Council Regulation (EC) No 658/2002 of 15 April 2002 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia
Date: 2002-04-15
Institutions: Council of the European Union
Subjects: Russia, anti-dumping duty, anti-dumping legislation, fertiliser, import, originating product

18.4.2002

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 658/2002

of 15 April 2002

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

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1), herein-
after referred to as ‘the basic Regulation’ and in particular
Article 11(2) and (3) thereof,

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

Whereas:

A. PROCEDURE

1. Previous investigations

(1)

(2)

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

anti-dumping

regional

a

from Lithuania and in August 1995,

In June 1994, a Community-wide anti-dumping invest-
igation concerning ammonium nitrate originating in
Lithuania and Russia was initiated subsequent
to a
complaint lodged by the European Fertiliser Manufac-
turers Association (EFMA). By Commission Decision 95/
344/EC (3), the proceeding was terminated in respect of
imports
the
Council, by Regulation (EC) 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 consisted of a variable duty
equal to the difference between ECU 102,9 per tonne
net of product (‘minimum import price’ or ‘MIP’) and the
net cif price, Community frontier before customs clear-
in all cases where the latter was lower.
ance,

(3)

(4)

(5)

Pursuant to a further investigation, which established
that these measures were being absorbed, the measures
were changed, in March 1998, by Regulation (EC) No
663/98 (5), to a specific duty of ECU 26,3 per tonne.

2. Investigations concerning other countries

In October 1999, an anti-dumping investigation was
initiated concerning imports into the Community of
ammonium nitrate originating in Lithuania, Poland and
Ukraine (6). It showed that imports of 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 Regulation (EC) No
132/2001 (7), definitive anti-dumping measures were
imposed on imports of ammonium nitrate originating in
Poland and Ukraine, while the proceeding was termi-
nated in respect of
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.

3. Present investigation

3.1. Request for review

Following the publication, on 24 February 2000, of the
notice of the impending expiry of the anti-dumping
measures in force on imports of ammonium nitrate
originating in Russia (8),
the Commission received a
request for an expiry and an interim review pursuant to
Article 11(2) and (3) of the basic Regulation, lodged by
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 interim review was based

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

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

(2) OJ L 129, 21.5.1994, p. 24.
(3) 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.

(6)

(7)

(8)

(9)

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on the grounds that the current measures did not appear
to be sufficient to counteract the injurious effects of
dumping.

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

(12)

Verification visits were carried out at the premises of the
following companies:

3.2. Notice of initiation

Having determined, after consultation of the Advisory
Committee, that sufficient evidence existed for the initia-
tion of a review, the Commission initiated an invest-
igation pursuant to Article 11(2) and (3) of the basic
Regulation by a notice published in the Official Journal of
the European Communities (1).

Community producers:

— Grande Paroisse SA, France,

— Hydro Agri France, France,

— Kemira Ince Ltd, United Kingdom,

— Terra Nitrogen, United Kingdom;

analogue country producer:

3.3. Period of investigation

— Mississippi Chemical Corporation, Yazoo City, USA.

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 recurrence of injury covered the
period from 1 January 1996 up to the end of the IP
(‘period under review’).

3.4. Parties concerned by the investigation

the

advised

the exporting producers

applicant
The Commission officially
in
Community producers,
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
Commission sent questionnaires to the exporting produ-
cers, Community producers, importers, users and asso-
ciations known to be concerned and to those who made
themselves known within the time limit set in the notice
of initiation.

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

(10) Nine Community producers, one analogue country
producer, two importers, one importers' association, and
two users' associations replied to the questionnaires.
With respect to the exporting country concerned, only
one reply to the questionnaire was received.

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

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

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

(13)

(14)

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.

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 characteris-
tics 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 gran-
ular and prilled AN have the same chemical characteris-
tics and end use and are perceived by users as being
interchangeable, they are to be regarded as two different
types of the same product.

(16)

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

(17)

(18)

(19)

(20)

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C. DUMPING AND LIKELIHOOD OF A CONTINUATION

OF DUMPING

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

(23)

In examining whether there is a likelihood of a contin-
uation of dumping,
it is necessary to verify whether
dumping exists at present and whether any such
dumping is likely to continue.

1. Dumping during the IP

1.1. Volume of exports to the Community during the IP

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.

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
gas distribution system. As an alternative, EFIA proposed
Lithuania on the grounds of its close proximity and
similar manufacturing conditions 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.

IP,

about 20 % of

Exports of AN from Russia amounted to 282 000
tonnes during the
total
i.e.
Community
imports of AN and about 5 % of
Community AN consumption. These imports are only
slightly below the level found in the previous invest-
igation period, i.e. 340 000 tonnes between April 1993
and March 1994.

1.2. MET and IT

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-
tionnaire within a reasonable period of time,
it was
considered appropriate not to process further their MET/
IT claim forms. Indeed, in the absence of the necessary
data for carrying out a dumping calculation, the claims
for MET and IT could not be considered. These compa-
nies were therefore considered as non-cooperating 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 Regulation.

(21)

The third company having submitted an MET/IT claim
form was found to have no exports of the product
In the
concerned to the Community during the IP.
absence of any actual export sales data for the IP, no
dumping calculation was possible in the context of
either the expiry review or the interim review. Conse-
quently, neither MET nor IT could be considered.

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 appropriate market economy third country. In the
notice of initiation, the Commission suggested Poland as

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

sole Lithuanian producer were willing to cooperate.

(25)

(26)

(27)

in
The Commission then approached producers
Australia and the USA as suggested by EFMA. As only
one producer from each of these countries was willing
to cooperate, 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 both producers had representative domestic
sales, the Australian producer did not face any signifi-
cant competition in its domestic market. Although the
USA producer also had significant domestic sales,
it
faced price competition from both domestic and foreign
companies. Consequently, the USA was selected as the
most appropriate analogue country.

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.

recent

from its

anti-dumping

the lack of
Following disclosure, EFIA argued that
cooperation from the sole Lithuanian producer should
not have prevented the Commission from using Lithu-
ania as the analogue country, as it had relevant informa-
proceeding
tion
concerning imports of ammonium nitrate from Lithu-
ania, 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 cover a period of six
the
months

to the initiation of

immediately prior

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

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In these circumstances it was considered
proceeding.
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
a given
proceeding for a precise purpose, in another proceeding
for a different purpose, where the party concerned has
moreover expressed its unwillingness to cooperate with
the second investigation, would be contrary to the provi-
sions of Article 19(6) of the basic Regulation. The argu-
ment was, therefore, rejected.

context 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 cooperated fully with the investigation.

(29)

(30)

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

Both EFIA and the cooperating 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 there are significant imports. As
such, the domestic prices of AN are to a significant
than cost-driven. No
extent market-driven rather
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 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 cooperating 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
of Community frontier cif prices,
in accordance with
Article 18 of the basic Regulation.

1.6. Comparison

(32)

(33)

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.

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

1.7. Dumping margin

(34)

In accordance with Article 2(11) and (12) of the basic
Regulation,
the country-wide dumping margin was
established on the basis of a comparison of the weighted
average normal value with the weighted average export
price at an ex-works level. The country-wide 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 34, exports 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.

(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, informa-
tion submitted by the only cooperating Russian
producer was used. However, this producer, although
exporting to third countries, did not have any export
sales to the Community. Second, in the absence of any
cooperating company with exports to the Community
market,
in accordance with Article 18(1) of the basic
Regulation, 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.

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(37)

(38)

The total capacity for AN production in Russia is esti-
mated about 8 900 000 tonnes (i.e. 1,6 times the
Community consumption for the IP), of which the
production capacity of the ‘export-oriented’ producers
(i.e. generally those with reasonable access to a port) is
estimated at a minimum of 4 500 000 tonnes. Although
capacity utilisation rates vary significantly between
different companies and from year
local
consumption is estimated at only about 2 200 000
tonnes. Taking into account the current level of Russian
exports to other third countries (i.e. 2 189 000 tonnes
in 1999),
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.

this means that

to year,

it is recalled that as recently as 1996,
Furthermore,
Russian exports to the Community accounted for 40 %
of total Russian exports (1) of the product under consid-
eration. This, in conjunction with the fact 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 of replacement of imports by domestic produc-
tion, 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.

(39) Having regard to the current price levels on the
Community market,
the Russian
it
is
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.

likely that

(40)

In addition, even though the world fertiliser consump-
tion is forecast to increase by the year 2004, the bulk of
the increase is expected to take place in Asia, mostly
China and India. However, China and India have devel-
oped massive capacities for fertiliser production in order
to reduce the level of imports. More particularly, China
imposed a ban on nitrogenous
imports,
including AN.

fertiliser

(42)

finding with regard to the likelihood of a continuation
of dumping for the country as a whole.

EFIA argued that, since the recent terrorist attacks in the
transport,
USA, all related costs, such as insurance,
unloading, storage and handling, are increasing and that
this will be reflected in higher prices of imported ferti-
liser, 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
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 investigation unsuitable and the
the results of
planned imposition of an anti-dumping duty manifestly
inappropriate. This was not found to be the case and the
argument was therefore rejected.

impact on export prices

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, dumping at a substantial
level and in increased volumes would very likely
continue.

D. DEFINITION OF THE COMMUNITY INDUSTRY

(44) Out of the 11 applicant Community producers, one did
not reply to the questionnaire (Sefanitro) and one did
not submit sufficient information (Chemical Industries
of Northern Greece). Consequently, both these producers
were considered to be non-cooperating and therefore
were not regarded as being part of the Community
industry.
the
remaining nine cooperating producers represented more
than 85 % of the Community production of AN during
the
the Community
they constitute
industry within the meaning of Article 4(1) and Article
5(4) of the basic Regulation.

IP. Therefore

investigation

established

that

The

(41) As mentioned in recital 21, the one exporting producer
which cooperated 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 necessitated a reduc-
tion 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 might sell to
the Community at non-dumped prices following any
expiry of the measures, this would not have altered the

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

E. ANALYSIS OF THE SITUATION IN THE COMMUNITY

MARKET

1. Preliminary remark

(45)

the anti-dumping measures on
The introduction of
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.

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2. Consumption

(46)

Community consumption was established on the basis
of the sales volume 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-cooperating
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
i.e. from 6 328 000
13 % between 1996 and the IP,
tonnes
in the IP.
Consumption decreased particularly between 1996 and
1997, and then remained relatively stable until the end
of the IP.

in 1996 to 5 525 000 tonnes

3. Imports from the country concerned

3.1. Volume and market share

(47)

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

With respect to the volume of the Russian imports, it
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, the conclusions of which 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
imports went down by 74 %, while other
increased by 30 %.

(48)

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

imports, namely 20 %.

(DEQ) and compared, at the
custom duty paid level
same level of trade, to Community producers' ex-works
prices, both for bagged products. This was done as
imports are always bagged, whereas the Community
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)

(52)

EFIA argued that an adjustment should have been made
for the lower quality of the product imported from
Russia. However, the investigation established that 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 country-wide 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 %.

4. Economic situation of the Community industry

4.1. Production

(53)

The Community industry's production decreased by
17 % between 1996 and the IP,
i.e. from 4 713 000
tonnes to 3 903 000 tonnes. A slight increase took place
between 1997 and 1998, but the production fell back
again in 1999.

3.2. Prices

4.2. Capacity and capacity utilisation

(49) After the imposition of

the
average prices of the imports concerned, as reported by
Eurostat, fell by 45 %, between 1996 and the IP.

the measures in 1995,

3.3. Price comparison

(50)

The Commission has examined whether the exporting
producers in the country concerned undercut the prices
of
the Community industry during the IP. For this
analysis, the cif prices of the exporting producers have
been duly adjusted to a Community frontier ex quay

(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
transformed into ammonia, various different products
are produced using the same production lines. The total
production capacity of the Community industry was
relatively stable over the period under consideration.
Capacity utilisation decreased from 56 % in 1996 to
46 % in 1997 and subsequently remained stable.

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4.3. Sales in the Community

fore considered as not being a meaningful indicator to
measure injury.

(55)

The sales volume of the Community industry decreased
from 4 238 000 tonnes in 1996 to 3 766 000 tonnes 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 cooperatives of farmers.

4.5. Market share

(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.
it was 68,2 % compared to 67 % in 1996.
In the IP,

4.6. Prices and factors affecting prices

(58)

The Community producers' 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 coun-
tries covered by Regulation (EC) No 132/2001 and the
Chinese ban in nitrogen fertiliser imports imposed in
1997.

4.7. Profitability and return on investment

(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.

During the period under review, the return on invest-
ment 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 AN followed very closely the profit-
ability trend.

(62)

(63)

4.10. Employment and wages

in the Community industry decreased,
Employment
from 1 986 to 1 608
between 1996 and the IP,
to
employees,
overall wages,
they followed a similar decline as
compared to the decrease of the number of persons
employed.

i.e. a decrease of 19 %. With respect

4.11. Investments

investments

Investment figures remained relatively stable over the
figures
period under consideration. These investment
include
to production steps
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
urea ammonium nitrate solutions.

4.12. Magnitude of the dumping margin

(64)

The impact on the Community industry of the magni-
tude of the actual margin of dumping, given the volume
and the prices of
the imports from the countries
concerned, cannot be considered to be negligible.

5. Conclusion

(65) As explained under recital 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. However, starting from the year 1997, the
situation deteriorated again. Except market shares, which
slightly increased on account of price decreases, all other
injury indicators, i.e. production, sales volumes, prices,
return on investment, 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 Regulation (EC) No 132/2001, this devel-
opment 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
prices of the Community industry.

In particular,

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 there-

(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 prices 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.

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F. LIKELIHOOD OF RECURRENCE OF INJURY

1. Changes with respect to dumping and the situa-

tion of the Community industry

(72)

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
the dumping
led to the measures in force.
margin calculated in the previous investigation was
41,9 % which is substantially lower than that calculated
in the current investigation (115,8 %).

In fact,

1.2. Change in circumstances with respect to the situation of

(73)

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 invest-
igation than it was in the investigation period of the
previous investigation, conducted under Regulation (EC)
No 2022/95.

(69) Nearly throughout the entire period of the existence of
the duty on imports from Russia, substantial price
undercutting took place. In March 1998 the variable
duty had to be replaced by a specific duty because
measures proved not to be effective. Moreover, as from
July 1998,
(i.e.
including the specific duty) were below the non-injur-
ious price of the Community industry which was estab-
lished in the original investigation and which determined
the level of the duty.

the export prices at duty paid level

(74)

2. Likelihood of recurrence of injury

(70)

In order to assess the likely effect of the expiry of the
measures
elements were
considered.

in force,

following

the

(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 in terms of decreasing sales prices

of the Community industry, sales volumes and market
shares as well as the consequent impact in terms of
profitability.

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 of the measures under consid-
eration, markedly improved in the first year of applica-
tion of the measures, it deteriorated again, in particular
as from 1997, due to the injurious dumping of other
countries' imports, as established in Regulation (EC) No
132/2001 and is now even worse. In this regard, should
the measures against Russia be repealed, not only would
the situation of the Community industry 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.

such as

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,
the decrease 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 1 000 000 tonnes,
i.e.
90 % of the Chinese AN imports in 1996, the year
before the ban was imposed.

the situation of

It was also claimed by the same importers' association
that, since the deterioration of
the
Community industry has already been attributed to
Poland and Ukraine in the context of another invest-
igation, leading to the imposition of anti-dumping meas-
ures, it cannot be considered in relation to the imports
of AN originating in Russia as well. In this respect, it
should be recalled that the scope of an expiry review is
to analyse the situation of the Community market as
against the likelihood that dumping and injury would
continue or recur should the measures in force be
removed. Consequently, with regard to the current
expiry investigation, the fact that the deterioration of 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 the analysis of
the future behaviour in the Community market of
Russian exporters and its likely effect on the situation of
the Community industry.

(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.

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L 102/9

As mentioned under recital 59, it was considered that
this gas price increase may have had an influence on
profitability. However, profitability is only part of the
analysis of the situation of the Community industry and,
as explained under recital 65, many other indicators
developed negatively over the period under review. It
was therefore considered that the gas price evolution
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.

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

(76) On the basis of the above, it is concluded that, should

the measures be repealed,

injury is likely to recur.

G. COMMUNITY INTEREST

1. Introduction

(77) According to Article 21 of the basic Regulation, the
Commission examined whether a prolongation and
amendment 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
involved,
the
importers/traders as well as the users of the product
under consideration. In order to assess the likely impact
of maintaining or not maintaining the measures, the
Commission requested information from all
interested
parties mentioned above.

the Community industry,

those of

i.e.

(78)

that

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

(79) On this basis it was examined whether, despite the
conclusions on the likelihood of a recurrence of injur-
ious 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.

2. Interest of the Community industry

(80)

(81)

(82)

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
further
deteriorate.

the period under

review, would

The Community industry has proved 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 the existence of a fair
competition on the Community market.

It can reasonably be expected that
the Community
industry will benefit from the measures imposed by
Regulation (EC) No 132/2001 provided that no other
source of injurious dumping undermines these measures.
As outlined above, since there is a likelihood of a recur-
rence 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.

3. Interest of importers

(83) Questionnaires and information were received from the
EFIA (representing 24 importers) and two importers (out
of the 48 questionnaires sent).

(84)

(85)

The replies received from the two cooperating importers
confirmed the price decrease as from 1998 and the fact
that the Community producers had to follow this trend
in order to ensure competitiveness. One of 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.

In view of the low level of cooperation and the fact that
importers generally deal with a wide range of fertilisers,
of which AN 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.

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4. Interest of users

competition be re-established, non-dumping countries
will increase their presence on the Community market.

(86)

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

(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 is unlikely to offset the posi-
tive effect on the Community industry.

(87) One users' association argued that the analysis of the
interest of the users should be closely linked to the
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 product concerned, whereas
the Community of
France accounted for 47 % of the Russian imports of AN
into the Community. On this basis, the argument has to
be rejected.

(88)

the same association argued that main-
In addition,
taining 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 Regulation (EC) No 132/2001,
fertilisers
the total
represented on average 6 % of
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. More-
over, 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.

(89)

EFIA and one users' association argued that the anti-
dumping measures restrict competitively priced altern-
ative sources of AN for the farmers since only 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.

it

should be noted that

the
On the other hand,
percentage of 37 % is partly underestimated due to the
fact that the supply of AN to the Community 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

5. Conclusion on the Community interest

(91) Given the above,

it was concluded that there are no
compelling reasons of Community interest against the
continuation of the measures.

(92)

(93)

(94)

(95)

(96)

H. ANTI-DUMPING MEASURES

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

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 should be maintained in order to prevent
further injury, and that the level of the measures should
be modified.

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 deter-
mining the amount of duty to be imposed.

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
i.e. a specific duty,
the measure,
discourages price manipulation and absorption of the
duties. EFMA's request was therefore rejected.

the form of

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,
of the weighted average import price, with the non-
injurious price of AN sold by the Community industry
on the Community market.

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(97)

(98)

The non-injurious price has been obtained by adding to
the full unit cost of production a profit margin that may
reasonably be reached in the absence of
injurious
dumping, taking account of the allowance with respect
to the difference between granular and prilled AN
already made for the undercutting calculations. The
profit margin used for this calculation is 8 %. The differ-
ence
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.

resulting from the

a

is

concept

relevant

reasonable profit

The applicant submitted that a profit margin of 15 %
return on capital employed would be appropriate.
It
argued that this level of return was necessary to reinvest
for the long term and to achieve an adequate return on
equity for shareholders. In the current context, however,
the
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
turnover seems to be a reasonable profit. In order to
ensure the efficiency of the measures and to discourage
the price manipulation which has been observed previ-
ously, it is considered appropriate to impose the duty in
the form of a specific amount per tonne.

(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:

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on
falling within CN codes 3102 30 90 and

1.
imports of AN,
3102 40 90, originating in Russia.

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

Country

Fixed amount of duty
(euro per tonne)

Russia

47,07

In cases where goods have been damaged before entry
3.
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
in paragraph 2 shall be reduced by a percentage which corre-
sponds to the apportioning of
the price actually paid or
payable.

Unless otherwise specified,
4.
concerning customs duties shall apply.

the provisions

in force

Country

Fixed amount of duty
(euro per tonne)

Russia

47,07

Article 2

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

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

Done at Luxembourg, 15 April 2002.

For the Council

The President

J. PIQUÉ I CAMPS

(1) OJ L 253, 11.10.1993, p. 1. Regulation as

last amended by
Commission Regulation (EC) No 993/2001 (OJ L 141, 28.5.2001,
p. 1).