Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia
Date: 2002-03-18
Institutions: European Commission
Subjects: Russia, anti-dumping duty, chemical salt, import, originating product

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Official Journal of the European Communities

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Proposal

for a Council Regulation imposing a definitive anti-dumping duty on imports of

ammonium nitrate originating in Russia

(2002/C 181 E/13)

COM(2002) 148 final

(Submitted by the Commission on 18 March 2002)

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 Community (1),
and in particular Article 11(2) and 11(3) thereof,

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

Whereas:

A. PROCEDURE

1. Previous investigations

(1) In May 1994, by Decision 94/293/EC (2), the Commission
accepted undertakings with regard
to imports of
ammonium nitrate originating in Lithuania and Russia,
following a regional anti-dumping proceeding concerning
imports
into the United Kingdom. The undertaking
accepted from the Russian authorities was, however,
breached within the first year of operation.

initiated subsequent

(2) In June 1994, a Community-wide anti-dumping investi-
gation concerning ammonium nitrate originating in
to a
Lithuania and Russia was
complaint
lodged by the European Fertiliser Manu-
facturers Association (EFMA). The proceeding was
terminated in respect of imports from Lithuania (3) and
the Council, by Regulation (EC)
in August 1995,
No 2022/95 (4), imposed a definitive anti-dumping duty
on imports of ammonium nitrate originating in Russia.
The measures applying to imports originating in Russia
to the difference
consisted of a variable duty equal
of product
ECU 102.9 per
between
(‘minimum import price’ or ‘MIP’) and the net cif price,
Community frontier before customs clearance, in all cases
where the latter was lower.

tonne net

(3) Pursuant to a further investigation which established that
these measures were being absorbed, the measures were
changed,
in March 1998, by Council Regulation (EC)
No 663/98 (5), to a specific duty of ECU 26.3 per tonne.

2. Investigations concerning other countries

It

imports of

showed that

(4) In October 1999, an anti-dumping investigation was
initiated concerning imports
into the Community of
ammonium nitrate originating in Lithuania, Poland and
Ukraine (6).
ammonium
nitrate originating in Poland and Ukraine were dumped
and caused material
injury to the Community industry,
whereas imports originating in Lithuania were found
not to be dumped. Consequently, by Council Regulation
(EC) No 132/2001 (7), definitive anti-dumping measures
were imposed on imports of ammonium nitrate orig-
inating in Poland and Ukraine, while the proceeding
was
imports originating in
Lithuania. Duties were imposed in the form of a specific
duty per tonne, in order to ensure the efficiency of the
measures and to discourage any price manipulation.

terminated in respect of

3. Present investigation

3.1. Request for review

the impending expiry of

(5) Following the publication, on 24 February 2000, of the
notice of
the anti-dumping
measures in force on imports of ammonium nitrate orig-
inating in Russia (8), the Commission received a request
for an expiry and an interim review pursuant to Article
11(2) and 11(3) of Council Regulation (EC) No 384/96 of
22 December 1995 (9) (‘the basic Regulation’), lodged by
the European Fertiliser Manufacturers Association (EFMA)
on behalf of producers representing a major proportion of
Community production of ammonium nitrate (‘applicant
Community producers’). The request for an expiry review
alleged that injurious dumping of imports originating in
Russia would be likely to continue or to recur if measures
were allowed to expire. The applicant's request for an
the
interim review was based on the grounds
current measures did not appear
to
counteract the injurious effects of dumping.

that
to be sufficient

(1) OJ L 56, 6.3.1996, p. 1. as last amended by Council Regulation

(EC) No 2238/2000 (OJ L 257, 11.10.2000, p. 2).

(2) OJ L 129, 21.5.1994, p. 24.
(3) Commission Decision 95/344/EC (OJ L 198, 23.8.1995, p. 27).
(4) OJ L 198, 23.8.1995, p. 1.

(5) OJ L 93, 26.3.1998, p. 1.
(6) OJ C 311, 29.10.1999, p. 3.
(7) OJ L 23, 25.1.2001, p. 1.
(8) OJ C 52, 24.2.2000, p. 3.
(9) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Council
Regulation (EC) No 2238/2000 (OJ L 257, 11.10.2000, p. 2).

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3.2. Notice of initiation

that

sufficient

(6) Having determined, after consultation of

the Advisory
Committee,
the
initiation of a review, the Commission initiated an inves-
tigation pursuant to Article 11(2) and 11(3) of the basic
Regulation by a notice published in the Official Journal of
the European Communities (1).

existed for

evidence

views known in writing and to request and hold a
hearing.

(12) Verification visits were carried out at the premises of the

following companies:

Community producers:

3.3. Period of investigation

— Grande Paroisse SA, France

(7) The investigation period (‘IP’)

for the examination of
continuation and recurrence of dumping and injury
covered the period from 1 July 1999 to 30 June 2000.
The examination of trends relevant for the assessment of
continuation and/or
injury covered the
recurrence of
period from 1 January 1996 up to the end of the IP
(‘period under review’).

3.4. Parties concerned by the investigation

— Hydro Agri France, France

— Kemira Ince Ltd, United Kingdom

— Terra Nitrogen, United Kingdom

Analogue country producer:

(8) The Commission

the

advised
exporting producers

applicant
officially
Community producers,
in
the
Russia, the importers, users and associations known to
be concerned, and the representatives of the exporting
country concerned of the initiation of the review. The
exporting
Commission sent
questionnaires
producers, Community producers,
importers, users and
associations known to be concerned and to those who
made themselves known within the time limit set in the
notice of initiation.

the

to

(9) In order to allow Russian exporting producers to submit a
claim for market economy treatment (‘MET’) or individual
treatment (‘IT’), if they so wished, the Commission sent
claim forms to the exporting producers known to be
concerned.

(10) Nine Community producers, one

country
producer, two importers, one importers' association, and
two users' associations replied to the questionnaires. With
to the exporting country concerned, only one
respect
reply to the questionnaire was received.

analogue

3.5. Verification of information received

(11) The Commission sought and verified all

information it
deemed necessary for the purpose of a determination of
the continuation or recurrence of dumping and injury and
of the Community interest. The Commission also gave the
parties directly concerned the opportunity to make their

(1) OJ C 239, 23.8.2000, p. 10.

— Mississippi Chemical Corporation, Yazoo City, USA

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

(13) The product under consideration is the same as in the
previous investigation,
i.e. ammonium nitrate (‘AN’ or
‘product under consideration’), a solid nitrogen fertiliser
commonly used in agriculture. It is manufactured from
ammonia and nitric acid and the nitrogen content
exceeds 28 % by weight in prilled or granular form.

(14) The product concerned currently falls within CN codes
3102 30 90 (ammonium nitrate other than in aqueous
solutions) and 3102 40 90 (mixtures of ammonium
nitrate with calcium carbonate or other
inorganic
non-fertilising
substances, with a nitrogen content
exceeding 28 % by weight).

2. Like product

(15) As both the previous investigation and the investigation
concerning other countries have shown, AN is a pure
commodity product and its basic chemical characteristics
are comparable whatever the country of origin. There are
two different types of AN: granular and prilled. Granular
AN has a larger diameter and therefore has better
spreading characteristics. The investigation has shown
that imports of AN originating in Russia are prilled and
that the majority of AN produced by the Community
industry is granular. However, since granular and prilled
AN have the same chemical characteristics and end use
and are perceived by users as being interchangeable, they
are to be regarded as two different types of the same
product.

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(16) Therefore,

the product produced and sold in the
Community by the applicant Community producers is
to that produced in
considered to be a like product
Russia
exported to the
Community. The same is true with regard to AN sold
on the domestic market of the analogue country.

and sold domestically or

C. DUMPING AND LIKELIHOOD OF A CONTINUATION
OF DUMPING

(17) In accordance with Article 11(2) of the basic Regulation,
the
is necessary to examine whether the expiry of
it
measures would be likely to lead to a continuation or
recurrence of dumping.

(18) In examining whether

is
a
continuation of dumping,
is necessary to verify
whether dumping exists at present and whether any
such dumping is likely to continue.

likelihood of

there
it

a

1. Dumping during the IP

1.1. Volume of exports to the Community during the IP

(19) Exports of AN from Russia amounted to 282 Ktonnes
total Community
during the IP i.e. about 20 % of
imports of AN and about 5 % of Community AN
consumption. These imports are only slightly below the
level found in the previous investigation period i.e. 340
Ktonnes between April 1993 and March 1994.

1.2. Market Economy Treatment

(MET)

and

Individual

Treatment (IT)

(20) Claims for MET and/or IT were received from three
exporting producers. As two of these companies later
failed to submit their reply to the Commission's ques-
it was
tionnaire within a reasonable period of
their
considered appropriate not
MET/IT claim forms.
the
Indeed,
necessary data for carrying out a dumping calculation,
the claims for MET and IT could not be considered.
These companies were therefore considered as non-coop-
erating with the investigation and were subsequently
informed that the findings would be based on the facts
available, in accordance with Article 18 of the basic Regu-
lation.

to further process

in the absence of

time,

the

interim review.
review or
either
Consequently, neither MET nor IT could be considered.

expiry

the

1.3. Analogue country

(22) Since imports from Russia fall under Article 2(7)(a) of the
basic Regulation except where MET is granted, normal
value has to be based on information obtained in an
economy third country.
appropriate market
In the
Notice of
the Commission suggested Poland
initiation,
as an appropriate analogue country because it was used
as an analogue country in other investigations concerning
the same product, and the production processes and
access to raw materials are comparable to those prevailing
in Russia.

(23) Comments were received by the European Fertiliser
Import Association (EFIA) objecting to this choice. Their
main objection was that Poland has very high domestic
fertiliser prices due to its high level of protection against
fertiliser imports and also it has the highest gas prices in
central Europe because of its monopolistic State-owned
EFIA
gas
system. As
close
proposed Lithuania on the
proximity
to
Russia, its absence of barter trade and the fact that the
sole Lithuanian producer purchases gas from a Russian
supplier, which also supplies the Russian producers, at
prices which vary in accordance with the published cif
northern Europe price for ammonia.

alternative,
its
conditions

and similar manufacturing

an
grounds of

distribution

(24) However, neither the known Polish producers nor the sole

Lithuanian producer were willing to co-operate.

(25) The Commission then approached producers in Australia
and the USA as
suggested by EFMA. As only one
producer from each of these countries was willing to
co-operate, a further analysis was carried out into the
importance of their respective domestic sales in terms of
domestic market share, and into the representativeness of
their domestic sales volume compared to Russian exports
to the Community. This analysis showed that, whereas
the
both producers had representative domestic sales,
Australian producer
significant
did not
competition in its domestic market. Although the USA
producer also had significant domestic sales,
faced
competition from both domestic and foreign
price
companies. Consequently, the USA was selected as the
most appropriate analogue country.

face

any

it

(21) The third company having submitted a MET/IT claim
the product
form was found to have no exports of
concerned to the Community during the IP.
In the
absence of any actual export sales data for the IP, no
dumping calculation was possible in the context of

(26) The sales of AN by the USA producer on its domestic
market were examined and found to be representative in
comparison with Russian export sales of AN to the
Community.

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(27) Following disclosure, EFIA argued that

the lack of
co-operation from the sole Lithuanian producer should
not have prevented
the Commission from using
Lithuania as the analogue country, as it had relevant
recent anti-dumping proceeding
information from its
concerning imports of ammonium nitrate from Lithuania,
Ukraine and Poland (1). There was indeed an overlap of
the IPs in the two proceedings. However, this overlapping
period was limited to the first three months of the IP for
the current proceeding. In accordance with Article 6(1) of
the basic Regulation, for a representative finding, the IP
should normally
six months
immediately prior to the initiation of the proceeding. In
these circumstances it was considered that data from the
first three months of the IP would not be sufficiently
representative for the seasonal and volatile AN market.
In addition, it should be stressed that using information
received in the context of a given proceeding for a precise
in another proceeding for a different purpose,
purpose,
where the party concerned has moreover expressed its
unwillingness to co-operate with the second investigation,
would be contrary to the provisions of Article 19(6) of
the basic Regulation. The argument was,
therefore,
rejected.

a period

cover

of

1.4. Normal value

(28) As stated above, normal value was calculated on the basis
of the data verified at the premises of the USA company
which co-operated fully with the investigation.

(29) In order to establish whether sales in the USA market of
the like product were made in the ordinary course of
the domestic selling price at an ex-works level
trade,
was compared to the full cost of production (i.e.
the
cost of manufacturing plus SG&A expenses). As the
weighted average
than the
weighted average unit cost, normal value was established
on the basis of the weighted average domestic selling
price for the IP.

sales price was higher

(30) Both EFIA and the co-operating Russian exporter argued
that a downward adjustment to constructed normal value
should have been made due to high gas prices paid by
USA producers. Firstly,
it should be noted that normal
value was not constructed, but was established on the
basis of profitable sales prices in the USA domestic
market. Secondly, although gas is an important cost
element in the production of AN, it was noted that the
domestic AN market in the USA is driven by competition
and that
the
domestic prices of AN are to a significant extent market
driven rather than cost driven. No evidence was obtained
with regard to the extent to which higher gas prices in the
USA market would have affected the domestic sales prices
of AN during the IP. Finally, even if high gas prices were

there are significant

imports. As such,

(1) OJ L 23, 25.1.2001, p. 1.

deemed to have affected the domestic sales prices of AN
to a quantifiable extent, this would have had no impact
on the definitive duty, since the dumping margin found
would not have fallen below the injury margin. In these
circumstances, the argument was rejected.

1.5. Export price

(31) As the sole co-operating exporting producer had no
exports of
the product concerned to the Community
during the IP, the export price was established on the
basis of the available data, in this case, Eurostat statistics
in accordance with
of Community frontier cif prices,
Article 18 of the basic Regulation.

1.6. Comparison

(32) The normal value was compared to the export price on an
ex-works basis. This method was used in order to take
into account the differences in internal transport costs in
market and non-market economy countries incurred in
particular for a bulk product such as the product under
consideration,
for which transport costs account for a
very high proportion of the selling price. The appropriate
adjustments were made, therefore, to the cif export price
in respect of the costs for transport from ex-works to
port, port services, insurance and freight costs.

(33) The transport costs for AN in the USA were found to be
market driven and there is competition between transport
companies. Since the USA is a competitive market, rail
fares established during the investigation for the product
under consideration in the USA were applied propor-
tionately to the Community frontier export price of
Russian exporting producers, on the basis of
the
weighted average distance to the Community border
estimated for
(37))
‘export-oriented’
all
Russian producers.

recital

(see

1.7. Dumping margin

(34) In accordance with Article 2(11) and (12) of the basic
Regulation, the country-wide dumping margin was estab-
lished on the basis of a comparison of
the weighted
average normal value with the weighted average export
price at an ex-works level. The countrywide dumping
margin expressed as a percentage of the ‘cif-Community-
border’ price is 115.8 %.

2. Likelihood of a continuation of dumping

(35) As

indicated in recital

to the
Community were found to be made at dumped prices
during the IP. Moreover,
the dumping margin found
was much higher than that of the previous investigation.

(34) above, exports

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(36) In examining whether dumping was likely to continue at
substantial levels and in significant quantities, a number of
sources of information were analysed. First, information
submitted by the only co-operating Russian producer was
used. However, this producer, although exporting to third
countries did not have any export sales to the EC. Second,
in the absence of any co-operating company with exports
in accordance with Article
to the Community market,
18(1) of
the analysis was also
based on Eurostat data as well as information provided
in the review request which permitted projections to be
made of likely future export volumes to the Community.

the basic Regulation,

(37) The total capacity for AN production in Russia is
the
(i.e. 1.6 times
estimated about 8 900 Ktonnes
the IP), of which the
Community consumption for
production capacity of
the ‘export-oriented’ producers,
(i.e. generally those with reasonable access to a port), is
estimated at a minimum of 4 500 Ktonnes. Although
significantly between
capacity utilisation rates
different
local
to year,
consumption is estimated at only about 2 200 Ktonnes.
Taking into account the current level of Russian exports
to other third countries (i.e. 2 189 Ktonnes in 1999), this
means that there is still significant capacity available for
production for export and this could potentially be used
to increase further the existing exports to the Community,
in the event of expiry of the measures.

vary
and from year

companies

(40) In addition, even though the world fertilizer consumption
is forecast to increase by 2004, the bulk of the increase is
expected to take place in Asia, mostly China and India.
However, China and India have developed massive
capacities for fertilizer production in order to reduce the
level of imports. More particularly, China imposed a ban
on nitrogenous fertilizer imports, including AN.

(41) As mentioned in recital

(21) above, the one exporting
producer which co-operated with the investigation had
no exports to the Community during the IP. Although
this producer had significant production capacity during
the IP, it had limited unused capacity and therefore, any
substantial production for export to the Community in
the event of expiry of the measures would have necess-
itated a reduction in sales to other markets. Given the
substantial volume of exports and margin of dumping
during the IP from other exporters, even if this exporter
to the Community at non-dumped prices
might sell
following any expiry of the measures,
this would not
have altered the finding with regard to the likelihood of
a continuation of dumping for the country as a whole.

such as

insurance,

related costs,

(42) EFIA argued that since the recent terrorist attacks in the
USA all
transport,
unloading, storage and handling, are increasing and that
this will be reflected in higher prices of imported fertiliser,
as importers have to recover these costs as well. However,
this argument was unsubstantiated, as no evidence was
provided to show that this would have a greater impact
on export prices from Russia than domestic prices in the
USA. In addition, developments after the IP can only be
taken into consideration if it can be demonstrated that
these developments would make the results of the inves-
tigation unsuitable and the planned imposition of an anti-
dumping duty manifestly inappropriate. This was not
found to be the case and therefore, the argument was
rejected.

(38) Furthermore,

it

in conjunction with the fact

is recalled that as recently as 1996,
Russian exports to the EC accounted for 40 % of total
Russian exports (1) of the product under consideration.
This,
that a number of
third countries (USA, Australia, Poland and Hungary)
adopted commercial defence measures against
imports
from Russia, that China, since 1997, actively pursued a
strategy
domestic
production, and that domestic consumption in Russia is
likely to stay at relatively low levels in the near future,
means that Russian producers would be more likely to
direct any additional production to the Community
market.

replacement

imports

by

of

of

levels on the
current price
(39) Having regard to the
Community market,
the Russian
likely
is
it
exporting producers would continue to adopt a policy
of dumped prices in order to regain their lost market
shares. This is also confirmed by the Russian exporters'
price behaviour on their other most important export
markets besides the Community and the USA.

that

(1) Source: Eurostat — Comext ‘Russian exports’.

3. Conclusion

(43) Nothing was found during the investigation to suggest
that the dumping margin or volume of dumped exports
determined for the investigation period would disappear
or even decrease should the measures be allowed to
expire. Moreover,
it was found that Russian producers
had substantial spare capacities and that the removal of
measures would likely result in further dumped exports to
the Community. It was therefore concluded that, should
the measures expire, there is a likelihood of continuation
of dumping at a substantial
level and in increased
volumes.

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D. DEFINITION OF THE COMMUNITY INDUSTRY

sufficient

information (Chemical
these

(44) Out of the 11 applicant Community producers, one did
not reply to the questionnaire (Sefanitro) and one did not
submit
Industries of
latter were
Northern Greece). Consequently,
considered to be non-co-operating and therefore were
not regarded as being part of the Community industry.
The investigation established that
the remaining nine
co-operating producers represented more than 85 % of
IP.
the Community production of AN during the
Therefore
industry
within the meaning of Article 4(1) and Article 5(4) of
the Basic Regulation.

the Community

constitute

they

and whose conclusions published in 1998 led to the
amendment of the anti-dumping measures in that year,
and of the significant increase of the imports from certain
other third countries, which have benefited from the
imposition of anti-dumping duties on Russian imports.
Between 1996 and the end of the IP, Russian imports
went down by 74 %, while other imports increased by
30 %.

(48) The market share of the imports from Russia decreased by
12 percentage points during the period under review.
represented 5 % of
However, during the IP,
still
it
significant part of
Community consumption and a
overall imports, i.e. 20 %.

E. ANALYSIS OF THE SITUATION IN THE COMMUNITY
MARKET

1. Preliminary remark

3.2. Prices

(45) The introduction of

the anti-dumping measures on
imports of AN originating in Russia in 1995 in a first
stage considerably improved the economic situation of the
applicant Community producers, in particular in terms of
better financial results, due to the increase in prices
between 1995 and 1996.

2. Consumption

(46) Community consumption was established on the basis of
the sales volumes of
the Community industry on the
Community market, as reported in the questionnaire
replies, the sales volume on the Community market of
the other Community producers (both non-co-operating
and non-applicants), as reported in the complaint and the
import volumes into the Community from the country
concerned and all other third countries, on the basis of
Eurostat.

On this basis, Community consumption decreased by
13 % between 1996 and the IP i.e. from 6 328 Ktonnes
in 1996 to 5 525 Ktonnes in the IP. Consumption
decreased particularly between 1996 and 1997, and
then remained relatively stable until the end of the IP.

3. Imports from the country concerned

3.1. Volume and market share

(47) Total

imports of AN in the Community followed a
downward trend during
review
(– 28 %) even though they increased slightly between
1999 and the IP.

the period under

(49) After the imposition of the measures in 1995, the average
prices of the imports concerned, as reported by Eurostat,
fell by 45 %, between 1996 and the IP.

3.3. Price comparison

(DEQ) and compared, at

(50) The Commission has examined whether the exporting
producers in the country concerned undercut the prices
of
this
the Community industry during the IP. For
analysis, the cif prices of the exporting producers have
been duly adjusted to a Community frontier ex quay
custom duty paid level
the
same level of trade, to Community producers' ex-works
prices both for bagged products. This was done as
the Community
imports are always bagged, whereas
industry sold its products both in bagged and in bulk
form. Thus, adjustments were made where appropriate.
In addition, the investigation has shown that granular
products were on average sold at a higher price than
prilled products. Therefore, an allowance of EUR 3.1
per tonne was made for the price comparison. This
amount is the average price difference between granular
and prilled AN sold by the Community industry during
the investigation period.

(51) EFIA argued that an adjustment should have been made
imported from
for the lower quality of
Russia. However,
the
quality of the product concerned originating in Russia
has improved in recent years and has been upgraded to
the higher European standards. Therefore, the argument
has been rejected.

the investigation established that

the product

it
With respect to the volume of the Russian imports,
decreased significantly over the period under review,
in
particular as from 1997. This trend seems to be the result
of the reopening of the investigation published in 1997

(52) The countrywide price difference found on this basis,
expressed as a percentage of the Community producers'
prices,
is 27.7 %. This difference still amounts to 3.2 %
when the anti-dumping duty is added to the export price.
Furthermore, prices of
the Community industry were
depressed, as the industry incurred losses of 18 %.

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4. Economic situation of the Community industry

4.7. Profitability and return on investment

4.1. Production

(53) The Community industry's production decreased by 17 %
i.e. from 4 713 Ktonnes to
between 1996 and the IP,
3 903 Ktonnes. A slight
increase took place between
1997 and 1998, but the production fell back again in
1999.

(59) The weighted average profitability of

the Community
industry deteriorated by 37 percentage points between
1996 and the IP from 18.6 % to (– 18.0 %). This trend
has to be seen in the light of the price evolution, which
showed a similar pattern, and of the natural gas price
which increased as from the third quarter of 1999.

4.2. Capacity and capacity utilisation

(54) It should be noted that capacity and capacity utilisation
were not found to be meaningful indicators for this type
of production and industry since they are affected by the
fact that also other products are produced on the same
production equipment. Indeed, based on natural gas trans-
formed into ammonia, various different products are
produced using the same production lines. The total
the Community industry was
production capacity of
relatively stable over
the period under consideration.
Capacity utilisation decreased from 56 % in 1996 to
46 % in 1997 and subsequently remained stable.

4.3. Sales in the Community

(55) The sales volume of the Community industry decreased
from 4 238 Ktonnes in 1996 to 3 766 Ktonnes in the IP
i.e. by 11 %. The decrease was most notable between
1996 and 1997 when the sales decreased by 15 %.

4.4. Stocks

(56) The level of stocks is not considered to be a relevant
injury indicator owing to the seasonal nature of
the
sales and the fact
that AN is partly stored by the
producers themselves and partly by the co-operatives of
farmers.

During the period under review, the return on investment
followed a trend similar to the one of profitability.

4.8. Cash flow

(60) The cash flow generated by the Community industry in
relation to sales of ammonium nitrate followed very
closely the profitability trend.

4.9. Ability to raise capital

(61) Due to the structure of the complainant companies, i.e.
the fact that the fertiliser producers are a part of large
chemical groups also dealing with other products, it was
not possible to establish the ability to raise capital for the
product under consideration only, and it was therefore
considered as not being a meaningful
to
measure injury.

indicator

4.10. Employment, and wages

(62) Employment of

the Community industry decreased,
from 1 986 to 1 608
i.e. a decrease of (– 19 %). With respect to
similar decline
as
the number of persons

between 1996 and the
employees,
overall wages,
compared to the decrease of
employed.

followed a

they

IP,

4.5. Market share

4.11. Investments

(57) The market share of the Community industry decreased
between 1996 and 1997 and then increased to gain
finally 1.2 percentage points between 1996 and the IP.
In the IP, it was 68.2 % compared to 67 % in 1996.

4.6. Prices and factors affecting prices

(58) The Community producer's average net

sales price
decreased from ECU 133/tonne
in 1996 to ECU
99/tonne in the IP i.e. by 25 %. The fall was particularly
marked between 1996 and 1999, i.e. (– 28 %). Besides the
price depressive effect of the imports concerned, other
factors that may have contributed to the fall
in prices
were the decrease in demand on the Community market
between 1996 and 1997, imports from countries covered
by Council Regulation (EC) No 132/2001 and the Chinese
ban in nitrogen fertiliser imports imposed in 1997.

(63) Investment

investments

figures remained relatively stable over the
figures
period under consideration. These investment
include
steps
production
relating
preceding the production of AN. The most important
investments between 1996 and the IP were investments
in production facilities for nitric acid, which is a raw
material for the production of AN, but which may also
be used for other purposes such as the production of
UAN solutions.

to

4.12. Magnitude of the dumping margin

(64) As concerns the impact on the Community industry of
the magnitude of the actual margin of dumping, given the
volume and the prices of the imports from the countries
concerned,
impact cannot be considered to be
negligible.

this

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5. Conclusion

(65) As explained under recital

of

situation

return on investment,

(45) the introduction of the
anti-dumping measures on imports of AN originating in
Russia in 1995 in a first stage considerably improved the
applicant Community
the
economic
producers. However, starting from the year 1997, the
situation deteriorated again. Except market shares, which
slightly increased on account of price decreases, all other
i.e. production, sales volumes, prices,
injury indicators,
cash flow and
profitability,
employment developed negatively.
the
sharp decrease in the sales prices of
the Community
industry had a negative effect on its profitability. As
confirmed by Council Regulation (EC) No 132/2001
imposing definitive duties on imports of AN originating
in Poland and Ukraine, this development should be seen
in the light of the increased presence in the Community
market of imports from these third countries, which have
gained more than half of Russian market shares and
significantly undercut
the Community
industry.

the prices of

In particular

(66) In this respect it should be noted that Russian prices, on
the basis of Eurostat and excluding the specific duty
imposed in 1998, were below the sales price of Poland
and Ukraine during the whole period under review (27 %
below during the IP), with the exception of the year 1997,
when they were at the same level.

F. LIKELIHOOD OF RECURRENCE OF INJURY

1. Changes with respect to dumping and the situation
of the Community industry

1.1. Change in circumstances with respect to dumping

(67) The investigation has shown that the dumping margin has
increased significantly compared to the dumping margin
calculated in the previous investigation which led to the
measures in force. In fact, the dumping margin calculated
investigation was 41.9 % which is
in the previous
substantially lower than that calculated in the current
investigation (115.8 %).

1.2. Change in circumstances with respect to the situation of

the Community industry

(68) The investigation has shown that significant losses have
been suffered by the Community industry between 1998
and the IP. The situation is even worse than it was during
the investigation which led to the measures in place, since
for instance, the level of losses was almost three times
higher during the IP of the current investigation than it
was in the investigation period of the previous investi-
gation (1).

(69) Nearly throughout the entire period of the existence of
the duty on imports from Russia, substantial price under-
cutting took place. In March 1998 the variable duty had
to be replaced by a specific duty because measures proved

(1) OJ L 198, 23.8.1995, p. 1.

not to be effective. Moreover, as from July 1998, the
export prices at duty paid level
including the
specific duty) were below the non-injurious price of the
Community industry which was established in the original
investigation and which determined the level of the duty.

(i.e.

2. Likelihood of recurrence of injury

(70) In order to assess the likely effect of the expiry of the
elements were
the

following

force,

in

measures
considered.

(71) A pricing behaviour by Russian exporting producers, as
evidenced by low prices on third country markets and on
the Community market, coupled with their ability to
deliver additional significant quantities of AN, would in
all likelihood have a general price depressing impact on
what is a very price-sensitive commodity market should
measures be repealed. Russian exporting producers would
in all likelihood take over from the Community industry
significant additional market shares. This in turn would
lead to a recurrence of injury from imports originating in
Russia
the
Community industry, sales volumes and market shares
as well as the consequent impact in terms of profitability.

in terms of decreasing sales prices of

of

under

the measures

(72) The Community industry is in a difficult situation having
regard in particular to its profitability. Indeed, although
the situation of the Community industry, following the
imposition
consideration,
markedly improved in the first year of application of
the measures, it deteriorated again, in particular as from
1997, due to the injurious dumping of other countries'
established in Council Regulation (EC)
imports,
No 132/2001 and is now even worse.
In this regard,
should the measures against Russia be repealed, not
the Community industry
only would the situation of
again be put at risk, but also the benefit which the
Community industry should derive from the measures
imposed against other countries could be weakened or
even nullified.

as

such as

the decrease

(73) EFIA argued that the price decrease experienced in the
Community market as from 1997 is due to a number
of factors amongst which the Chinese import ban on
nitrogen fertilisers and that it cannot be attributed to
the Russian price behaviour. However, even if other
factors
in demand on the
Community market between 1996 and 1997 and the
the origin of a price
Chinese strategy may be at
decrease, the Russian prices decreased far more than the
prices of all other exporters, and were far below other
prevailing non-dumped import prices from countries such
as Lithuania, Egypt and Bulgaria. This may be explained
by the fact that Russia lost one of its most important
export markets given that Russian exports to China
amounted to more than 1 000 Ktonnes, i.e. 90 % of the
Chinese AN imports in 1996, i.e. the year before the ban
was imposed.

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leading to the

the situation of

since the deterioration of

(74) It was also claimed by the same importers' association
that,
the
Community industry has already been attributed to
Poland and Ukraine in the context of another investi-
anti-dumping
gation,
imposition of
it cannot be considered in relation to the
measures,
imports of AN originating in Russia as well.
In this
respect, it should be recalled that the scope of an expiry
the Community
review is to analyse the situation of
of
the
the
market
perspective
continuation or
recurrence of dumping and injury
should the measures in force be removed. Consequently,
with regard to the current expiry investigation, the fact
that
the Community industry has
been attributed during a certain period to the presence
of other third countries, namely Poland and Ukraine, in
the context of another anti-dumping proceeding, does not
affect
in the
Community market of Russian exporters and its likely
effect on the situation of the Community industry.

the deterioration of

future behaviour

the analysis of

likelihood

the

of

in

(75) EFIA finally claimed that the decrease of the Community
industry's profitability is mainly due to the price increase
of natural gas, and that an adjustment should have been
made to the non-injurious price to take this into account.

As mentioned under recital (59), it was considered that
this gas price increase may have had an influence on
the
profitability. However, profitability is only part of
analysis of the situation of the Community industry and
(65), many other indicators
as explained under recital
developed negatively over the period under review.
It
the gas price evolution
was therefore considered that
should be seen rather as an aggravating factor than as a
cause of the injury, given that the price pressure found
did not allow the Community industry to pass on the
increase via its sales prices.

recent years

the analysis of the gas price evolution in the
Finally,
to be very
Community over
volatile and no conclusions can be drawn with repect to
future development. Consequently, it was concluded that
there are no special circumstances on the Community
market that justify an adjustment.

shows

it

(76) On the basis of the above, it is concluded that, should the
measures be repealed, there is a likelihood of recurrence
of injury.

G. COMMUNITY INTEREST

1. Introduction

(77) According to Article 21 of

Commission examined whether

the basic Regulation,

the
a prolongation and

the

existing

anti-dumping measures
amendment of
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
the
involved,
importers/traders as well as the users of
the product
under consideration. In order to assess the likely impact
the
of maintaining or not maintaining the measures,
Commission requested information from all
interested
parties mentioned above.

the Community industry,

those of

i.e.

(78) It should be recalled that, in the previous investigation,
the adoption of measures was considered not
to be
against the interest of the Community. Furthermore, the
fact
thus
analysing a situation in which anti-dumping measures
have already been in place, would allow the assessment
of any undue negative impact on the parties concerned by
the current anti-dumping measures.

investigation is a review,

the present

that

(79) On this basis it was examined whether, despite the
conclusions on the
recurrence of
injurious dumping, compelling reasons existed which
in the
would lead to the conclusion that
Community
in this
particular case.

to maintain measures

likelihood of

interest

is not

it

a

2. Interest of the Community industry

(80) It is considered that if anti-dumping duties are not main-
tained, injurious dumping is likely to recur and that the
situation of the Community industry, which worsened
during the period under review, would further deteriorate.

(81) The Community industry has proven to be a structurally
viable industry, able to adapt to the changing conditions
on the market. This has been shown in particular by the
industry's profits achieved until 1997 and its investment
in state of the art production capacity. The success of
these efforts strongly depends on existence of a fair
competition on the Community market.

(82) It can reasonably be expected that

the Community
industry will benefit
from the measures imposed by
Council Regulation (EC) No 132/2001 provided that no
other source of injurious dumping will undermine these
measures. As outlined above, since there is a likelihood of
a recurrence of injurious dumping from Russia, it is in the
interest of the Community industry to maintain the anti-
dumping measures on imports of AN originating in
Russia.

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3. Interest of importers

(83) Questionnaires and information were received from the
European Fertiliser Import Association (EFIA — repre-
senting 24 importers) and two importers (out of the 48
questionnaires sent).

(89) EFIA and one users' association argued that

the anti-
dumping measures restrict competitively priced alternative
sources of AN for the farmers since only 37 % of all
imports of AN into the Community are not subject to
anti-dumping measures.

(84) The replies received from the two co-operating importers
confirmed the price decrease as from 1998 and the fact
that the Community producers had to follow this trend in
order
them also
underlined the necessity to maintain the European infra-
structure in order to guarantee good conditions for the
supply of the European market, whereas the association
was against the continuation of the measures.

to ensure competitiveness. One of

(85) In view of the low level of co-operation and the fact that
importers generally deal with a wide range of fertilisers, of
which ammonium nitrate is only one, it was concluded
that any negative impact of the continuation of measures
on importers would not be a compelling reason not to
impose the continuation of measures.

4. Interest of users

(86) The users of

the product concerned are farmers. The
Commission sent questionnaires to six users' associations
at the European and national levels. Two of them replied
to the questionnaire. Both are, as a matter of principle,
against the continuation of the measures.

(87) One users' association argued that the analysis of the
the users should be closely linked to the
interest of
British users'
interest, on the grounds that the highest
level of consumption of AN in the Community is in the
United Kingdom. However, the investigation established
that, during the IP, the United Kingdom accounted for
only 16 % (in volume) of the imports from Russia into
the Community of the product concerned, whereas France
accounted for 47 % of the Russian imports of AN into the
Community. On this basis,
the argument has to be
rejected.

(88) In addition, the same association argued that maintaining
the anti-dumping measures in force would decrease the
incomes of British farmers, thus putting them in a much
more difficult economic situation. In this respect, as stated
in Council Regulation (EC) No 132/2001, fertilisers repre-
sented on average 6 % of the total production costs for
farmers. Given that imports from the country concerned
represented, during the IP, 5 % of AN consumption in the
Community market, and given that only part of any
resulting import price increase is likely to be passed on
to the users, any increase in farmers' production costs is
likely to be minor. Moreover, were the Community
industry to increase not only the volume of sales but
also the prices, any such price increase would be limited
given the existence of other sources of supply. Indeed,
37 % of all imports of AN into the Community are not
subject to anti-dumping measures.

On the one hand it is recalled that the purpose of the
anti-dumping measures is not to restrict supply, but to
re-establish fair competition on the Community market.

On the other hand, it should be noted that percentage of
37 % is partly underestimated due to the fact that the
supply of AN to the EC market by non-dumping
countries became less attractive owing to the strong
price pressure exerted by Russia, Poland and Ukraine. It
is therefore highly likely that, should fair competition be
re-established, non-dumping countries will increase their
presence on the Community market.

(90) On the basis of the above, the likely impact on farmers
was considered not
to constitute a compelling reason
against the continuation of the measures, as a possible
negative effect on farmers
the
positive effect on the Community industry.

is unlikely to offset

5. Conclusion on the Community interest

(91) Given the above,

it was concluded that

compelling reasons of Community interest against
continuation of the measures.

there are no
the

H. ANTI-DUMPING MEASURES

(92) The complainant submitted that there were indications of
i.e.
the emergence of new forms of ammonium nitrate,
mixtures of ammonium nitrate with other products,
whose only purpose is
to circumvent possible anti-
dumping measures concerning ammonium nitrate. The
attention of the customs authorities is drawn to this issue.

(93) In view of

the conclusions

reached with regard to
dumping and injury, and taking into consideration that
it could be established that existing measures are not
achieving the intended results in removing the injury
previously established, it is concluded that anti-dumping
measures
to prevent
should be maintained in order
further injury, and that the level of the measures should
be modified.

(94) For establishing the level of duty, account has been taken
of the level of the dumping margin found and the amount
of duty necessary to eliminate the injury suffered by the
Community industry. On the basis of the lesser duty rule,
the injury margin was used for determining the amount of
duty to be imposed.

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(95) EFMA argued that a double mechanism (specific duty
coupled with a minimum import price) would be more
appropriate given the extremely low State-fixed gas prices
paid by the Russian producers. It is however considered,
that the specific duty is sufficient as it is based on the
findings of the review investigation and that the form of
i.e. a specific duty, discourages price
the measure,
manipulation and absorption of
the duties. EFMA's
request was therefore rejected.

(99) On the basis of the above, the amount of the duty shall be
equal to the fixed amount per tonne of AN as shown
below:

Country

Russia

Fixed amount of duty
EUR per tonne

47.07

(96) In order to establish the level of duty needed to remove
the injury caused by dumping, injury margins have been
calculated. The necessary price increase was determined
on the basis of a comparison, at the same level of trade,
import price, with the
of
non-injurious price of AN sold by the Community
industry on the Community market.

the weighted

average

reached in the absence of

(97) The non-injurious price has been obtained by adding to
the full unit cost of production a profit margin that may
reasonably be
injurious
dumping, taking account of the allowance with respect
to the difference between granular and prilled AN
the undercutting calculations. The
already made for
profit margin used for
this calculation is 8 %. The
difference resulting from the comparison between the
weighted average import price and the non-injurious
price of the Community industry was then expressed as
a percentage of the total cif import value.

(98) The applicant submitted that a profit margin of 15 %
return on capital employed (ROCE) would be appropriate.
this level of return was necessary to
It argued that
re-invest for the long term and to achieve an adequate
return on equity for shareholders. In the current context,
however, the relevant concept is a reasonable profit the
Community industry could have reached in the absence of
injurious dumping, which does not coincide with the
concept of the profit sought by shareholders. Given the
findings in recital (56) of Regulation (EC) No 132/2001,
and in the absence of any other comments, 8 % of
In order to
turnover seems to be a reasonable profit.
ensure the efficiency of the measures and to discourage
the price manipulation which has been observed
previously,
is considered appropriate to impose the
duty in the form of a specific amount per tonne.

it

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on
falling within CN code

1.
imports of
3102 30 90 and 3102 40 90, originating in Russia.

ammonium nitrate,

The amount of the applicable duty per tonne of product
2.
shall be a fixed amount per tonne of ammonium nitrate as
shown below:

Country

Russia

Fixed amount of duty
EUR per tonne

47.07

3.
In cases where goods have been damaged before entry
into free circulation and, 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 (1) the amount of anti-dumping duty mentioned
above, shall be reduced by a percentage which corresponds to
the apportioning of the price actually paid or payable.

Unless otherwise

4.
concerning customs duties shall apply.

specified,

the provisions

in force

Article 2

This Regulation shall enter into force on the day following 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.

(1) OJ L 253, 11.10.1993, p. 40.