Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of potassium chloride originating in Belarus, Russia and Ukraine
Date: 2000-04-26
Institutions: European Commission
Subjects: CIS countries, anti-dumping duty, chemical salt, export price, import

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 26.04.2000
COM(2000) 249 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of potassium chloride originating in
Belarus, Russia and Ukraine

(presented by the Commission)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

1

2

3

EXPLANATORY MEMORANDUM

The Council, by Regulation (EC) No 449/1998,1 amended Regulation (EC)
No 643/942 which had introduced fixed anti-dumping duties on imports into the
Community of potassium chloride (potash) from Belarus, Russia and Ukraine in
addition to the minimum-price-based anti-dumping duties, already imposed by
Regulation (EEC) No 3068/92.3

On 23 March 1999 an expiry review and an interim review limited to the form of the
anti-dumping measures were initiated, the former following a request by APEP
(European Association of Potash Producers), the latter on the Commission’s own
initiative. The Commission sent questionnaires to the parties concerned and carried
out verification visits where appropriate.

As in the previous investigations, Canada was used as the analogue country to
determine normal value. Based on the ex-mine normal value established for Canada
and the questionnaire response of International Potash Company (IPC) and its related
importers, substantial dumping margins were found for Russia, Ukraine and for
Belarus. Therefore, it is reasonable to assume that such dumping will continue
should measures be removed. It was also established that there is a likelihood of
recurrence of dumping from the Ukraine.

As far as the Community industry is concerned, the Commission concluded that its
economic situation continues to be vulnerable to a possible recurrence of dumping
and that, in view of the huge raw material reserves, the low capacity utilisation and
other factors, injurious dumping is likely to recur in the absence of the measures. It
was also established that, although the continuation of measures is not in the interests
of the users of potash, the price advantage for them that would result from allowing
the anti-dumping measures to lapse is overwritten by the benefits to the Community
resulting from preventing the recurrence of injurious dumping.

The exporter, IPC, contacted the Commission and, after numerous meetings, offered
an undertaking on 18 January 2000. The terms of this undertaking were carefully
reviewed and it was concluded that there were too many serious shortcomings to
make the undertaking acceptable, especially bearing in mind that IPC could not give
sufficient guarantees that the undertaking could be efficiently implemented and
monitored. On these grounds, the Commission decided to reject this undertaking and
IPC was informed accordingly.

In accordance with Article 9 of Council Regulation (EC) No 384/96, the Commission
therefore proposes that the Council amend its Regulation No (EC) 449/1998 to adapt
the existing combination of measures by eliminating the minimum price requirement
and retaining only the fixed duty element of the measures.

The attached draft Council Regulation contains detailed information as regards the
data and motivation on the basis of which the proposed measures have been
established.

OJ L 58, 27.2.1998, p. 15.
OJ L 80, 24.3.1994, p. 1.
OJ L 308, 24.10.1992, p. 41.

2

(8)

(9)

The interested parties were informed of the essential facts and considerations on the
basis of which the Commission proposes to the Council the maintenance of anti-
dumping duties in an amended form, and were given an opportunity to comment. The
comments were taken into account where appropriate.

In the Anti-Dumping Committee of 20 January 2000 eight Member States were in
favour of the proposal, three abstained and four were against.

3

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of potassium chloride originating in
Belarus, Russia and Ukraine

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection
against dumped imports from countries not members of the European Community4 and in
particular Articles 9 and 11 thereof,

Having regard to the proposal submitted by the Commission after consulting the Advisory
Committee,

Whereas:

1.

(1)

(2)

(3)

4

5

6

7

PREVIOUS INVESTIGATIONS

By Regulation (EEC) No 3068/92,5 the Council imposed definitive anti-dumping
duties on imports of potassium chloride (hereinafter referred to as potash or the
product concerned) originating in Belarus, Russia and Ukraine (hereinafter:
the
countries concerned). The duties were equal to the difference between a set minimum
price and the net, free-at-Community-frontier prices before customs clearance.

By Regulation (EC) No 643/94,6 the Council amended the abovementioned duties.
Combined measures in the form of a fixed amount per tonne of potash or the
difference between a set minimum price and the net, free-at-Community-frontier price
per tonne before customs clearance, whichever was higher, were imposed. This type of
measure was found to be warranted because circumvention of the original duties had
been taking place. It should also be mentioned that the review carried out in 1994
covered both dumping and injury, as well as Community interest.

By Regulation (EC) No 449/1998,7 the Council again amended the abovementioned
measures. This review was initiated following a request by the International Potash
Company (IPC), an exporter of Russian and Belarusian potash, who claimed, among
other issues, that the accession of Austria, Finland and Sweden had resulted in a
change in the circumstances on the basis of which the measures in force had been
established. The form of the combined measures was maintained but the level of the

OJ L 56, 6.3.1996, p.1. Regulation as last amended by Regulation (EC) No 905/1998 (OJ L 128,
30.4.1998, p. 18).
OJ L 308, 24.10.1992 p. 41.
OJ L 80, 24.3.1994 p. 1.
OJ L 58, 27.2.1998 p. 15.

4

measures was adapted in accordance with the findings of that investigation. It should
also be mentioned that the review concluded in 1998 was limited to the examination of
dumping and Community interest.

PRESENT INVESTIGATION

Following the publication of a notice of impending expiry of the anti-dumping
measures in force on imports of potash originating in the countries concerned,8 the
Commission received a request to review these measures pursuant to Article 11(2) of
Council Regulation (EC) No 384/96, hereinafter referred to as the “Basic Regulation”.

The request was lodged on 23 December 1998 by the European Association of Potash
Producers (hereinafter the “applicant”) on behalf of producers, whose collective output
of potash constitutes about 99% of the Community production of this product, i.e. a
major proportion of the total Community production pursuant to Articles 4(1) and 5(4)
of the Basic Regulation.

that

The request was based on the grounds that the expiry of the measures would result in
the continuation or recurrence of dumping and injury. Indeed, the applicant alleged
that potash from the countries concerned was still being sold at dumped prices for
inward processing, a relief regime not subject
to anti-dumping measures in the
Community. Likewise, the applicant claimed that, in view of the extent of the past
dumping and the fact
the relevant exporters were still selling the product
concerned at very low prices in countries neighbouring the Community, it was very
likely that dumping would recur if the anti-dumping measures were removed. This
argument was reinforced by the evidence presented that showed that domestic
consumption had fallen drastically in the countries concerned whilst production had
increased significantly, leaving the exporters with a surplus product that risked being
sold on the Community market at dumped prices. Finally, the applicant submitted that
the likely recurrence of dumping would lead to price erosion and inevitably cause
injury to a Community industry whose profit situation was still somewhat precarious.

In view of the specific form of the anti-dumping duties imposed on imports of
potassium chloride from the countries concerned - i.e. a combination of a minimum
price and a fixed duty, the Commission also decided, on its own initiative, to initiate
an interim review, pursuant to Article 11(3) of the Basic Regulation, limited to the
form of the measures.

Having determined, after consulting the Advisory Committee, that sufficient evidence
existed, the Commission initiated an expiry review and an interim review (limited to
the form of the duty) through the publication of a notice (hereinafter “Notice of
Initiation”)9 pursuant to Articles 11(2) and 11(3) of the Basic Regulation.

Period of investigation

The investigation on continuation or recurrence of dumping covered the period from
1 January to 31 December 1998 (hereinafter
the
"investigation period"). The examination of continuation or recurrence of injury
covered the period from 1 January 1994 up to the end of the IP (hereinafter referred to

referred to as the “IP” or

2.

(4)

(5)

(6)

(7)

(8)

2.1.

(9)

8

9

OJ C 296, 24.9.1998, p. 3.
OJ C 80, 23.3.1999, p. 9.

5

as the "period considered"). For the purposes of the examination of recurrence of
injury, forecasts for years 1999 and 2000 were also taken into consideration.

2.2.

(10)

Parties concerned by the investigation

The applicant Community producers, the exporters and producers in the exporting
countries and the importers/users as well as their representative associations known to
be concerned and the representatives of the exporting countries were officially advised
of the initiation of the review. Questionnaires were sent to all these parties and to those
who made themselves known within the time limit set in the notice of initiation. In
addition, the producers in Canada, which was chosen as the analogue country, were
contacted and received questionnaires. The parties directly concerned were also given
the opportunity to make their views known in writing and to request a hearing.

(11) All applicant Community producers replied to the questionnaire. Producers in Belarus
and Russia, namely, Production Amalgamation ‘Belaruskali‘
(Soligorsk, Minsk
region, Belarus), JSC ‘Silvinit‘ (Solikamsk, Perm region, Russia) and JSC ‘Uralkali‘
(Berezniki, Perm region, Russia) cooperated with the investigation via their common
exporter IPC (Moscow, Russia). Ferchimex (Antwerp, Belgium) and Belurs (Vienna,
Austria), related importers of IPC, replied as well. No cooperation was received from
any Ukrainian exporting producer.

(12)

Seven unrelated importers replied to the questionnaire and made their views known in
writing. The importers of potash are in most cases also users of the product. No replies
were obtained from the non-importing users of the product.

(13) All information deemed necessary to determine whether there was a likelihood of a
the continued
recurrence of dumping and injury and whether
continuation or
imposition of the measures was in the Community interest was sought and verified.
Investigations were carried out at the premises of the following companies:

a) Applicant Community producers:

–

–

–

–

Cleveland Potash Limited, Saltburn, United Kingdom,

Comercial de Potasas, S.A.,10 Madrid, Spain,

Kali und Salz GmbH, Kassel, Germany,

Société Commerciale des Potasses et de l’Azote S.A.11, Mulhouse,
France, hereinafter referred to as “SCPA”

b) Producers in the analogue country

–

–

–

Agrium Inc., Calgary

IMC Global Inc., Regina

Potash Corporation of Saskatchewan (PCS), Saskatoon

10

11

Sister company and exclusive trader of the production of two Spanish mines: Suria K, S.A. (until April
1997) and Potasas de Llobregat, S.A.
Sister company and exclusive trader of the production of “Mines de Potasse d’Alsace”.

6

c) Unrelated importers into the Community

–

Fertiberia S.A., Madrid, Spain (also a user of potash),

3.

PRODUCT CONCERNED AND LIKE PRODUCT

3.1.

Description of the product concerned

(14)

(15)

(16)

(17)

The product concerned is potassium chloride (potash, KCl) and is generally used as
agricultural fertiliser, directly, blended with other fertilisers or after transformation
into a complex fertiliser known as NPK (nitrogen, phosphorus, potassium). The
potassium content is variable and is expressed as a percentage of the weight of
potassium oxide (K2O) on the dry anhydrous product.

Potash is generally commercialised in either a standard/powder form (standard potash)
or in “other than standard” form that includes but is not limited to a granular form
(granular potash). The product is generally classified into three basic categories, based
on the K2O content, namely:

–

–

–

potassium content
CN code 3104 20 10,

not

exceeding

40% K2O -

falling

under

potassium content exceeding 40% K2O but less than or equal to 62% - falling
under CN code 3104 20 50,

potassium content over 62% K2O - falling under CN code 3104 20 90

the
Since the anti-dumping measures in force also consist of a variable duty,
Regulation subject to review specified different levels of anti-dumping duties for
standard potash, on the one hand, and the remaining forms of potash including
granular potash, on the other.

It should be recalled that in the last review investigation, it was found that imports of
certain special mixtures or blends with an unusually high content of potash, which do
not fall under the CN codes for potash indicated above, should be considered a product
concerned. This conclusion was reached as such mixtures and blends shared the same
basic physical and chemical characteristics and have the same uses as the basic
categories mentioned above. As the present investigation has not brought to light any
consideration indicating that the approach taken should not be continued, and in order
to ensure a consistent application of the anti-dumping measures, as well as to avoid
misclassification, it has been considered necessary, in this Regulation, to clarify the
minimum content of K2O of such mixtures and blends as being 35% or more, by
weight, of the dry anhydrous product and falling under the “other than standard” form
of potash.

3.2.

Like product

(18) As in the previous investigations,

it was established that, since there were no
differences in the physical and chemical properties of the different types and qualities
of potash, potash produced in Canada, which was chosen as analogue country (see
Chapter 4.2. below) and sold on the North American market, is a like product to that
exported to the Community from the countries concerned, in the sense of Article 1(4)

7

of the Basic Regulation. In addition, potash exported from the countries concerned and
potash produced by the Community producers were also like products.

(19)

IPC requested the exclusion of standard potash with a K2O content higher than 62%,
which, it was claimed, was only used in pharmaceutical applications, had different
prices and was delivered packed (as opposed to the bulk deliveries of potash used as a
fertilizer). However,
in question had the same basic physical
characteristics and basic chemical composition as the product concerned. The fact that
potassium chloride is generally used as a fertiliser does not exclude products destined
for industrial or pharmaceutical use or products packed in a different way, from the
scope of the like product definition. It was therefore decided that this type of potash is
one single product with the other types of potash.

the product

4.

LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF DUMPING

4.1.

(20)

(21)

Preliminary remarks

In accordance with Article 11(2) of the Basic Regulation, the purpose of this type of
review is to determine whether or not the expiry of the measures would lead to a
continuation or recurrence of injurious dumping

In this respect, the volumes exported to the Community during the IP were examined.
The volume of imports from Russia represented 4.2% of consumption but was largely
imported under the IPR regime. In line with the consistent practice of the institutions
these imports should be taken into account for the purposes of establishing whether
dumping is taking place and thus the Russian import volume is considered sufficient to
provide a representative picture of whether dumping is taking place at present and
whether any such dumping will continue should measures be removed. The volume of
imports from Belarus could also be considered representative as they reached 1.2% of
Community consumption. In these circumstances, it was not necessary to examine
whether there was a likelihood of recurrence of dumping due to imports originating in
these two countries should measures be removed. As regards Ukraine there were no
exports during the IP and therefore the investigation centred on whether there was a
likelihood of recurrence of dumping should measures be removed.

4.2.

Analogue country

(22)

In order to establish whether dumping would continue or recur, normal value had to be
based on information obtained in an appropriate market economy third country in
accordance with Article 2(7) of the Basic Regulation. In the Notice of Initiation,
Canada was suggested as an appropriate analogue country.

(23) No party objected to the use of Canada as an analogue country. Both IPC and the
European Fertiliser Import Association (EFIA) agreed to the choice of Canada as
analogue country provided that the mines located in the province of Saskatchewan
rather than New Brunswick were used for the determination of normal value. IPC also
wanted the Patience Lake mine in Saskatchewan excluded from the normal value
determination.

(24) Both parties argued that the mines for which exclusion was requested differ in terms of
size, geological deposit conditions and mining and production methods from those
prevailing in Belarus, Russia and Ukraine, which are very similar to the Saskatchewan

8

mines. Furthermore, it was argued that the New Brunswick mine is situated much
closer to its customers than the ports of loading used for potash exports for Belarus
and Russia, rendering transport costs, in particular, incomparable.

(25)

The investigation confirmed that Canada should be used as an analogue country
because:

a)

b)

c)

Canada was the main producer and exporter of potash world-wide, ahead of
Belarus, Russia and Ukraine,

the North American domestic market for the product concerned was subject to
normal conditions of competition,

the manufacturing process and access to raw materials were, to a large extent,
similar in Canada and in the countries concerned,

d)

Canada had been used in the previous investigations.

(26) With regard to the arguments made by IPC and EFIA concerning the exclusion of

certain mines the following points can be made:

a)

b)

As potash is effectively a commodity and as the normal value determination is
based on prices from virtually all of the mines operating on the open and
competitive North American market, any difference in mining conditions or
any of the other factors cited, in one particular mine or region, does not have
any material affect on the normal value.

The point raised by IPC concerning the differences in the distances between the
New Brunswick mine and its domestic markets in Canada and the Belarusian
and Russian mines and their export ports is not relevant as normal value and
export price are compared, in accordance with Article 2(10) of the Basic
Regulation, at the same level, i.e. ex-mine. Moreover, the New Brunswick
mine in question represents only a small proportion of the sales taken into
account for the determination of normal value so that an effect of distances, if
any, would be diluted by the volume of the total sales taken into consideration.
(see recital 36)

(27) Consequently, calculations were based on all complete questionnaire replies received
from all three Canadian companies. These data, relating to mines located in New
Brunswick and Saskatchewan, were fully verified at the companies’ premises in
Canada.

4.3.

Russia and Belarus

(28)

In examining whether there is a likelihood of continuation of dumping from Russia
and Belarus if measures were removed it is necessary to verify whether dumping
existed during the IP and whether any such dumping is likely to continue.

4.3.1. Normal value

(29) Normal value was calculated on the basis of the data of all the cooperating Canadian
companies. In this respect, the total sales of potash of the cooperating companies on
the Canadian market were considered to be representative.

9

(30)

It was finally examined whether the relevant sales could be considered as having been
made in the ordinary course of trade by looking at the proportion of profitable sales of
the grade in question.

(31) As the volume of standard potash sold at a net sales price equal to or above the cost of
production (profitable sales) represented more than 80% of the total sales volume of
that grade and since the weighted average price was higher than the weighted average
cost of production, normal value was based on the actual price on the North American
market for Russia, calculated as a weighted average of the prices of all sales of
standard potash made by each company during the investigation period, whether
profitable or not.

4.3.2.

Export price

(32)

(33)

(34)

IPC was the only exporter that cooperated with the investigation. Export volumes
reported by IPC do virtually correspond to the Eurostat figures, complemented as
explained under 6.2.1 below. Therefore, for both Belarus and Russia, export prices
were assessed on the basis of the information provided by IPC.

IPC sold to the Community market partly via two related importers: Ferchimex, based
in Belgium and Belarus, based in Austria, and partly directly to independent
customers.

In all cases where exports of potash were made to independent customers in the
Community, the export price was established in accordance with Article 2(8) of the
Basic Regulation, i.e. on the basis of export prices actually paid or payable. In cases
where export sales were made to a related party, the export price was constructed
pursuant to Article 2(9) of the Basic Regulation, i.e. on the basis of the price at which
the imported products were first resold to an independent buyer. In such cases,
adjustments were made for all costs incurred between importation and resale and for
profits accruing, in order to establish a reliable export price at the Community frontier
level. The profit margin of 5% applied in the previous investigation was, in the
absence of any other
information, considered reasonable given the functions
performed by the related importers.

(35) During the investigation period, virtually all of the potash exported to the EU by IPC
entered the Community market in the framework of the inward processing relief (IPR)
regime, where it competed with potash produced by the Community industry.

4.3.3. Comparison

(36) As potash is a bulk product with transport costs representing a large proportion of the
selling price, and in view of the significant distance between the Belarusian and
Russian mines and the nearest port or frontier, it was decided that the comparison
should be carried out on an ex-mine basis, as in the previous investigation.

(37)

For the purpose of ensuring a fair comparison between the normal value and the export
price, due allowance, in the form of adjustments, was made for differences affecting
price comparability, in accordance with Article 2(10) of the Basic Regulation.

10

(i) Adjustments to normal value

(38)

IPC made a number of comments regarding differences in quality and mining
conditions between Belarus and Russia and the EU and Canada. However, no claims
for adjustment were made and none of the alleged differences was quantified.
Furthermore, most of the elements mentioned were already treated in the previous
investigation, where it was concluded that any adjustment for natural comparative
advantages would have been to the disadvantage of the Belarusian and Russian mines.
As the essential circumstances have not materially changed since the previous
investigation, and for the abovementioned reasons, there was no need for adjustments
to normal value for physical differences or natural comparative advantages. An
adjustment for differences in credit costs has been granted where warranted.

(ii) Adjustments to the export price

(39) An adjustment to the export price was made for transport costs. The methodology used
to determine the amount of the adjustment was the same as in the previous
investigation, i.e. for transport within Belarus and Russia data relating to transport cost
in Canada were taken, while the transport cost from the border of the producing
country to the Community border, where applicable, were determined on the basis of
the costs reported by IPC.

(40)

the amounts for

IPC argued that
transport costs reported in its reply to the
questionnaire were wrongly deducted. There was some contradiction between the
delivery terms and the transport costs as reported by IPC. However, in the absence of
any evidence provided by IPC, it was impossible to find out whether the delivery
terms or the transport expenses were correctly reported. In any event, even if the most
favourable approach for IPC was taken, this would not have altered the findings
concerning the existence of dumping. Furthermore, it should be recalled that in an
expiry review it is not necessary to calculate a precise dumping margin.

(41) An adjustment was also made for credit costs on the basis of the information reported

by IPC.

4.3.4. Dumping margin

(42) A dumping margin was determined respectively for Belarus, Russia and Ukraine. The
weighted average normal value was compared to the weighted average export price to
the Community.

(i) Belarus

(43)

there was still
Expressed as a percentage of the price ‘CIF-Community-border’,
significant dumping with regard to imports originating from Belarus, although at a
somewhat lower level than found in the previous investigation.

(ii) Russia

(44)

Expressed as a percentage of the price ‘CIF-Community-border’, the dumping margin
found is significantly higher than the one found in the previous investigation.

11

4.3.5. Conclusion

(45) With regard to imports from Belarus and Russia, it can therefore be concluded that
there has been a continuation of significant dumping. No reasons have been found as
to why dumping would stop should the anti-dumping measures be repealed

4.4.

Ukraine

(46) As in the previous investigation, no cooperation was received from Ukraine. Eurostat
figures did not show any imports from this country during the investigation period,
although there had been imports in preceding years. On this basis, it was necessary to
examine whether dumping would recur should measures be repealed. No cooperation
was received from any Ukrainian producer. Therefore, and in accordance with
Article 18 of the Basic Regulation, findings had to be based on facts available. In this
context, it should be noted that evidence suggests that potash mines are operated in
Ukraine. This evidence suggests that they have a significantly lower capacity than the
ones in Russia and Belarus. However, when comparing the capacity of these Ukrainian
mines with Community consumption the potential for exports is still important. As to
the level of prices of possible Ukrainian imports, it should be noted that there is no
shortage of supply of potash on the Community market. Thus, if a new player wishes
to enter the Community market it can only do so at price levels undercutting those
charged by the operators currently active on this market, which means that they would
be dumped. It should also be noted that in the past imports from the Ukraine have been
at prices similar to those then charged by Russia and Belarus.

4.4.1. Conclusion

(47)

5.

(48)

6.

(49)

In view of the foregoing, and in the absence of any other evidence to the contrary, e.g.
information on capacity utilisation, volumes and prices of exports to other third
countries, it was concluded that there is a likelihood of a recurrence of dumped
imports originating in the Ukraine should measures be repealed.

DEFINITION OF THE COMMUNITY INDUSTRY

The investigation confirmed that the applicant Community producers represented 99%
of the Community production of potash and therefore constitute the Community
industry within the meaning of Article 4(1) and Article 5(4) of the Basic Regulation.

ANALYSIS OF THE SITUATION OF THE COMMUNITY INDUSTRY AND OF THE
COMMUNITY POTASH MARKET

Firstly, it should be noted that the data relating to the profitability and investments
during the period considered were calculated on the basis of the data of three
Community producers: Cleveland Potash Limited, Comercial de Potasas, S.A. and
Kali und Salz GmbH. The fourth Community producer, SCPA, was partly excluded
due to the exceptional condition of its mining subsidiary, “Mines de Potasse
d’Alsace”. The mine will be closed in a few years due to exhaustion of potash
reserves, and it is no longer investing. Also the accounting system of the mine has
been simplified in such a way that it is no longer possible to calculate either the
production cost or the profitability of potash in a manner allowing for the aggregation
of the data with other Community producers. However, on the basis of the information
available, had SCPA been taken into account the profitability of the Community

12

industry would have been notably lower and the investments would have shown an
even more drastic downward trend.

(50)

Secondly, it should be noted that during the most recent years imports from the
countries concerned were almost exclusively under the IPR regime. In line with the
consistent practice of the Community institutions, it was considered that these imports
compete with the product concerned of the Community industry as they are processed
in the Community by fertiliser manufacturers who buy some of the raw materials used
in the production of complex fertilisers, which are also destined for export, from the
Community industry. These imports were therefore taken into account in establishing
Community consumption, market shares of the countries concerned and in the analysis
of prices of potash sold by the exporters concerned.

6.1.

Consumption on the Community market

(51)

The total consumption of potash was calculated on the basis of the combined totals of:

a)

b)

c)

d)

the sales volume of own-produced potash of the Community industry on the
Community market,

the sales volume of non-applicant Community producers on the Community
market,

imports into the Community of potash from the countries concerned,

imports into the Community of potash from all other third countries.

(52) On this basis, consumption decreased from around 7 460 000 tonnes in 1994 to around
7 290 000 tonnes in the IP; i.e., a decrease of approximately 2.3%. However, during
the period considered the level of consumption fluctuated as shown in the table below.

Community
consumption

1994

1995

1996

1997

IP

In '000 tonnes

7 460

7 340

7 090

7 600

7 290

Sources: Questionnaire replies of the Community industry, EUROSTAT, Statistical
Offices in Finland, Denmark and Belgium.

6.2.

Imports from the countries concerned

6.2.1.

Import volume

(53)

The volume of imports of potash originating in Russia decreased from 397 000 tonnes
in 1994 to 305 000 tonnes during the IP, equivalent to a decrease of about 23%. The
volume of imports originating in Belarus decreased from 137 000 tonnes in 1994 to
91 000 tonnes in the IP, equivalent to a decrease of about 34%. Ukraine exported only
during the years 1994, 1995 and 1997, with a sharply declining trend. The overall
imports from the countries concerned decreased by around 32% during the period
considered. The decrease was, however, not constant: total imports from the countries
concerned decreased until 1996, reaching a low of 132 000 tonnes, after which they
started soaring again, increasing by threefold up to the IP.

13

(54)

importer did not

The investigation has shown that the volume of imports as reported by IPC is higher
than the data contained in EUROSTAT, as several Member States that have only one
major
confidentiality reasons.
Complementary information from those Member States was requested and received.
On this basis it was found that the imports reported by IPC are not significantly
different from the complete EUROSTAT data.

complete data

report

for

Imports
‘000 tonnes

Russia total

Belarus total

Ukraine

Total

in

1994

1995

1996

1997

IP

397

137

49

583

175

113

15

303

122

190

305

11

0

51

1

91

0

132

243

396

Source: EUROSTAT and National Statistical Offices from Finland, Denmark and Belgium

The tonnage imported under the IPR regime and their percentage of total Community imports
of potash for each country were:

in

1994

1995

1996

1997

1998

Imports
‘000 tonnes

Russia
% of imports

Belarus
% of imports

Ukraine
% of imports

61
15

34
25

35
72

Totals
% of imports

131
22

159
91

52
46

15
100

226
75

115
94

11
100

0
N/A

126
95

178
93

51
100

1
100

230
95

284
93

91
100

0
N/A

375 -
95

(55)

The above tables illustrate developments during the imposition of anti-dumping
measures; whereas the share of imports under the IPR regime was only minor in 1994,
during the IP practically all the imports occurred under the said regime. Imports under
the IPR regime are controlled by the Member States’ customs authorities as provided
for in Council Regulation (EEC) No 2913/9212 establishing the Community Customs
Code. The present investigation has not brought to light any facts that would suggest
that the regime could have been used to circumvent the measures. It should also be
noted that goods imported under this regime are not liable to the anti-dumping duties
under review; a factor explaining the increase occuring towards the end of the period
considered.

12

OJ L 302, 19.10.1992 p. 1.

14

6.2.2. Market share

(56)

The market share of the imports from the countries concerned on the Community
market decreased by 2.4 percentage points during the period considered. However, the
decrease has not been constant. The market share decreased from its highest level of
7.8% in 1994 to reach its lowest level in 1996, i.e. 1.9%. After 1996 there was a
constant increase, up to 5.4% in the IP.

Market share of the
imports concerned in %

1994

1995

1996

1997

IP

Belarus

Russia

Ukraine

Total

1.8

5.3

0.7

7.8

1.5

2.4

0.2

4.1

0.2

1.7

0

1.9

0.7

2.5

0

3.2

1.2

4.2

0

5.4

Source: EUROSTAT and National Statistical Offices from Finland, Denmark and Belgium

6.2.3.

Price evolution and price behaviour

6.2.3.1. Price evolution of the imports concerned

(57) As to the evolution of prices of the imports subject to investigation over the period
trends were established using EUROSTAT figures as determined in

considered,
recital 54 above.

The CIF average sales prices from the countries concerned on the Community market
developed in detail as follows:

Average CIF prices of
potash with
40%<K2O£ 62% in
ECU/tonne

Belarus

Russia

Ukraine

Average

1994

1995

1996

1997

IP

67.5

83.1

83.6

79.2

86.5

71.7

89.9

76.8

88.3

74.4

-

75.7

94.1

79.4

88.0

83.3

100.1

85.8

-

90.8

Source: EUROSTAT and National Statistical Offices from Finland, Denmark and Belgium

15

Average CIF prices of
potash with K2O >62% in
ECU/tonne

1994

1995

1996

1997

IP

Russia

-

89.9

93.8

96.7

101.5

Source: EUROSTAT and National Statistical Offices from Finland, Denmark and Belgium

(58)

The average increase in the price of potash with 40%< K2O £ 62% from the countries
concerned amounts to 14.6% during the period considered. Whereas the Belarusian
prices have increased significantly, overtaking the price of potash of Russian origin,
the Russian prices have remained relatively low. No potash originating in Ukraine was
imported in the IP.

(59)

Potash with K2O >62% was only imported from Russia. The average price increased
by 12.9% from 89.9 ECU/tonne in 1995 to 101.5 ECU/tonne in the IP.

6.2.3.2. Price Behaviour

(60) Anti-dumping duties have been in force for three years. During this time very few
imports originating in the countries concerned were made for release into free
circulation. Imports have mostly been limited to the IPR regime. IPC representatives
claimed that
lower prices than those of the
Community industry due to the very nature of the IPR regime. This argument was
studied but no clear evidence was found to support it.

they had to offer their product at

(61)

In the examination of price behaviour, prices declared by the exporters for each sale to
independent customers and for each resale through their related importer were
averaged during the IP for the two main grades of potash according to their origin:
Belarus and Russia. These prices were net invoice prices, duty unpaid and equivalent
to delivered prices because of the proximity of the clients to the ports of delivery.
They were compared to the weighted averages of all Community producers’ invoiced
prices at Community level for the said two grades of potash.

(62)

It was thus established that IPC’s prices were lower than those of the Community
industry by more than 10% on average. More specifically, potash prices of Russian
origin were lower by about 20% and of Belarusian origin by 5%.

6.3.

Economic situation of the Community industry

(63)

It should be noted that forecasts given by the Community industry for 1999 and 2000
were based on the assumption that the measures will be maintained.

6.3.1.

Production

(64)

The production of potash in the Community has declined throughout the period
considered with the exception of 1996 when a minor increase occurred. Production
decreased from around 7 779 000 tonnes to around 7 026 000 tonnes for the following
reasons: 1) the gradual exhaustion of ore in the French mine; 2) the closing down of
some unprofitable mines in Germany and Spain; and 3) geological anomalies in the
mine of one Community producer in 1997 and during the IP. For 1999 and 2000, the

16

Community industry forecast an increase in production reaching the level of 1997 in
2000.

Figures for Community production of potash were as follows:

Production

1994

1995

1996

1997

IP

in ‘000 tonnes

7 779

7 428

7 541

7 368

7 026

Source: Questionnaire replies of the Community industry

6.3.2.

Production capacity

(65)

The production capacity of
the Community industry decreased from around
10 000 000 tonnes in 1994 to around 9 300 000 tonnes in the IP. Only in 1996 was
there a minor increase in production capacity compared to the previous year. In 1999
and 2000 the Community industry is expected to reduce its capacity even further to a
level of around 8 500 000 tonnes in 2000 due to progressive exhaustion of ore in the
French mine.

Figures for total production capacity of potash were as follows:

Capacity

1994

1995

1996

1997

IP

in ‘000 tonnes

9 996

9 414

9 472

9 403

9 293

Source: Questionnaire replies of the Community industry

6.3.3. Capacity utilisation

(66)

The Community industry’s capacity utilisation increased from 1994 to 1996 but began
to decrease in 1997, primarily because the French producer was no longer able to
produce potash up to its maximum ore processing machine capacity as a result of
decreasing ore resources. However, for 1999 and 2000 the Community industry
expects to improve its capacity utilisation rate up to a level of 86% in year 2000 along
with the write-off of capacity in France.

In particular, The Community industry’s capacity utilisation for potash developed as
follows:

Capacity utilisation 1994 1995

1996

1997

IP

In %

77.8 78.9

79.6

78.4

75.6

Source: Questionnaire replies of the Community industry

6.3.4.

Sales volume

The Community industry’s sales volume of own-produced potash to unrelated
customers decreased from around 5 530 000 tonnes in 1994 to around 5 260 000
tonnes during the IP. The sales volume increased considerably between 1996 and
1997, but decreased again during the IP. However, by the end of 2000 the

17

Community is expected to increase its sales volume to 1997 level. In particular, the
Community industry’s sales volume on the Community market developed as follows:

Sales volume of the
Community
industry

1994

1995

1996

1997

IP

In ‘000 tonnes

5 530

5 452

5 415

5 750

5 261

Source: Questionnaire replies of the Community industry

6.3.5. Market share

(67)

The Community industry’s market share decreased from 74.1% in 1994 to 72.2% in
the IP: a drop of about 2 percentage points. During this period its market share
increased until 1996, after which it began to decrease to reach the level of the IP.

Specifically, the Community industry’s market share developed as follows:

Community
industry’s
market share

1994

1995

1996

1997

IP

In %

74.1

74.3

76.4

75.6

72.2

Source: Questionnaire replies of the Community industry, EUROSTAT and Statistical Offices
in Finland, Denmark and Belgium.

6.3.6.

Price development

(68)

The investigation showed that the Community producers’ average selling price of the
most sold grade of standard potash (40%<K2O£ 62%) rose from 90.1 ECU/tonne in
1994 to 104.2 ECU/tonne in the IP. This amounts to a rise of 15.6%. However, the
prices of potash with K2O>62% dropped from 137.7 ECU/tonne in 1994 to
122.0 ECU/tonne in the IP. This amounts to a decrease of 11.4%. The decrease in
price coincides with significant
increase in sales volumes for the grade by the
Community industry during the period considered. Larger orders brought economies
of scale and therefore customers benefited from lower average prices.

(69) While there was a general upward trend in selling prices of standard potash with
40%<K2O£ 62% between 1994 and the IP, prices temporarily dropped in 1997 and
then increased by 7.9% in the IP. As for 1999 and 2000 the Community industry
believes the positive trend in sales prices for potash with 40%<K2O£ 62% will
continue and that there will be a small decrease in price for potash with K2O>62%.

18

The Community industry’s average sales price for potash on the Community market
developed as follows:

Average sales price

1994

1995

1996

1997

IP

In ECU per tonne

Standard potash with
40%< K2O £ 62%

Standard potash with
K2O >62%

90.1

96.8

101.6

96.6

104.2

137.7

138.7

134.8

123.2

122.0

Source: Questionnaire replies of the Community industry

6.3.7.

Profitability

(70)

(71)

For the purpose of the profitability analysis of the Community industry and following
an established practice, the revenues from sales of certain by-products of potash
production were also taken into account. It should also be recalled that the French
producer, SCPA, was excluded from the Community industry’s profitability
calculation for the reasons set out in recital 49.

The Community industry’s profitability , expressed as a percentage of net sales,
increased during the period considered from a weighted average loss of (1.0%) in 1994
to a profit of 3.3% in the IP. It should be noted that profitability has improved steadily
with the exception of 1997 when the profits declined to close to zero. During 1999 and
2000 the Community industry’s profit level is expected to continue to fall short of a
profit, which is considered normal for a risk-intensive mining business such as potash.
The Community industry’s profitability on the Community market
for potash
developed as follows:

Profit rate

1994

1995

1996

1997

IP

In %

-1.0

-0.5

1.5

0.1

3.3

Source: Questionnaire replies of the Community industry

6.3.8.

Employment

(72)

Employment in the Community industry declined from 8 460 employees in 1994 to 6
936 employees in the IP, a drop of (18.0%). The number of employees is forecast to
drop even more during 1999 and 2000 due to the approaching closure of the French
mine. The Community industry’s employment situation developed as follows:

Personnel employed in the
production of potash

1994

1995

1996

1997

IP

Employees

8 460 7 919 7 296 7 213 6 936

Source: Questionnaire replies of the Community industry

19

6.3.9.

Stocks

(73)

The closing stocks of the Community producers for potash decreased from 560 000
tonnes in 1994 to 469 000 tonnes in the IP, a decrease of about 16%. Closing stocks
increased continuously from 1994 to 1996, but dropped significantly in 1997 to
moderately increase again during the IP.

The closing stocks of the Community industry of potash developed as follows:

Closing
stocks

‘000

In
tonnes

1994

1995

1996

1997

IP

560

614

903

415

469

Source: Questionnaire replies of the Community industry

6.3.10.

Investments

(74)

The Community industry’s total investments decreased from around ECU 87.7 million
in 1994 to around ECU 52.9 million in the IP, a decrease of about 40%. Between 1994
and 1995 the investments increased due to a modernisation process of the mines of one
major Community producer. In 1999 and 2000 the Community industry plans to start
investing more again and the forecast level of investments in 2000 would exceed the
1996 figure. It should also be recalled that the French producer, SCPA, was excluded
from the Community industry’s assessment of investments for the reasons set out in
recital 49. The Community industry’s investments developed as follows :

Investments

1994

1995

1996

1997

IP

‘000 ECU

87 722

113 809

84 201

63 908

52 882

Source: Questionnaire replies of the Community industry

6.4.

(75)

Import volumes and import prices from other third countries

The import volume of potash from other third countries increased during the period
considered from about 1 348 000 tonnes in 1994 to about 1 566 000 tonnes in the IP.
This is equivalent to an increase of about 16.2%. The major part of the increase is
attributable to imports from Israel.

Imports from other
third countries

1994

1995

1996

1997

IP

‘000 tonnes

1 348

1 552

1 495

1 555

1 566

Source: EUROSTAT

(76)

The market share of imports from other third countries grew from 17.9% of 1994 to
21.0% in 1995 and remained relatively stable ever since ending up with 21.4% at the
end of the IP.

20

(77)

The average sales price for imports from other third countries has been included to
show the price trend during the period considered. According to EUROSTAT, the
average sales price for these imports increased steadily from 96.5 ECU/tonne in 1994
to 120.5 ECU/tonne in 1997. The price then dropped to 112.3 ECU/tonne in the IP.
This corresponds to an increase of 16.4% in the period considered.

In detail, the development was as follows:

Average import
prices from
other third countries

1994

1995

1996

1997

IP

ECU/tonne

96.5

101.8

104.3

120.5

112.3

Source: EUROSTAT

6.5.

Export activity of the Community industry

(78)

In view of the fact that the production set out in Chapter 6.3.1. is destined for sales
both inside and outside the Community, the Community industry’s exports of potash
to third countries was also analysed. This analysis showed that exports amounted to
2 314 000 tonnes in 1994 compared to 1 658 000 tonnes in the IP. These exports had a
downward trend except for 1997 when exports increased compared to previous year.
The overall decrease in exports amounts to 28.3% in the period considered. In 1999
and 2000 the Community industry expects to export somewhat less than in the IP. This
downward trend is likely to be explained by the fact that, as explained later in Chapter
7.3, the countries concerned have significantly increased their marketing efforts in
other third markets than the Community after the anti-dumping measures concerning
imports of potash originating in the countries concerned came into force in the
Community. Faced with fierce price competition, the Community industry has not
been able to deliver the same quantities of potash in the third country markets as
before.

In detail, the development during the period considered was as follows:

Export sales volumes
of the Community
industry

1994

1995

1996

1997

IP

‘000 tonnes

2 314

1 815

1 671

1 947

1 658

Source: Questionnaire replies of the Community industry

6.6.

Conclusion

(79)

The evolution of various economic indicators of the Community industry during the
period considered was mixed. After the imposition of combined measures (fixed duty
and a minimum price) in 1994, the situation of the Community industry has improved.
Economic factors such as average sales prices per tonne for the most sold grade,
volume of stocks and profitability showed a positive development.

21

(80)

Indeed, average sales prices for standard grade potash with 40%< K2O £ 62% rose by
15.6% during the period considered. Secondly, the volume of stocks has decreased
since 1996: an indication of improving demand on the market. Thirdly, after two years
of losses, the Community industry’s sales have been profitable again since 1996. It is
clear that this is due to increased sales prices, which were made possible by the
introduction of more effective anti-dumping measures in 1994.

(81) Nevertheless, the analysis also shows that these positive developments do not cover all
indicators and that, in particular from 1996 onwards, there has been a downward trend.
Specifically, production volume, capacity, capacity utilisation, market share, sales
volume, employment and investments did not develop favourably.

(82)

The Community industry's sales volume decreased by 4.9% during the period
considered.
Its production volume and capacity declined by 9.7% and 7.0%
respectively, leading to a decrease of 2.2 percentage points in its capacity utilisation.
Furthermore, the Community industry’s investments plummeted by 39.7% at the same
time as it had to reduce its workforce by 18.0%.

(83) As mentioned earlier, the Community consumption of potash decreased by about
2.3%, reaching its lowest level in 1996. The Community industry lost 1.9% of the
Community market; the countries concerned lost 2.4%, while other third countries,
notably Israel, gained 3.4%. Since 1996, however, the Community industry has lost
more than 4% of it; the countries concerned gained 3.5% while for the other third
countries the share remained practically unchanged. It can be concluded, therefore,
that imports from other third countries have had no significant impact on the economic
situation of the Community industry between 1996 and the end of the IP.

(84)

(85)

The average prices of the Community industry and of the countries concerned
increased in a similar manner (except for standard potash with K2O >62%) as shown
in recitals 57 and 69. The same applies for other third countries. However, prices from
the countries concerned continued to be the lowest, especially for potash of Russian
origin, influencing negatively sales volumes, market share and profitability of the
Community industry, in spite of the restricted imports originating in the said three
countries.

Finally, the impact of declining export sales was considered. Export sales, which
represented 24% of the total sales of the Community industry during the IP, had
decreased by 28.3% during the period considered because of fierce competition on the
third country markets. Although this development may explain part of the negative
development of the production of the Community industry in particular, it is not
sufficient to explain this negative trend overall.

the investigation established that, although the situation of the
In conclusion,
Community industry has somewhat
improved, several economic factors did not
develop so favourably and that the Community industry continues to be vulnerable to
a possible recurrence of injurious dumping if the measures were allowed to lapse.

22

7.

LIKELIHOOD OF RECURRENCE OF INJURY

7.1.

Domestic markets in the countries concerned

(86)

The countries concerned possess huge raw material reserves of potash. Yet domestic
consumption of potash in Belarus and Russia collapsed in the first half of the 90s and
remained at a low level during the period considered. Domestic sales in these two
countries increased by about 6% in the IP compared to 1994; they still represented less
than a quarter of the corresponding potash production. There is no reason to believe
that demand on the domestic market would have developed differently in Ukraine.

7.2.

Exports under the IPR regime

(87) An analysis of the sales prices for imports under the IPR regime was made in order to
assess at which prices imports could be made in case anti-dumping measures were
allowed to lapse. As can be seen in recital 62, IPC’s prices in the Community, quoted
almost exclusively under the IPR regime, undercut the Community industry’s sales
prices by significantly more than 10% on average.

7.3.

Exports to third countries by the countries concerned

(88)

(89)

The development of exports of the countries concerned to the Community and of their
Community market share is described in Chapter 6.2. above.

The development of the export volumes of Belarus and Russia to major markets other
than the Community was also analysed on the basis of the questionnaire reply and
subsequent submission of IPC. Ukrainian production is not sold through IPC and no
information on Ukrainian export sales to third countries was made available as the
Ukrainian exporting producers did not cooperate in the investigation. During the IP the
main export market of Belarus and Russia was China, where imports increased by
around 87% during the period considered. The second largest market was Brazil,
which in the IP imported about 34 times more potash from Belarus and Russia than in
1994. The USA and Norway were the third and fourth biggest markets with impressive
increases in import volumes, as can be seen from the table below. Japan and other
smaller markets in total somewhat decreased their imports from the two countries
during the period considered.

(90) Norway, which has a significant user interest but no producers of potash, imported
hardly any quantities from Belarus and Russia in 1994. Since the effective, combined
anti-dumping measures against potash from the countries concerned were imposed by
the Community, the exports of Belarus and Russia have been redirected into Norway
to such an extent that the market share of the countries concerned in Norway reached
71.3%13 in the IP and the sales volumes of Belarus and Russia into this country
exceeded total sales into the Community as early as 199514.

(91)

The table below, indexed for confidentiality reasons, shows in detail the development
of the export sales of Belarus and Russia to markets other than the Community during
the period considered.

13

14

Source: International Fertiliser Industry Association.
Source: IPC questionnaire response.

23

Exports of the countries
to markets
concerned
other
the
Community

than

China (Index)

Brazil "

USA "

Norway "

Japan "

Others "

Total

"

1994

1995

1996

1997

IP

100

100

100

100

100

100

100

167

414

104

127

183

187

2 535

4 062

3 438

103

157

157

3 833

5 750

5 383

4 933

94

74

78

74

79

90

84

96

130

137

188

186

Source: IPC questionnaire reply

(92)

In order to be able to assess the importance of these exports it should be noted that the
exports of the countries concerned to the Community during the IP roughly correspond
to their exports to Norway. Furthermore, the total exports of the countries concerned
to third country markets other than the Community roughly correspond to the
Community industry’s total sales on the Community market.

(93) A price comparison for all types of potash on a delivered basis shows that sales prices
to Norway, Brazil and Japan during the IP were at a higher level than prices to the
Community. The price level in China was lower in previous years but gained the level
of Community prices during the IP. Export prices to the USA have remained
systematically lower than prices to the Community during the period considered.

7.4.

(94)

Production, capacity, capacity utilisation, stocks and investments

Information was received concerning the above indicators from the two cooperating
companies in Russia and from one in Belarus. As Ukrainian companies did not
cooperate no information was available except for capacity (277 000 tonnes per
Industry
annum) published in a recent
Association.

report by the International Fertilizer

(95) As can be seen from the table below production capacity in Belarus and Russia
remained steady during the period considered, totalling 19 844 000 tonnes of potash,
which is about 33% of world capacity and almost
three times the volume of
Community consumption.

24

Production
(‘000 tonnes )

Belarus

Russia

Total

capacity

1994

1995

1996

1997

IP

9 077

9 077

9 077

9 077

9 077

10 767 10 767 10 767 10 767 10 767

19 844 19 844 19 844 19 844 19 844

Source: International Fertilizer Industry Association

(96) Belarus and Russia have managed to increase their production by 39% during the
period considered. As the table below (indexed for confidentiality reasons) shows
production volumes have increased relatively steadily, with only one small downward
correction in 1996.

Actual production

1994

1995

1996

1997

IP

Belarus (Index)

Russia"

Total"

100

100

100

111

113

112

108

106

107

129

137

133

138

140

139

Source: questionnaire reply of IPC

(97) Along with the increasing production, the capacity utilisation of the producers in
Belarus and Russia has improved but remains still at an exceptionally low level
leaving a considerable amount of idle capacity. The table below (indexed for
confidentiality reasons) demonstrates that the capacity utilisation rate of the producers
improved by 38% during the period considered.

Capacity utilisation
(%)

Belarus (Index)

Russia"

Total"

1994

1995

1996

1997

IP

100

100

100

111

116

112

109

108

107

130

139

133

137

142

138

Source: questionnaire reply of IPC

(98) No clear trend was established for stocks. In general the level of stocks varied
significantly during the period considered. Stocks of the three producers were at a
relatively low level at the end of the IP.

(99)

Investments by Belarus and Russia in their potash mines and factories increased by
around 172% during the period considered. The growth trend was only interrupted
the following year
once in 1996 when the level of investments dropped, but
investments again reached a level 3.5 times higher than in 1996. Since capacity has not

25

been increased, it is probable that the investment was used to modernise the existing
production facilities.

7.5.

Conclusion on the likelihood of the recurrence of injurious dumping

(100) The information available has shown that, although Belarus and Russia have managed
to redirect part of their sales from the Community market to other markets such as
China and Brazil and to obtain relatively favourable prices on some of these markets,
the production capacity and capacity utilisation rates of the producers in Belarus and
Russia continue to be exceptionally low.

(101) Domestic consumption is significantly reduced and a change in this situation is not
expected in the foreseeable future. Moreover, possible earnings on the Community
market are much more attractive than those which can be achieved on the domestic
market. These elements indicate that Belarusian and Russian export prices could be
much lower than they were in the IP and still be attractive to the exporters concerned.

(102) The alternative markets in far away countries are bound to be less profitable than the
Community market, which, being close, is cost-efficient to reach by boat or by rail. In
addition, customers in the Community traditionally pay for the goods in hard currency
and with shorter payment terms. It should be noted that although the price level on
some markets, like Brazil, is higher than in the Community, freight costs from the
countries concerned to these destinations are much higher than to the Community.
Sales to the Community market are even more attractive when compared to sales to
the USA and China, which, on a delivered basis, yield lower prices than those to the
Community. Norway serves as an example of a West-European country situated in the
proximity of the countries concerned and having no duties on imported potash.
Norway is now almost completely dominated by imports from the countries
concerned. These imports occur at a somewhat higher price than imports under the
IPR regime into the Community but still clearly below those of the Community
producers.

(103) Therefore,

the huge raw material

the
reserves,
disadvantageous domestic situation in terms of consumption, the higher freight cost to
alternative markets, the need for hard currency and the current market situation in
Norway demonstrate that
the export potential of the countries concerned to the
Community at low prices is very high and that, in the absence of measures, there is the
likelihood of the recurrence of injurious dumping.

the low capacity utilisation,

(104) As far as Ukraine is concerned no information was made available due to that
country’s non-cooperation. In accordance with Article 18 of the Basic Regulation the
facts available had to be used in these circumstances. In this respect it was found that
the Ukrainian potash industry has close economic links to the Belarusian and Russian
industry. It has already been demonstrated in Chapter 4.4. that there is a likelihood of
recurrence of dumping in significant volumes. It is beyond any reasonable doubt that
such imports, which would be in direct competition with those from Belarus and
Russia, would have an injurious impact on the Community industry. It was therefore
concluded that, with respect to imports originating in Ukraine, there is a likelihood of
recurrence of injurious dumping should the measures lapse.

26

(105)

It is therefore concluded that, in the absence of measures, there is a likelihood of a
recurrence of injurious dumping and that antidumping measures should therefore be
maintained.

8.

COMMUNITY INTEREST

8.1.

Introduction

(106) According to Article 21 of the Basic Regulation,

it was examined whether a
prolongation of the existing anti-dumping measures would be against the interest of
the Community as a whole. The determination of the Community interest was based
on an appreciation of all the various interests, such as those of the Community
industry, the importers and users of the product concerned. In order to assess the likely
impact of a continuation of the measures, information was requested from all the
interested parties mentioned above.

(107)

it should be noted that

It should be recalled that, in the previous investigations, the adoption and maintenance
the interest of the Community.
of measures was considered not
to be against
Furthermore,
thus
analysing a situation in which anti-dumping measures have already been in place.
Consequently, the timing and nature of the present investigation allows the assessment
of any negative, undue impact of the anti-dumping measures imposed on the parties
concerned.

investigation is a review,

the present

(108) Questionnaires were sent to 17 importers/users, of which seven unrelated and two
related importers/users replied to the questionnaire. The importers and users received
the same questionnaire as many of
in the two roles. Furthermore,
questionnaires were sent to three importer/user organisations: European Fertilizer
Import Association (EFIA), European Fertilizer Manufacturers Association (EFMA)
and COPA/COSEGA. However, only EFIA replied to the questionnaire.

them act

(109) On this basis it was examined whether, despite the findings on dumping, injury and
continuation or recurrence of injurious dumping, compelling reasons existed which
would lead to the conclusion that it is not in the Community interest to maintain
measures in this particular case.

8.2.

Interests of the Community Industry

(110) As set out above, it is considered that, if the anti-dumping measures were allowed to
lapse, the dumped imports destined for free circulation on the Community market
would be likely to recur and that the situation of the Community industry would start
deteriorating again from its currently moderately profitable status.

(111) This could entail a severe reduction in the numbers of employees in addition to the
reductions that will occur as a result of the future closure of the French Community
producer.

(112) Furthermore, although potash production in France will cease,

the ongoing
restructuring efforts and plans show that the Community industry is not ready to
abandon this segment of production. Maintaining antidumping measures is therefore
of prime interest to the Community industry.

27

8.3.

Interests of importers (traders)

(113) Two of the seven companies that replied to the importers/users questionnaire are
purely traders of the product. The remaining five are also users of it. Main arguments
from the traders’ position were provided in the questionnaire reply of EFIA.

(114) The importers of potash are against the prolongation of the anti-dumping measures.
They argue that the combination of a fixed duty and a minimum price has completely
excluded the producers of the countries concerned from the Community market, thus
reducing competition within the Community to a minimum. As a result, they claim,
the price of potash on the Community market has become artificially high and access
to imported potash difficult especially to small traders.

(115) Whereas it is true that, apart from imports under the IPR regime, potash from the
countries concerned has practically been excluded from the Community market,
imports from Canada, Israel, Jordan and from some smaller exporting countries,
together with the existence of a number of Community producers, have guaranteed
competition on the Community market. No representative evidence was found on the
alleged difficult access for traders to imported potash. In any event the proposed
measures will take a different form to those presently reviewed and are aimed at an
increased access to the Community market for the imports from the countries
concerned.

(116)

It is thus concluded that the profitability of those importers who are purely traders of
potash has not been negatively influenced by the imposition of the anti-dumping
measures. It is also likely that a continuation of the measures in a different form will
not lead to a future deterioration in their profitability.

8.4.

Interests of users

(117) The direct users of potash as a fertiliser (farmers) did not express their position,
although their representative organisation received the questionnaire. Therefore, it is to
be concluded that the continuation of anti-dumping duties will not make a major
difference for farmers.

(118) The five users who did reply to the questionnaire are all fertiliser manufacturers who
buy potash from the Community industry and also import it from third countries. For
them potash is a raw material for producing compound fertilisers that typically consist
of three different nutrients: nitrogen, phosphorus and potassium (NPK-fertilisers).

(119) Most of the users, being also importers, argued in the same manner against the
continuation of the measures as explained above in the chapter “Interests of importers
(traders)”. However, one importing user stated that the anti-dumping measures had
created a certain price stability on the Community market for potash, which was
beneficial for its activity.

(120) Users have little flexibility concerning their product mix whenever an anti-dumping
duty for one of the fertiliser components is applied. As the competing fertiliser
producers in third countries do not pay duty on their potash, the Community fertiliser
manufacturers claim that they are unable to compete with the prices of the final
product offered by their foreign competitors. On the export market the situation is

28

completely different: there the Community fertiliser manufacturers can be competitive
due to the possibility to import under the IPR regime.

(121)

In reply to these allegations the investigation showed that potash represents around 15-
30% of the total cost of the compound fertiliser. The production costs of fertilisers
increased during the period considered not only because of potash but for several
reasons. It was established that
the price levels of other fertiliser components,
especially that of nitrogen, varied significantly during the period considered. In a
particular example, the share of potash in the total price increase of the final product
was calculated to be around 20% during the period considered.

(122) Although it must be recognised that the cost situation of Community users of potash
on the Community market has deteriorated since the measures were imposed, the
effect of the potash prices on their total production costs is not likely to be such as to
jeopardise their existence. Since the measures have been in place for seven years now,
it can be concluded that their continuation will not imply a further deterioration in the
situation of the users.

8.5.

Consequences for competition on the Community market

(123) As mentioned earlier, the measures in their current form have practically excluded
potash from the countries concerned, apart from imports under the IPR regime. Even
in this time period, it should be recalled that the importers and users have always
enjoyed the presence of a number of competitors – Community and third country
based - on the market. However, it has been argued that, despite such a presence, the
current form of measures, in particular the minimum price element, has affected the
market in a way that has impeded competition. While no indications in this respect
have been made available in the course of the investigation, it was found that, through
the imposition of measures in the present form, major sources of supply have been
practically excluded from the Community market. It is recalled that such “de facto”
exclusion was not the purpose of the combined measures (a minimum price and a
specific duty), whose purpose was simply to prevent circumvention and absorption of
the original duties.

8.6.

Conclusion on Community interest

(124) Having analysed all the various interests involved, it is considered that, on the one
hand, a continuation of the anti-dumping measures is likely to result in a stable price
for potash on the Community market, entailing some negative effects on the economic
situation of users of potash. On the other hand, leaving the Community industry
without adequate protection against the dumped imports would most probably wipe
out its already small profitability and lead to more serious problems than the user
industry could possibly suffer. Therefore, the price disadvantage that will result for the
users from the continuation of the anti-dumping measures is overridden by the benefits
to the Community resulting from the prevention of the recurrence of the injurious
dumping.

(125) However, since the current form of anti-dumping measures has had the effect of
practically excluding imports of the product concerned, other than those destined for
inward processing, and consequently of eliminating a significant source of supply on
the
this market,

there are no compelling reasons against

is concluded that

it

29

prolongation of the existing anti-dumping measures, but that it is in the interest of the
Community to change the form of measures as explained below.

9.

DEFINITIVE ANTI-DUMPING MEASURES

(126)

(127)

It follows from the above that, as provided for by Article 11(2) of the Basic Regulation
(governing the request for a review lodged by the Community industry) and Article
11(3) (applicable to the interim review initiated by the Commission on its own
the measures on imports of
initiative but
potassium chloride originating in Belarus, Russia and Ukraine imposed by Council
Regulation (EEC) No 3068/92, as amended by Council Regulations (EC) No 643/94
and 449/1998, should be maintained.

limited to the form of the measures),

It will be recalled that the current form of measures, i.e. a combination of a minimum
price and a specific duty, was introduced by Regulation (EC) No 643/94. This form of
measure was chosen in view of the particular situation which prevailed at that time.
Indeed there were strong indications of circumvention of the type of anti-dumping
duty initially imposed, i.e. a variable duty based on a minimum price. The current
investigation has shown that this particular form of measures is no longer warranted as
it is considered unlikely that the countries concerned would lower their export prices
and thus absorbing the fixed duty. The investigation has further shown, as explained in
Chapter 8.6, that, in order to allow potential sources of supply to operate on the
Community market, it is not in the interest of the Community to maintain the measures
in their current form. It is therefore considered appropriate to amend the form of the
measures by eliminating the minimum price component while retaining the fixed duty
element.

(128) Finally,

it should be noted that the Commission also received proposals for an
undertaking from IPC, in accordance with Article 8 of the Basic Regulation. These
proposals were carefully examined and it was concluded that, in the absence of
sufficient guarantees by the exporter and the Russian government, they could not be
effectively monitored or enforced and that furthermore the risk of compensatory
pricing of the product concerned imported into the Community under the IPR regime
could not be excluded. The Commission was, therefore, not satisfied that the offers of
price undertakings would guarantee the prevention of the injurious effects of dumping.
The offers were therefore rejected.

HAS ADOPTED THIS REGULATION:

Article 1

Article 1 of Regulation (EC) No 449/1998 is hereby replaced by the following:

'Article 1

A definitive anti-dumping duty is hereby imposed on imports of potassium chloride
1.
falling within CN codes 3104 20 10, 3104 20 50, 3104 20 90 and on special mixtures falling
within CN codes ex 3105 20 10, ex 3105 20 90, ex 3105 60 90, ex 3105 90 91, ex 3105 90 99
originating in Belarus, Russia and Ukraine.

30

2.
For the purpose of paragraph 1 of this Article potassium chloride will be either
potassium chloride not containing any additional nutrients or potassium chloride containing
additional nutrients in special mixtures. For the purpose of the application of the anti-dumping
duty special mixture is defined as a blend of two or more nutrients. Such a mixture is subject
to an anti-dumping duty if the K2O content of the mixture or blend is 35% or more, by weight,
of the dry anhydrous product. Such product will fall under “other than standard” grade.

3.
The amount of duty shall be equal to the fixed amount in ECU per tonne of KCl
shown below per category and grade (Standard potash is to be understood as potash in powder
form):

BELARUS

Potassium chloride not containing any additional nutrients
With a potassium content
Category
evaluated
by
weight,
exceeding
40% on the dry anhydrous
product

With a potassium content
evaluated
by
weight,
exceeding 40%
but not exceeding 62% on
the dry anhydrous product

as K2O,

as K2O,

not

Grade

Standard

3104 20 10
10
19.51

TARIC Code

Fixed
amount
(Euro/tonne)

than

Other
standard
(including
granular)
3104 20 10
90
30.84

Standard

3104 20 50
10
29.51

than

Other
standard
(including
granular)
3104 20 50
90
46.65

Potassium chloride containing additional nutrients in special mixtures

a

With
potassium
content
evaluated
as K2O, by
weight,
exceeding
62% on the
dry
anhydrous
product

3104 20 90
00
48.19

a

a

potassium content
With
evaluated as K2O, by weight,
equal or exceeding 35% but not
dry
40% on
exceeding
anhydrous product
3105 20 10 10, 3105 20 90 10, 3105 60 90 10, 3105 90 91 10, 3105
90 99 10
30.84

potassium content
With
evaluated as K2O, by weight,
exceeding 40% but equal to or
not exceeding 62% on the dry
anhydrous product

46.65

the

TARIC Code

Fixed
amount
(Euro/tonne)

31

32

RUSSIA

Potassium chloride not containing any additional nutrients

Category

as K2O,

With a potassium content
evaluated
by
weight,
exceeding
40% on the dry anhydrous
product

not

as K2O,

With a potassium content
evaluated
by
weight,
exceeding 40%
but not exceeding 62% on
the dry anhydrous product

a

With
potassium
content
evaluated as
K2O,
by
weight,
exceeding
62% on the
dry
anhydrous
product

Grade

Standard

Standard

than

Other
standard
(including
granular)

than

Other
standard
(including
granular)

TARIC Code

3104 20 10
10

3104 20 10
90

3104 20 50
10

3104 20 50
90

3104 20 90
00

19.61

26.01

29.65

39.33

40.63

Fixed
amount
(Euro/tonne)

Potassium chloride containing additional nutrients in special mixtures

a

With
potassium content
evaluated as K2O, by weight,
equal or exceeding 35% but not
exceeding
dry
40% on
anhydrous product

the

a

With
potassium content
evaluated as K2O, by weight,
exceeding 40% but equal to or
not exceeding 62% on the dry
anhydrous product

TARIC Code

3105 20 10 10, 3105 20 90 10, 3105 60 90 10, 3105 90 91 10, 3105
90 99 10

26.01

Fixed
amount
(Euro/tonne)

39.33

33

UKRAINE

Potassium chloride not containing any additional nutrients

Category

With a potassium content
by
evaluated as K2O,
weight,
exceeding
not
40% on the dry anhydrous
product

With a potassium content
by
evaluated as K2O,
weight,
exceeding 40%
but not exceeding 62% on
the dry anhydrous product

a

With
potassium
content
evaluated as
K2O,
by
weight,
exceeding
62% on the
dry
anhydrous
product

Grade

Standard

Standard

than

Other
standard
(including
granular)

than

Other
standard
(including
granular)

TARIC Code

Fixed
amount
(Euro/tonne)

3104 20 10
10

3104 20 10
90

3104 20 50
10

3104 20 50
90

3104 20 90
00

19.61

30.84

29.65

46.65

48.19

Potassium chloride containing additional nutrients in special mixtures

a

potassium content
With
evaluated as K2O, by weight,
equal or exceeding 35% but not
exceeding
dry
40% on
anhydrous product

the

a

With
potassium content
evaluated as K2O, by weight,
exceeding 40% but equal to or
not exceeding 62% on the dry
anhydrous product

TARIC Code

3105 20 10 10, 3105 20 90 10, 3105 60 90 10, 3105 90 91 10, 3105
90 99 10

30.84

Fixed
amount
(Euro/tonne)

46.65

34

In cases where goods have been damaged before entry into free circulation and,
4.
therefore, the price actually paid or payable is apportioned for the determination of the
customs value pursuant to Article 145 of Commission Regulation (EEC) No 2454/93, the
amount of anti-dumping duty, calculated on the basis of the fixed amounts set out above, shall
be reduced by a percentage which corresponds to the apportioning of the price actually paid or
payable.

5.

The provisions in force with regard to Customs duties shall apply.

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

Article 2

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

Done at Brussels,

For the Council
The President

35