paris-La-Défence, France 

Hydro-Agri-France S.A., Neuilly-sur-Seine, France 

Hydro-Agri (UK) Ltd., Immingham, UK 

Hydro-Agri, Sluiskil B.V., Netherlands 

(b)  Unrelated importers in the Community 

Noortrade GmbH, Viernheim, Germany 

Schweizerhall Fertilizer GmbH, Hamburg, Germany 

Unifert France SA, Sète, France 

Conagra Resources Europe Ltd, Tiverton, Devon, UK 

(c)  Producer in analogue country 

Zaklady Azotawe "Pulawy", Pulawy, Poland 

(9)  The investigation of dumping covered the period from 1  April 1993 to 31 March 

1994 ("the investigation period"). 

(10)  The Commission disclosed its preliminary findings to all interested parties. Several 
parties submitted comments in writing; some requested and were granted a hearing. 

(11)  The Commission continued to seek all information  it deemed necessary for its 
definitive  findings. The parties were informed  of the essential facts and 
considerations on the basis of which it was intended to recommend the imposition 
of definitive  anti-dumping duties. They were also granted a period within which to 
make representations subsequent to these disclosures. 

(12)  The parties' comments were taken into consideration and the Commission's 

conclusions amended accordingly where justified. 

B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 

(13)  The product concerned is ammonium mtrate, which is a fertilizer produced in prill 

or granular form, containing between 33 and 35% nitrogen plant nutrient. 

(14)  The ammonium nitrate produced by the Community industry is a like product as 

regards physical and technical characteristics to the ammonium nitrate exported to 
the Community by Russia and Lithuania, and as regards the ammonium nitrate 
produced and sold in Poland, which has been used as the analogue country 
(Recitals 22 to 24). 

C. COMMUNITY INDUSTRY 

(15)  The complainant producers account for 94% of the Community production of 

ammonium nitrate and therefore constitute the Community industry in accordance 
with Article 4(5) of Regulation 2423/88. 

(16)  E.F.I.A., representing the Community importers, alleged that Hydro Fertilizers Ltd 
(UK) should be excluded from the Community industry because it allegedly 
imported ammonium nitrate from Russia and Lithuania through Fertrachem U.K., a 
related company. However, it was established that no such imports were made 
during the investigation period by Fertrachem. 

It was also alleged that BASF, another complainant producer, should be excluded 
on the same grounds, since it allegedly imported Russian and Lithuanian 
ammonium nitrate into the Community through a related company, Kali (UK) Ltd. 
It was established that Kali (UK) Ltd. did import ammonium nitrate from Lithuania 
and Russia during the investigation period, but was not related to BASF, either 
directly or through a subsidiary during this period, and had no agreement with any 
company related to BASF as regards purchases of ammonium nitrate. 

There is consequently  no justification  for considering the exclusion of either Hydro 
Fertilizers Ltd (UK) or BASF from the Community  industry. 

D. DUMPING 

(a)  Normal value 

(I)  Selection of analogue country 

(17)  Since  the  exporting  countries  involved  are  both  non-market  economies,  normal 
value  was  based  on  prices  or  costs  in  an  analogue  country,  in  accordance  with 
Article 2(5) of Regulation 2423/88. 

(A)  Proposal by the complainant  Î Hungary 

(18)  The  complainant  alleged  that  Hungary,  which  had  been  used  in  the  UK  regional 
case  (see  recital  2), would  be an  appropriate  analogue  country  for  the  purpose  of 
this investigation. Contact was made with Nitrogenmuvek, Varpalota, Hungary; the 
details  of  the  second  producer  in  Hungary  were  not  available  to the  Commission. 
Nitrogenmuvek  replied  to  the  Commission's  questionnaire.  On  the  basis  of  this 
reply, 
the 
investigation  period  were  significant  compared  to  the  volume  of  imports  into  the 
Community  from  Russia and Lithuania.  80% of domestic sales were bagged.  The 
Hungarian producer uses domestic or imported gas purchased at market prices. 

that  the  domestic  sales  of  Nitrogenmuvek  during 

it  appeared 

(19)  However,  Nitrogenmuvek  did  not  respond  to  the  Commission's  request  for  a 
verification  visit.  In these  circumstances,  it  did  not  appear  possible  to  establish  a 
reliable  normal  value  on the  basis  of the  Hungarian  data  available.  In  addition  to 
there being only two domestic producers of ammonium nitrate in Hungary, imports 
are  restricted  by  a  15%  import  duty  and  since  1993  by  an  annual  import  quota 
against  CIS  countries  of  50.000  tonnes  of  ammonium  nitrate  and  calcium 
ammonium  nitrate  combined.  Consequently,  competition  is  rather  limited.  For 
these reasons Hungary is not an appropriate analogue country. 

(B)  Other countries 

(20)  The  Commission  also  wrote  to  all  known  producers  of  ammonium  nitrate  in 
In 
Australia,  Bulgaria,  Canada,  Egypt,  Mexico,  Poland,  Turkey  and  the  USA. 
addition,  the  European  Fertilizer  Importers'  Association  proposed  Algeria  and 
Romania as analogue countries, and the Commission wrote to the known producers 
in these countries. 

5 

following  producers  co-operated  and 

The 
questionnaire: 

replied 

to 

the  Commission's 

Abu Qir Fertilizers Co, Alexandria, Egypt 
Zaklady Azotawe "Pulawy", Pulawy, Poland 

(i)  Esm 

(21)  During the investigation period, the volume of domestic sales of ammonium  nitrate 
in  Egypt  was  in  excess  of the  combined  volume  of  imports  into  the  Community 
from  Russia  and  Lithuania.  Domestic  sales were  100% bagged,  like  the  Russian 
and Lithuanian exports. 

However,  although  there  are  three  domestic  producers  and  no  formal  import 
restrictions, the 30% customs duty on imports of ammonium nitrate into Egypt has 
led  to  a  situation  where  there  is  no  import  penetration.  Therefore,  there  is  only 
limited competition in the market. 

(ii)  £oJand 

(22)  During the investigation period, Pulawy's domestic sales of ammonium nitrate were 
almost the same as the combined  import volume into the Community  from  Russia 
and  Lithuania.  The  product  is  produced  by  Pulawy  in  prilled  form.  100% of  the 
domestic  sales were bagged.  Pulawy  uses imported  gas from  Russia purchased  at 
arms length prices expressed in hard currency. 

There  are  four  domestic  producers  of ammonium  nitrate. During the  investigation 
period there were no import restrictions and the share of the market held by imports 
was 18.2%. 

Poland  was  therefore  considered  an  open  and  competitive  market  for  ammonium 
nitrate. 

(C)  Choice of analogue country 

(23)  Hungary  cannot  be  chosen  as  an  analogue  country,  in  view  of  the  conclusion 

reached in recital  19. 

As to the other countries from whose producers the Commission obtained  sufficient 
co-operation,  although  the  volumes  of  domestic  sales  of  the  co-operating 
companies  in  both  Egypt  and  Poland  are  significant  in  comparison  with  the 
volumes  of  imports  from  Russia  and  Lithuania,  and  access to  raw materials  is not 
dissimilar,  it is considered that the more open nature of the Polish market  makes it 
the  more  appropriate  choice  for  the  analogue  country  in  this  investigation,  and 
Poland was accordingly chosen. 

(II)  Determination of normal value 

(24)  On the basis of the elements stated in recital  22, the domestic  sales of Pulawy  in 

Poland can be regarded as representative. 

The weighted-average  domestic sales price of the Polish producer to  independent 
customers  during  the  investigation  period  was  found  to  be  profitable,  in  that  it 
covered  all  costs  incurred, which  in this case were  found  to be  representative  of 
the normal cost structure of a company operating in a market economy. 

(25)  EFMA alleged that the domestic price on which the normal  value was based was 
incorrect, since it was lower than the reported level of prices in the Polish market. 
Furthermore,  EFMA  alleged  that  the  domestic  price  inferred  from  the  normal 
value  could  not  cover  the  cost  of  production  in  Poland.  EFMA  provided  some 
documentation to support these allegations. 

(26)  Further  contact  was  made  with  the  Polish  manufacturer  involved  in  order  to 
clarify  the  price  and  cost  situation  in  Poland.  Most  of  the  relevant  information 
supplied by the company had already been verified by the Commission. 

(27)  The Polish company clarified the situation and provided evidence to show that the 
price information  referred  to by EFMA was based on standard ex-dealer prices to 
farmers,  and  was  therefore  well  above  the  manufacturer's  net  ex-works  price  to 
the  dealers. As regards  costs, they  provided  further  evidence  to  support  the  cost 
data verified by the Commission, to demonstrate that they covered the costs of the 
company  relating  to  this  product,  and  to  show  that  they  purchase  gas  at  arms 
length prices. However, the Commission was also able to obtain confirmation  that 
a  cost  normally  borne  by  the  company  had  been  mistakenly  netted  out  of  the 
company's  own  normal  value  calculations.  The  normal  value  was  therefore 
increased  to reflect  the fact that this cost should not have been deducted  from  the 
domestic price when calculating normal value. 

(28)  After  having  reviewed  all  the  data,  it  is  concluded  that  the  net  ex-works  price 
provided by the Polish manufacturer,  with the adjustment  referred  to in recital 27, 
was correct, and  that  this price was profitable,  covering all  costs  incurred  by  the 
company at this stage of the operation. 

Normal  value  was  therefore  based  on  the  net  ex-works  price  of  Pulawy  to 
customers in Poland. 

(b) 

Export price 

(29)  The  export  price  of  ammonium  nitrate  originating  in  Russia  and  Lithuania  was 
based  on  the  price  paid  to  exporters  of  the  product  sold  for  export  to  the 
Community.  This  was the  FOB  ex-frontier  price  charged  by  the  exporter  to  an 
agent or importer in the Community. 

(c) 

Comparison 

(30)  The comparison between normal value and export price (both at ex-frontier)  was 
made  on  a  weighted-average  basis  at  the  same  level  of  trade.  In  the  case  of  all 
transactions, the export price was lower than the normal  value, both adjusted  for 
comparison purposes. The ex-works domestic price was increased to allow for the 
normal  level  of transport  and  handling  costs between  the  factory  and  the port  in 
Poland  during the  investigation  period.  This increase  was calculated  on the  basis 
of  transport  and  handling  costs  actually  incurred  by  the  Polish  producer  in 
question, supplemented  by information  from  other operators  in Poland relating to 
the handling costs for other types of bags. 

(31)  Normal  value  and  export  price  were  adjusted  to  take  account  of  certain  selling 
expenses  specified  in  Article  2  (10)(c)  of  Regulation  No  2423/88.  The  cost  of 
bags  used  in  the  Polish  producer's  domestic  sales  was  less  than  the  price  of  the 
bags  used  to  pack  the  Russian  exports,  and  normal  value  and  export  price  were 
both  reduced  to  reflect  these  directly  related  packing  costs.  In  the  case  of  the 
Lithuanian  exports,  although  the  normal  cost  of  bags  was  higher  than  for  those 
used  by  the  Polish  producer,  a  significant  proportion  of  the  Lithuanian  export 
sales to the Community during the investigation period were made in bulk, which 
incurred  no bagging  costs. Therefore,  the  appropriate  adjustment  was made  only 
as regards the part of the exports made as bagged product. 

The  Russian  authorities claimed  that  the normal  value  should  be reduced  to take 
account  of  the  lower  cost  of  transporting  gas to  the  Russian  plants  compared  to 
the  Polish  factory.  In  this  regard,  it  is  noted  that  no  precise  data  has  been 
produced  on the distances  involved  and that  the costs and prices  in regard  to gas 
and  its distribution  in Russia are not established  on a market basis. In any  event, 
such  claims  for  reductions  in  normal  value  for  alleged  natural  competitive 
advantage have to be considered  on an overall basis. Therefore,  even if it were to 
be  established  that  the  Russian  producers  had  an  advantage  over  the  Polish 
manufacturer  as  regards  the  proximity  of  gas  supplies,  this  would  be 
counterbalanced  by their much greater distance from the Baltic ports, involving a 
higher transport cost. Therefore this claimed adjustment  cannot be accepted. 

The Russian authorities also claimed that normal value should be reduced to take 
account  of  the  allegedly  more  efficient  and  larger  production  units  in  Russia. 
Concerning  this  claim,  no  evidence  has  been  produced  to  show  that  those 
factories which sold ammonium nitrate to the Community during the investigation 
period  operate  more efficiently  than the Polish manufacturer.  Consequently,  this 
claim is also rejected. 

(d) 

Dumping margin 

(32)  The  dumping  margins,  expressed  as  a  percentage  of  the  CIF  price  at  the 
Community  frontier,  were  41.6%  as  regards  imports  originating  in  Russia  and 
27.4% as regards imports originating in Lithuania.  Expressed  in ECU per tonne, 
the margins were 31.3 for Russia and 21 for Lithuania. 

E. 

INJURY 

(a)  Market analysis 

(33)  The  investigation  period  for  dumping  in the proceeding  was  1 April  1993 to  31 
March  1994. In order to ensure a fair evaluation of the development of the  factors 
pertaining to injury,  data relating to this period is compared to the  corresponding 
periods  in  previous  years.  For  easy  reference,  the  periods  in  question  are 
described as follows in the text: 

1 April  1990 - 31 March  1991 
1 April  1991 - 31 March  1992 
1 April  1992 - 31 March  1993 

"1990/91" 
"1991/92" 
"1992/93" 

(i) 

Total Community  consumption 

(34)  Community  consumption  (i.e.  sales  of  the  Community  producers  in  the 
Community  plus  imports)  declined from 4.76  million  tonnes  in  1990/91  to  4.65 
million tonnes in the investigation  period, an overall  fall  of  2.3%.  Consumption 
in the investigation period was, however,  3.1% above the level of  1992/93, when 
sales of ammonium nitrate had dropped sharply to only 4.5 million tonnes. 

10 

(ii) 

Volume and market share of dumped imports 

(35)  The  combined  imports of ammonium  nitrate  originating  in  Russia  and  Lithuania 
rose from  26.000 tonnes in  1990/91 to 489.000 tonnes in the investigation period. 
The  EUROSTAT  data  does  not  provide  separate  import  figures  for  Russia  and 
Lithuania  in  1990/91 but only one figure for the Former Soviet Union.  However, 
given  that  exports  from  both  countries  are  known  to  have  taken  place  in  this 
period,  the  most  reasonable  solution,  on the basis  of the  available  data from the 
exporters,  is to allocate  50% of the Former  Soviet Union figure to each  country. 
On  this  basis,  imports  from  Russia  increased  by  13.000  to  341.000  tonnes,  and 
imports from  Lithuania from 13.000 to  148.000 tonnes. (In any event, a  different 
allocation of the import volumes between Russia and Lithuania in  1990/91 would 
not materially affect  the conclusion reacted later in this Regulation). 

(36)  The combined market share of imports from Russia and Lithuania increased from 
0.5%  in  1990/91  to  10.5% during  the  investigation  period.  The  market  share  of 
Russian  imports  rose  from  just  below  0.3  to  7.3%; the  share  of  imports  from 
Lithuania rose from just below 0.3 to 3.2%7. 

(iii) 

Prices of dumped imports 

(37)  The weighted average selling price of the imports from Russia and Lithuania were 
compared with the weighted average selling price of the Community producers in 
the Community  on an ex-store basis, allowing for  an appropriate  mark-up for  the 
imported  material.  All  prices  were  compared  at  a  net  level,  after  excluding  all 
discounts and rebates. An allowance was made for the fact that substantial sales of 
Community  producers,  particularly  in  the  French  market,  were  made  in  bulk, 
while imports are almost all bagged; the Community industry price was therefore, 
for comparison purposes, adjusted upwards. 

In  calculating  the  weighted  average  price  of  the  dumped  imports,  account  was 
taken of the poor quality of a certain portion of the Russian product. 

On this basis, it was found that during the investigation period the Lithuanian and 
Russian  imports  were  sold  at  14.7  ECU  and  16.2  ECU  per  tonne  respectively 
below the price of the Community  producers (equivalent to  12.6% and  13.9% of 
the Community producers' price). 

7 

In the text, figures do not always add exactly, due to rounding. 

11 

(38)  However, the investigation  has shown that the market  in the Community  dictates 
that  imports  will,  even  in  conditions  of  normal  competition,  always  have  to  be 
offered  at a price below that of the domestic product  in order to sell. The Russian 
and Lithuanian ammonium nitrate is perceived by farmers to be of a lower quality 
than the Community product, a perception which  is reinforced  in the publicity  of 
certain  Community  manufacturers  to  this  effect.  Furthermore,  importers  cannot 
offer  the same security of supply as domestic manufacturers,  nor the same service 
to  customers.  Finally,  most  Community  production  of  ammonium  nitrate  is 
granular,  while  the  imported  product  from  Russia  and  Lithuania  is  prilled; 
granular  product  normally  commands  a  higher  price.  On  the  basis  of  the 
information  obtained in the investigation, this "quality" gap is considered to be 10 
ECU per tonne.  This  is based  on the figure of £8 per tonne  (10.4 ECU) used  in 
the UK regional proceeding  (see recital 2), with a slight reduction  being made to 
take  account  of  the  general  decline  in  prices  in  the  market  during  the  present 
investigation period. 

(39)  Therefore,  after  taking  account  of the  normal  premium  available  to  Community 
producers over imports, the prices of the Lithuanian and Russian imports undercut 
those of the Community product by 4.7 ECU and 6.2 ECU per tonne respectively 
during  the  investigation  period  (equivalent  to  4.4%  and  5.8%  below  the 
Community producers' price). 

(40)  EFI A argued  that the quality  gap of  10 ECU per tonne allowed  for the  difference 
between the selling price of Community product and the dumped imports was too 
low, since it was based on the UK regional  case. In the context of a Community-
wide case the quality  gap in the other  major  market,  France,  should  be higher  in 
view  of  the  traditionally  protected  nature  of  this  market  and  the  consequent 
suspicion of imports by farmers. In other words, it was alleged that imports had to 
be  priced  lower  than  the  Commission  has  estimated  in  order  to  overcome 
perceived differences  in quality and enter the market. 

This  argument  has  to  be  rejected.  Firstly,  it  was  found  that  the  price  of  the 
dumped  imports  was  higher  in  France  than  in  the  UK,  and  that  the  level  of 
undercutting  of the domestic products' prices was lower  in France. Secondly,  the 
absolute  level  of  prices  in  the  market  was  lower  during  the  investigation  period 
for the Community-wide  case than for the regional  case. On both  counts, there  is 
no reason to  increase the quality  gap beyond  10 ECU  and  no other  evidence  has 
been presented in favour of such an increase. 

12 

(ni)  Cumulation of dumped imports 

(41)  In establishing  the  impact  of the dumped  imports  on the  Community  industry,  the 
question  of  whether  the  effect  of  dumped  imports  from  Russia  and  Lithuania 
should be assessed cumulatively had to be addressed. 

(42)  At first sight several factors appear to militate in favour of cumulation. 

The  volume  of  imports  originating  in  both  Russia  and  Lithuania  is  significant. 
During  the  investigation  period,  their  market  shares  were  7.3%  and  3.2% 
respectively. 

The  physical  characteristics  of  the  normal  quality  ammonium  nitrate  from  both 
countries are broadly similar; 

The  Russian  and  Lithuanian  products  are  in  competition  in  the  Community  with 
each other and with the like product produced by the Community industry; 

The Russian and Lithuanian products use the same type of distribution channels in 
the Community  and the selling price of good quality  ammonium  nitrate  from  both 
countries in the Community is broadly similar. 

(43)  However,  in  this  particular  case,  a  number  of  other  factors  have  to  be 

considered; 

Although the combined volume of imports from  Russia and Lithuania increased  in 
the  investigation  period,  the  volume  of  Russian  imports  rose  by  55%  in  the 
investigation  period  compared  to  1992/93, while  imports  from  Lithuania  fell  by 
28%  in  the  same  period,  in  spite  of  an  overall  increase  of  3%  in  Community 
demand.  The  market  share  of  Russia  rose  from  4.9%  to  7.3%  whilst  that  of 
Lithuania  fell  from  4.6% to 3.2%. Thus from  a position  of near parity  in 1992/93, 
the Lithuanian  and Russian  imports diverged  in the  investigation  period to a point 
where the former was equivalent to only about 40% of Russian imports. 

13 

Although  selling prices charged by importers in the Community  for  normal  quality 
Russian  and  Lithuanian  product  are  not  too  dissimilar,  the  Lithuanian  product 
commands  a  small  premium.  The  average  cif  import  price  of  the  Lithuanian 
product was 89 ECU per tonne in the investigation period, compared to 75 ECU per 
tonne  for  the  Russian  product.  The  average  FOB  export  price  of  Lithuanian 
ammonium  nitrate is also well above that of the Russian  product.  This difference  in 
average prices is explained by the fact that certain shipments of the Russian product 
were of an inferior  quality which commanded exceptionally  low prices on arrival in 
the Community  and  served to reinforce  the image of the Russian product  as being 
inferior  and less reliable than the Lithuanian ammonium nitrate, almost all of which 
arrived in good condition at the Community  frontier. 

In  addition,  a  particular  feature  of  this  case  is  the  previous  UK  regional 
investigation,  which has resulted  in measures intended to remove  injury  in the UK 
market. Up to  1993 both Russian and Lithuanian  imports had been concentrated  in 
the UK.  In the  investigation  period,  the  major  part  of the  Lithuanian  imports  into 
the  EC  still  went  to  the  UK.  This  high  concentration  in  the  UK  means  that  the 
Lithuanian market share in the rest of the Community was barely 2%, compared to 
4%  in  the  UK.  In  contrast,  less  than  40% of  Russian  imports  to  the  Community 
were made in the UK; and Russia's market share across the Community market was 
more uniform than Lithuania's. 

In  the  remainder  of  the  Community  market,  excluding  the  UK,  Russian  imports 
increased dramatically during the investigation period, indicating a shift  away  from 
the UK market, while the trend in Lithuanian imports was downwards. Imports into 
the  EC  (minus  the  UK)  from  Lithuania  declined  from  33.153  tonnes  (quarter 
ending  March  1993) to  28.676 tonnes  (quarter  ending  March  1994), a decrease  of 
13.5%. Exports from  Russia to the same destination  increased  from  22.768  tonnes 
to  105.830 tonnes, up by 364%, over the same period. 

Conclusion 

(44)  In  view  of  the  divergent  development  of  imports  from  Russia  and  Lithuania,  in 
terms of their overall volume and market  share in the Community  and their degree 
of  concentration  in  the  UK  market,  and  the  difference  in  terms  of  price,  it  is 
considered  that  the  conditions  of  competition  between  the  two  do  not  make 
cumulation appropriate in this case. 

14 

(b) 

Situation of the  Community industry 

(i) 

Prodiiction 

(45)  The  production  of  ammonium  nitrate by the  Community  industry  fell  from  4.68 
million tonnes in  1990/91 to 3.69 million in the investigation  period, a decline of 
21%.  Production  in the  investigation  period  was, however,  6.7% above the  level 
of  1992/93, when it had fallen to 3.46 million tonnes. 

(ii) 

Capacity  utilisation 

(46)  The  production  capacity  of  the  Community  industry  declined  from  9.12  million 

tonnes in  1990/91 to 8.58 million tonnes in the investigation period, a fall of 6%. 
Over the same period, the utilisation of capacity fell from  51% to 43%. 

(iii) 

Stocks 

(47)  The Community  industry's stocks fell  from  363.000 tonnes at the end of  1990/91 

to 201.000 tonnes at the end of the investigation period. 

(iv) 

Sales in the Community 

(48)  Between  1990/91  and  1992/93,  sales  of  the  Community  industry  in  the 
Community  fell  from  3.85  to  3.16  million  tonnes.  Although  sales  recovered  to 
3.40 million in the investigation period, the volume was still  12% below the level 
of  1990/91. 

(v)  Market share 

(49)  The Community  industry's share of the Community market dropped from  81% in 
1990/91 to 69% in  1992/93, before  increasing slightly to 73% in the investigation 
period. 

(vi) 

Prices 

(50)  The weighted average net selling price of the Community  industry fell  from  145.4 
ECU per tonne in  1990/91 to  117.1 ECU per tonne in  1992/93, and then  dropped 
further  to  106.9 ECU  per  tonne  in the  investigation  period.  Therefore,  prices  in 
the investigation period were 26.5% below the level of  1990/91. 

15 

(vii)  Profitability 

(51)  The  Community  industry  made  a  weighted-average  profit  of  15.6%  on  sales  in 
1990/91.  By  1992/93, this  had  become  a  loss  of  2.7%,  and  in  the  investigation 
period this loss worsened to 6.8% on sales. 

(viii)  Employment 

(52)  The  number  of  people  directly  employed  by  the  Community  industry  in  the 
ammonium  nitrate sector fell  from  2.444  in  1990/91 to  1.810 in the  investigation 
period, a loss of 634 jobs and a decline of 26%. In this regard, employment  fell in 
line with production, which dropped by just over 21%. 

(c) 

Conclusion 

(53) 

It  is  clear  that  the  situation  of  the  Community  industry  has  worsened  between 
1990/91 and the end of the investigation  period. The development  of most of the 
main indicators was negative. 

Over this period, production, capacity utilisation, domestic sales and market share 
all  fell,  while  prices  dropped  by  26%  and  the  industry's  financial  performance 
slumped  from  a  healthy  profit  in  1990/91  to  a  serious  loss  in  the  investigation 
period. 

investigation  period  compared 

Although  the  Community  industry's production  and  sales volume  did  improve  in 
the 
to  1992/93,  this  reflected  a  general 
improvement  in  total  demand  as  much  as  any  improvement  in  its  market 
penetration,  since the market  share of the Community  industry  increased  by only 
4 percentage points while the sales volume rose by almost  8%.  At the same time 
the industry had to decrease prices further  in the investigation period and  suffered 
a heavier loss than in 1992/93. 

Furthermore,  the  combined  effect  of  the  declining  sales  volume  and  the  drop  in 
the price  level  led to  a fall  of the  Community  industry's turnover  for  ammonium 
nitrate in the investigation period to only 65% of the level of  1990/91. 

(54) 

In  view  of  the  above  factors,  it  is  concluded  that  the  Community  industry  has 
suffered  material  injury. 

16 

F. 

CAUSATION 

(a) 
(i) 

Injury caused by dumped imports originating in Russia 
Saks 

(55)  Between  1990/91  and  the  investigation  period,  the  sales  of  the  Community 
industry  fell  by  452.000  tonnes,  while  the  volume  of  imports  from  Russia 
increased  by 328.000 tonnes.  Although a small part of the Russian  imports were 
made up of poor quality product that had to be sold off cheaply for solutions, it is 
clear that the major  part of the loss of domestic  sales of the Community  industry 
can be attributed to the dumped imports from  Russia, which replaced them. 

(ii)  Market share 

(56)  Between  1990/91  and  the  investigation  period  the  market  share  of  the  dumped 
imports  from  Russia  rose  from  0.3% to  7.3%.  During  this  period,  the  market 
share  of  the  Community  industry  fell  by  eight  percentage  points  from  81% to 
73%. 

(57)  The  market  share  of  the  Community  industry  did  improve  from  69%  to  73% 
between  1992/93 and  the  investigation  period,  but this  increase  was  achieved  at 
the  expense  of  imports from other  sources  (including  Lithuania), which  declined 
by  seven  percentage  points, back  to  the  level  of  1990/91.  The  market  share  of 
imports from  Russia continued to increase between  1992/93 and the  investigation 
period. In these circumstances, it is clear that the fall  in market share suffered  by 
the  Community  industry  between  1990/91  and  the  investigation  period  was  due 
mainly to the increase in the dumped imports from  Russia. 

17 

(iii)  Production 

(58)  Production  of  ammonium  nitrate  fell  by  almost  1  Million  tonnes  between 
1990/1991  and  the  investigation  period.  The  328.000  tonne  increase  in  the 
volume  of  the  dumped  imports  from  Russia  contributed  to  a  major  part  of  this 
decline  in  production,  and  to  a  corresponding  part  of  the  fall  in  capacity 
utilisation,  even  allowing  for  the  portion  of  poor  quality  product,  referred  to  in 
recital 56. 

(iv) 

Prices and  profitability 

(59)  Between  1990/91 and the investigation period, the average net selling price of the 
Community  industry  fell  from  145 to  107 ECU per tonne.  At the same time, the 
volume  of  dumped  imports  from  Russia  increased  by  328.000  tonnes  and 
displaced  an  equivalent  volume  of  Community  producers'  sales.  Since  1990/91, 
these  dumped  imports  were  consistently  offered  at  prices  which,  even  allowing 
for  a  quality  difference  between  the  Community  and  imported  product,  were 
significantly  below the Community industry's cost of production. 

The investigation has established, on the basis of documented evidence, that many 
customers have switched from  the Community  product to Russian  imports purely 
on the basis of price. 

(60) 

It  is therefore  concluded  that the  Community  producers  have had to reduce  their 
prices to well below cost in order to maintain a certain level of sales in the face of 
the low prices of the dumped  imports from  Russia. Therefore  the modest  level of 
price  undercutting  by  the  Russian  imports  during  the  investigation  period,  as 
previously  indicated in recital 39, after  an adjustment  for quality, only reflects  the 
extent to which the Community industry has had to depress its own prices in order 
to compete, to a point where prices were almost 7% below cost. 

Therefore  the  dumped  imports  from  Russia  have  obviously  been  a  significant 
cause  of  the  fall  in  the  Community  industry's  prices,  and  have  consequently 
played a large part in the decline from profit into a considerable loss. 

18 

(d) 

Injury caused bv dumped imports from Lithuania 

(i) 

Saks 

(61)  Between  1990/91  and  the  investigation  period,  the  sales  of  the  Community 
industry  fell  by  452.000  tonnes,  with  the  volume  of  imports  from  Lithuania 
increased by  135.000 tonnes. Consequently, a part of the loss of domestic sales of 
the  Community  industry  appears  to  be  linked  to  the  dumped  imports  from 
Lithuania,  although  in  the  investigation  period  the  Community  industry's  sales 
rose by 287.000 tonnes compared to  1992/1993, while imports of the  Lithuanian 
product  fell  by  58.000  tonnes.  Consequently,  the  overall  impact  of  Lithuanian 
imports appears to have been rather limited. 

(ii)  Market share 

(62)  Between  1990/91  and  the  investigation  period  the  market  share  of  the  dumped 
imports from  Lithuania rose from 0.3% to 3.2%.  During this period, the market 
share  of  the  Community  industry,  as  previously  mentioned,  fell  by  eight 
percentage points from  81% to 73%. 

(63) 

In  these  circumstances,  it  is  clear  that  the  fall  in  market  share  suffered  by  the 
Community  industry is in part linked to the increase in the dumped  imports  from 
Lithuania.  However,  it  should  be  recalled  that  between  1992/93  and  the 
investigation  period,  the  market  share  of  Lithuanian  imports  fell  from  4.6%  to 
3.2%. Overall, therefore,  it is concluded  that the contribution  of Lithuania  to the 
decline in the Community industry's market share is small. 

(iii) 

Production 

(64)  Production  of  ammonium  mtrate  fell  by  almost  1  Million  tonnes  between 
1990/1991  and  the  investigation  period.  The  135.000  tonne  increase  in  the 
volume  of  the  dumped  imports  is  considered  to  have  played  only  a  very  minor 
part  in this decline  in production,  as well as in the  fall  in capacity  utilisation.  In 
the  investigation  period,  Community  production  rose  by  232.000  tonnes  and 
Lithuanian imports fell by 58.000 tonnes. 

19 

(iv) 

Prices and  profitability 

(65)  The  price  of  Lithuanian  imports  is  above  that  of  Russian  imports,  and  only  a 
limited  volume of Community  production  appears to have been displaced  by the 
Lithuanian  imports. In addition, the price of the Community  producers' sales  fell 
9% during the investigation period, while at the same time the volume of imports 
of the Lithuanian product fell by 28%, and their c.i.f. price rose by 9%. 

(66) 

In view of the above, it is concluded that imports from Lithuania have not had a 
significant  impact on the prices and profitability  of the Community producers. 

(c) 

Injury caused by other factors. 

(i) 

Imports from other sources 

(67)  Between  1990/91  and  the  investigation  period,  the  volume  of  imports  from 
countries  other  than  Russia  and  Lithuania  declined  from  629.000  to  537.000 
tonnes,  a  decline  of  92.000  tonnes,  equivalent  to  15%.  Over  this  period,  the 
market  share  of  these  imports,  sourced  mainly  from  Eastern  Europe  and  North 
Africa,  declined from  13.2 to  11.6%. In addition, although they were priced below 
the  level  of  the  Community  producers,  these  imports  were  consistently  sold  at 
prices above those of the imports originating in either Russia or Lithuania. 

(68) 

In these circumstances, it is concluded  that the  imports from  other  sources made 
no  significant  contribution  to  the  injury  suffered  by  the  Community  industry 
during the investigation period. 

(ii) 

Decline in total demand 

(69)  Total  EC  consumption  of  ammonium  nitrate  fell  by  109.000  tonnes  between 
1990/91  and  the  investigation  period.  Over  the  same  period  sales  of  the 
Community  industry  fell  by  452.000  tonnes,  while  imports  from  Russia  and 
Lithuania  rose by 463.000 tonnes. In view  of the  above,  it  is concluded  that  the 
part  played  by  the  decline  in  total  Community  demand  in  the  fall  in  the 
Community industry's sales is only marginal. 

20 

(iii) 

Strategy of Community  producers 

(70)  Since the production volume of the Community  industry  fell  by  1 million  tonnes 
between  1990/91 and the investigation period while the dumped imports increased 
by  463.000  tonnes,  it  is  clear  that  other  factors  must  have  played  a  part  in  the 
decline  in  production  and  the  consequent  fall  in  capacity  utilisation  and 
employment.  The  investigation  has established  that two  factors  were  responsible 
for the remainder of the fall in production -

(i) 

A reduction in stocks by the Community industry (see recital 47). 

(ii) 

A fall  in the  amount  of  ammonium  nitrate  used  for  internal  consumption  by  the 
Community producers, mainly for blending into compound  fertilizers. 

It is clear that these two factors have played a significant  role in the decline in the 
Community industry's production. 

(71)  The  investigation  has  further  established  that  the  Community  industry  has 
maintained  a  level  of  production  capacity  in  excess  of  market  demand  between 
1990/91 and the investigation period. While is accepted that in some factories part 
of  the  declared  capacity  for  ammonium  nitrate  can  also  be  used  to  manufacture 
other  nitrogen  products  and  that  overall  capacity  has  been  reduced  by  6%,  it  is 
clear  that  in  general  the  capacity  of  the  Community  industry  would  still 
comfortably  exceed market demand in the Community, even in the absence of the 
dumped  imports from  Russia and Lithuania. This state of affairs  appears to have 
contributed  to  maintaining  a  higher  than  necessary  level  of  fixed  costs  for  this 
product. 

(d)  Conclusion 

in 

the  Community 

(72)  The other factors identified  above (Recitals 67-71) have played a part as regards the 
decline 
industry's  production,  capacity  utilisation  and 
employment,  and  the  maintenance  of  an  excessive  level  of  capacity  may  have 
contributed  to a higher than necessary  production  cost, and therefore  to a negative 
impact  on  profits.  Nevertheless,  it  should  be  noted  that  between  1990/91  and  the 
investigation  period,  the  Community  industry  was  able  to  reduce  its  average 
production cost from 126 to  115 ECU per tonne, and in spite of this effort  was still 
not able to compete with the dumped imports. 

21 

(73)  The dumped  imports from  Lithuania have had a certain  impact on the  Community 
industry's  sales and  market  share  and  played  a small  part  in the  fall  in  production 
and capacity  utilisation  (Recitals 61-66). However,  in view of the small  volume of 
imports  from  Lithuania  and  their  considerable  decline  in  the  investigation  period, 
their  contribution  to  injury  to  the  Community  industry  as  a  whole  must  be 
considered  to be a minor one. As has been  stated  earlier,  Lithuanian  imports  have 
achieved  significant  penetration  only  in  the  UK  market,  where  regional  anti 
dumping measures against Lithuanian ammonium nitrate remain in force. 

(74)  The  remaining  injury,  caused by the dumped  imports  from  Russia,  consists  of the 
main part of the decline  in sales and market share, and by far the major  part in the 
fall  in the Community  industry's prices and profits. The Russian imports have also 
had  a  significant  impact  on  production  and  capacity  utilisation,  and  also  on 
employment  (recitals  55-60).  The  impact  of  Russian  imports  was  felt  by  the 
Community  industry as a whole, since their market penetration was significant  and 
increasing across the whole of the Community. 

(75)  In conclusion, it is found that a certain part of the injury to the Community industry 
has been  caused  by  factors  other than  the  dumped  imports. The  minor  part  of  the 
injury  attributable  to  dumped  imports  from  Lithuania  cannot  be  considered  to  be 
material. However, in view of the gravity of the overall injury  in this case, it has to 
be  concluded  that  the  remaining  injury,  caused  by  dumped  imports  from  Russia, 
taken in isolation, is material. 

G.  COMMUNITY INTEREST 

1. 

££nexal 

(76)  In  examining  whether  the  interest  of  the  Community  calls  for  the  taking  of  anti 
dumping  measures,  the  need  to  eliminate  the  trade-distorting  effects  of  injurious 
dumping and to restore effective  competition is given special consideration. 

2.  Consequences for Community industry 

(77)  With regard to this proceeding, without  measures to correct the effects  of dumped 
imports,  one  or  more  Community  producers  may  be  forced  to  close  plants  and 
perhaps to shut down altogether, especially  in view of the large volume of  surplus 
capacity  in  Russia,  and  the  dumping  practices  identified  during  the  investigation 
period.  This  would  lead  to  a considerable  loss  of  employment  in  the  Community 
and would reduce the amount of competition in the market. 

22 

(78)  EFIA alleged that there is no large surplus capacity of ammonium  nitrate in Russia. 
However,  this  allegation  is  contradicted  by  the  replies  of  the  co-operating 
exporters, which between them showed an unused capacity of over  1  million tonnes 
during the investigation period, and which furthermore  represent only a minority of 
ammonium  nitrate  production  in  Russia.  An  independent  study  published  in 
January  1995  concluded  that  there  was  5  million  tonnes  of  excess  ammonium 
nitrate capacity in Russia. 

3. 

Impact on users 

(79)  It is true that farmers  in the Community  have benefited  in the short term from  the 
low  price  of  dumped  imports.  However,  it  must  also  be  borne  in  mind  that 
fertilizers  account  for  only  about  12%  of  the  cost  of  farmers'  total  inputs  in  the 
Community, the price of fertilizers having fallen considerably in recent years. 

Therefore,  any  adjustment  in  prices  resulting  from  an  anti-dumping  measure  is 
unlikely  to  have  a  major  impact  on  farmers'  budgets,  particularly  in  view  of  the 
relatively  modest  nature  of  the  measures  required  to  prevent  injurious  dumping, 
and  on  balance  is  not  a  sufficient  reason  to  deny  legitimate  protection  to  the 
Community producers in this case. 

4. 

Impart on trade with Russia 

(80)  When assessing Community interest and formulating  proposals in this case, proper 
consideration  must  be given to the Community's  stated  commitment  to  encourage 
trade  with  Russia  in  order  to  facilitate  its  transition  to  a  market  economy.  This 
does  not  of  course  mean  that  anti-dumping  measures  should  not  be  taken  where 
warranted;  it  does  mean,  however,  that  the  solution  proposed  should  attempt  to 
minimise  any  conflict  between  preventing  injury  to  Community  industry  from 
dumped  imports  and  the  need  to  encourage  continued  and  increased  trade  with 
Russia. 

5.  Conclusion 

(81)  It is concluded that anti-dumping measures are in the interest of the Community  in 
this case; nevertheless, full  account  should be taken of the arguments in recital  80 
when considering the measures to be taken. 

23 

H.  CONCLUSION 

1. 

Termination of Community-wide proceeding as regards  Lithuania 

(82)  In  view  of  the  conclusion  that  the  Lithuanian  imports  have  not  caused  material 
injury  to  the  Community  industry,  the  proceeding  for  Lithuania  has  been 
terminated, by Commission Decision 95/.../EC8 

2. 

Existing measures concerning the UK market 

(83)  The  current  Community-wide  investigation  concerning  ammonium  nitrate  from 
Lithuania  and  Russia  has  established  that,  in  the  case  of  Russia,  anti-dumping 
measures at Community  level are warranted.  At the same time, it should be noted 
that since May  1994 anti-dumping measures have also been in force with regard to 
imports  of  Russian  and  Lithuanian  ammonium  mtrate  into  the  UK,  following  the 
regional case referred to in recital 2. 

These  measures  have  taken  the  form  of  quantitative  undertakings  which  limit 
annual imports into the UK from Lithuania and Russia to  100.000 tonnes for  each 
country. 

(84)  With  regard  to  imports  from  Russia,  the  regional  measure  does  not  provide 
adequate  protection  to  the  Community  industry  as  a  whole,  since  during  the 
investigation period 60% of Community imports of ammonium nitrate from  Russia 
were made in Member  States other than the UK. In volume terms, this represented 
over 200.000 tonnes, and showed a sharp rise compared to 1992/93. 

It  should  also  be  noted  that  during  this  period  Member  States  other  than  the  UK 
accounted  for  55% of  Community  production  and  60%  of  demand,  and  that  the 
producers  in question  suffered  sharper declines in prices and profitability  than the 
producers in the UK. 

8 See page .... of this Official Journal 

24 

3.  Definitive  measures at Community level for imports from  Russia. 

(85)  Anti-dumping  measures  at  Community  level  are  therefore  justified  for  imports 
from  Russia.  It  is therefore  clear  that  the  UK  regional  measures  concerning  these 
imports  have 
the  UK  market  would  benefit 
simultaneously  from two separate protective measures. 

to  be  removed,  otherwise 

Thus UK regional proceeding concerning  imports of ammonium nitrate  originating 
in Russia has been terminated by Commission Decision 96/.../EC9. 

(86)  Several parties alleged that the prices of ammonium nitrate in the Community, and 
consequently  the  situation  of the  Community  producers,  have  improved  since  the 
end of the investigation period. They allege that this improvement makes protective 
measures unnecessary, and should be taken into account. 

Although not the subject of a formal  investigation, it does seem that the ammonium 
nitrate  market,  in  common  with  the  nitrogen  fertilizer  market  as  a  whole,  has 
improved  since the end  of the  investigation  period.  However,  this does not  in any 
way invalidate the need to remedy injurious  dumping, although the type of measure 
proposed should take this situation into account. 

4. 

Type of measure 

(87)  It  is  concluded  that  definitive  anti-dumping  on  imports  of  ammonium  nitrate 
originating  in Russia be imposed  in the form  of a variable duty.  This would  have 
the  advantage  of  increasing  export prices to a level  at which  injurious  dumping  is 
eliminated,  while  at  the  same  time  not  imposing  any  extra  burden  on  exporters 
which  have  subsequently  increased  export  prices  to  or  beyond  a  non-injurious 
level. 

This  approach  best  reconciles  the  need  to  eliminate  injurious  dumping  with  the 
considerations in recitals 80 and 86. 

See page ... of this Official  Journal 

25 

(88)  EFIA  was  concerned  that  a  minimum  price  duty  could  make  it  difficult  for 
exporters  to  sell  in  the  Community  in  the  event  of  a  fall  in  market  prices  or  a 
change  in  the  rate  of  the  US  Dollar.  To  offset  this  possibility,  in  either  case,  the 
Council notes that the Commission would be prepared to consider the initiation of a 
prompt  review  of  the  measure,  if  sufficient  evidence  was  provided  to  this  effect, 
even less than one year following  its imposition. 

5.  Rate of duty 

(a)  Target price for Community industry 

(89)  In order to  establish  the price  increase  of the dumped  imports  required  to  remove 
injury  to  the  Community  industry,  the  weighted  average  per  tonne  cost  of 
production  of  the  Community  industry  for  bagged  ammonium  nitrate  has  been 
calculated,  and  a profit  of  5% added  in  order  to  arrive  at  a  target  price  at  which 
injury  is eliminated. 

A profit  of 5% on cost has been used in recent anti-dumping  cases concerning urea 
and UAN solutions, and was therefore  considered as a reasonable profit  margin  for 
nitrogen fertilizers  in anti-dumping proceedings. 

(90)  EFMA  alleged that the target profit  of  10% on cost used  in the UK regional  case, 

would be a more appropriate level of profit. 

(91)  The  profit  margin  used  in  the  regional  proceeding  was  not  applied  on  the  actual 
costs  of  production  of  the  UK  industry,  but  on  the  costs  adjusted  to  exclude  the 
impact  of  factors  other  than  the  dumped  imports.  In  any  event,  the  UK  industry 
represents only a minority of Community production of ammonium nitrate, and has 
lower costs than the rest of the Community  producers. Therefore  the cost  structure 
of the UK  industry  appears to lend  itself to the reasonable  expectation  of a higher 
level of profit  under normal market conditions than is the case for the  Community 
industry  as  a  whole.  Furthermore,  it  has  been  established  that  the  Community 
industry's  fixed  costs  are  slightly  inflated  by  the  maintenance  of  over-capacity 
(recital  71).  EFMA  also  claimed  that  the  use  of  a  higher  profit  figure  was  more 
appropriate  because  of  certain  costs  associated  with  ammonium  nitrate  which  are 
not  present  in the  production  of urea or UAN  solutions. However,  EFMA  did  not 
forward  sufficient  evidence to substantiate this claim. In view of these factors,  and 
after  considering  this  matter  carefully,  it  is  concluded  that  5%  on  actual  costs 
remains an appropriate level of profit. 

26 

(92)  Using the 5% profit,  and taking into account the  10 ECU  "quality  gap"  established 
in recital  38, the price increase of the dumped  imports required to remove injury is 
20.4 ECU per tonne for imports from  Russia. 

(b)  Duty based on injury  elimination 

(93)  The dumping  margin  as regards  ammonium  nitrate  from  Russia  is 31.3  ECU  per 

tonne. 

Since the dumping  margin  is above the price  increase  required to eliminate  injury 
("injury  margin"), the rate of anti-dumping  duty  will be determined  by the injury 
margin of 20.4 ECU per tonne. 

(c)  Calculation of minimum price for the determination of a variable duty 

(94)  The minimum  price threshold is calculated by taking the export price  (ex-frontier) 
and  adding  the  injury  margin  plus  the  costs  of  freight,  insurance  and traders' 
margin,  in order to arrive  at a c.i.f.  Community  frontier  price  before  duty.  Anti 
dumping duty will only be collected if the c.i.f. import price falls below this level. 

(95)  In  order  to  calculate  the  costs  incurred  between  export  and  import  ,  it  is not 
sufficient  to take  the difference  between the ex-Russian  frontier  export  price and 
the  EUROSTAT  c.i.f.  price,  since  the average  c.i.f.  price  of Russian  imports  is 
brought down by a portion of sub-standard product, while the export price is based 
on  good  quality  ammonium  nitrate  only.  The above  comparison  would  under 
estimate  the cost  incurred  and result  in a  minimum  price  which  did not  fully 
eliminate  injury. 

In  the  absence  of  full  co-operation  from  importers  and  exporters  of  Russian 
ammonium nitrate, the most reasonable method would be to take the costs incurred 
between export  and  imports into the Community of the Lithuanian  product,  which 
were  established  on  the  basis  of  verified  data  in  the  investigation.  This  is  a 
uniformly  good quality product and is shipped roughly the same distance and under 
the same conditions as the Russian ammonium nitrate. 

The Russian Ministry of Foreign Economic Relations alleged that the figure of 24.7 
ECU  per tonne  resulting  from  this  method  was too high.  They  produced  certain 
data from  exporters indicating lower freight rates. 

27 

These  data  cannot  be  accepted,  since  they  were  submitted  very  late  in  the 
proceeding and were not subject  to verification,  they concerned only a small  part of 
total  exports  and  because  they  omitted  any  cost  element  for  agents  or  other 
intermediaries  which  buy  and  sell  the  product  between  the  Russian  f.o.b.  and 
Community  c.i.f.  stages.  This  is  the  normal  selling  route  for  Russian  ammonium 
nitrate, on the basis of the information  supplied during the  verification. 

When  applied  to  the  Russian  ammonium  nitrate,  this  results  in  the  following 
calculation: 

Export price (ex-frontier) 
Injury  margin 
Freight, insurance etc. 

57.8  ECU per tonne 
20.4  ECU per tonne 
24.7  ECU per tonne 

Total 

102.9  ECU per tonne 

(96)  The  minimum  price  for  bagged  imports  from  Russia  should  therefore  be  102.9 

ECU per tonne. 

(97)  E.F.LA.  has claimed  that the  minimum  price  should  be reduced  if the  ammonium 
nitrate  is  imported  in  bulk.  On  this  point,  it  is  considered  that  the  existence  of a 
lower minimum  price  for  bulk product would  inevitably  open up the possibility  of 
avoidance  of  anti-dumping  duty  on  bagged  imports  by  means  of  compensatory 
arragements for the costs of bags. 

Therefore,  it  is  concluded  that  in  order  to  maintain  the  effectiveness  of  the 
measures,  the  same minimum  price  of  102.9 ECU per  tonne  must  be  imposed  on 
both bagged and on a bulk product. 

6.  Undertaking 

(98)  The Russian Ministry of Foreign Economic Relations has offered  to limit exports to 
the Community to 300.000 tonnes per year and to issue licences only at or above an 
indicative  price  which  will  reflect  the  "market  price"  in  the  Community.  The 
undertaking is not acceptable, given that the  100.000 tonne limit in the quantitative 
undertaking covering the UK market, accepted by Decision 94/293/EC, had already 
been  exceeded  by  February  1995, in  spite  of  the  fact  that  the  Russian  authorities 
had  undertaken  to  limit  exports to  100.000 tonnes for  the  12-month  period  ending 
21 May 1995. 

28 

In  the  li^ht  of  these  circumstances,  the  Russian  authorities  have  not  adequately 
demonstrated their ability to satisfy  the monitoring requirements of the undertaking 
concerning exports of ammonium nitrate. 

In addition : 

(99)  The figure  of 300.000 tonnes is too high. It represents only a 27% reduction on the 
volume  imported  in the investigation  period, even if the  70.000 tonnes  of  Russian 
ammonium nitrate imported into Austria, Finland and Sweden are included. This is 
not sufficient  to remove injury to the Community industry. 

(100) In  any  event,  in  this  case,  given  that  a  100.000  tonne  limit  is  still  in  force  for 
imports  from  Lithuania  into the UK, the acceptance  of a higher  figure  for  Russian 
imports  to  the  whole  of  the  Community  would  give  Russia  the  opportunity  of 
exporting  more  than  100.000  tonnes  to  the  UK,  thus  rewarding  the  Russian 
exporters  for  having  caused  injury  in  the  past,  especially  in  view  of  having 
exceeded the above limit in the regional undertaking. 

(101) The  "indicative  price",  although  reflecting  the  highest  prices  on  offer,  would  not 
always  be  equal  to,  or  exceed,  the  minimum  price  which  eliminates  injurious 
dumping:  the Russian  authorities request market  - related  flexibility.  In any  event, 
the Ministry would not in practice be able to control the actual price paid. 

7.  Conclusion 

(102) It is concluded that the above undertaking should not be accepted; the variable anti 

dumping duty should therefore be imposed. 

29 

HAS ADOPTED THIS REGULATION: 

Article 1 

1.  A definitive  anti-dumping duty is hereby imposed on imports of ammonium nitrate 

originating  in Russia and falling within CN Codes 31 02 30 90 and 31 02 40 90. 

2. 

The amount of anti-dumping duty shall be the difference  between ECU  102.9 per 
tonne nel of product and the net CIF price, Community frontier  before customs 
clearance, in all cases where this is lower. 

3.  Unless otherwise specified, the provisions in force concerning customs duties shall 

apply. 

Article 2 

This Regulation shall enter into force on the day following that of its publication in the 
Official  Journal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 

Done in Brussels, 

For the Council 

30 

ISSN 0254-1475 

COM(95) 397  final 

DOCUMENTS 

EN 

02  11 

Catalogue number  : CB-CO-95-424-EN-C 

ISBN 92-77-92613-9 

Office for Official Publications of the European Communities 

L-2985 Luxembourg 

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