Proposal for a Council Regulation repealing the anti-dumping duty on imports of urea originating in Russia, following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96, and terminating the partial interim reviews pursuant to Article 11(3) of such imports originating in Russia
Date: 2007-07-03
Institutions: European Commission
Subjects: EU market, Russia, anti-dumping duty, anti-dumping legislation, anti-dumping measure, chemical fertiliser, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 3.7.2007 
COM(2007) 382 final 

Proposal for a 

COUNCIL REGULATION  

repealing the anti-dumping duty on imports of urea originating in Russia, following an 
expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96, and 
terminating the partial interim reviews pursuant to Article 11(3) of such imports 
originating in Russia 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of 
22 December 1995 on protection against dumped imports from countries not members 
of  the  European  Community,  as  last  amended  by  Council  Regulation  (EC)  No 
2117/2005 of 23.12.2005 (‘the basic Regulation’) in the proceeding concerning imports 
of urea originating in Russia. 

•  General context 

This proposal is made in the context of the implementation of the basic Regulation and 
is the result of an investigation which was carried out in line with the substantive and 
procedural requirements laid out in the basic Regulation. 

•  Existing provisions in the area of the proposal 

Council  Regulation  (EC)  No  901/2001  imposing  a  definitive  anti-dumping  duty  on 
imports  of  urea  falling  within  CN  codes  3102  10  10  and  3102  10  90  originating  in 
Russia. The amount of the duty imposed is the difference between the minimum import 
price of EUR 115 per tonne and the net, free-at-Community-frontier price, before duty, 
if the latter price is lower. 

•  Consistency with other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

Interested  parties  concerned  by  the  proceeding  have  already  had  the  possibility  to 
defend their interests during the investigation, in line with the provisions of the basic 
Regulation. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

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On  4  May  2006,  the  Commission  initiated  an  expiry  review  of  the  anti-dumping 
measures  in  force  in  respect  of  imports  of  urea  originating  in  Russia  and  a  partial 
interim review of those measures, limited in scope to the form of the measures. On 1 
February 2007, the Commission initiated a partial interim review of the anti-dumping 
measures  in  force  in  respect  of  imports  of  urea  originating  in  Russia  limited  to  the 
examination of dumping as far as one exporting producer is concerned. 

The  purpose  of  the  expiry  review  investigation  was  to  examine  whether  there  is 
continuation or recurrence of dumping regarding imports of urea originating in Russia, 
thereby causing a continuation or recurrence of injury to the Community industry. 

The  investigation  did  not  establish  any  likelihood  of  recurrence  of  injury  should 
measures be allowed to lapse. In view of this finding, it is proposed that the measures 
are  repealed  and  that  that  the  proceeding  concerning  imports  of  urea  originating  in 
Russia  is  terminated.  Therefore,  it  is  also  proposed  to  terminate  the  partial  interim 
reviews. 

•  Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 2117/2005.  

•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason: 

The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

•  Choice of instruments 

Proposed instruments: regulation. 

Other  means  would  not  be  adequate  because  the  basic  Regulation  does  not  foresee 
alternative options. 

4)  BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION  

repealing the anti-dumping duty on imports of urea originating in Russia, following an 
expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96, and 
terminating the partial interim reviews pursuant to Article 11(3) of such imports 
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 Community1 ('the basic 
Regulation') and in particular Articles 11(2) and 11(3) thereof, 

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

Whereas: 

1. Measures in force 

A. 

PROCEDURE 

(1) 

In  March  1995,  the  Council,  by  Regulation  (EC)  No  477/952,  imposed  a  definitive 
anti-dumping duty on imports of urea originating in the Russian Federation ('Russia'). 
The amount of the duty imposed was the difference between ECU 115 per tonne and 
the  net,  free-at-Community  frontier  price,  before  duty,  if  the  latter  price  was  lower. 
The  investigation  that  led  to  these  measures  will  be  referred  to  as  'the  original 
investigation'.  Following  an  expiry  review  pursuant  to  Article  11(2)  of  the  basic 
Regulation,  the  Council,  by  Regulation  (EC)  No  901/20013,  decided  that  these 
measures should be maintained. The measures currently in force are in the form of a 
variable duty on the basis of a minimum import price ('MIP') of EUR 115 per tonne 
('the existing measures'). The review investigation that led to the maintenance of the 
measures will be referred to as 'the previous expiry review investigation'. 

(2) 

In  December  2003,  the  Council,  by  Regulation  (EC)  No  2228/20034,  terminated  a 
partial interim review initiated on the initiative of the Commission pursuant to Article 

1 

2 
3 
4 

OJ  L  56,  6.3.1996,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  2117/2005  (OJ  L  340, 
23.12.2005, p. 17). 
OJ L 49, 4.3.1995, p. 1. 
OJ L 127, 9.5.2001, p. 11. 
OJ L 339, 24.12.2003, p. 1. 

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11(3) of the basic Regulation  in order to examine the appropriateness of the form of 
the measures in force, without any amendment to the existing measures. 

2. Requests for reviews 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

In  August  2005,  the  Commission  published  a  notice  of  impending  expiry  of  the 
existing  measures5.  The  Commission  received  on  9  February  2006  a  request  for  an 
expiry review pursuant to Article 11(2) of the basic Regulation of these measures and 
a request for a partial interim review pursuant to Article 11(3) of the basic Regulation, 
limited to the form of the measures. 

These  requests  were  lodged  by  the  European  Fertilizer  Manufacturers  Association 
(EFMA)  ('the  applicant')  on  behalf  of  producers  representing  a  major  proportion,  in 
this case more than 50% of the total Community production of urea. 

The applicant alleged and provided sufficient prima facie evidence that the expiry of 
the measures would be likely to result in a continuation or recurrence of dumping and 
injury to the Community industry with regard to imports of urea originating in Russia 
('the country concerned') and that the current form of the measures is not sufficient to 
counteract the injurious effects of dumping.  

Furthermore,  on  14  September  2006,  a  request  for  a  partial  interim  review  of 
Regulation (EC) No 901/2001 was received from Joint Stock Company 'Mineral and 
Chemical Company EuroChem' ('EuroChem'), an exporting producer of urea in Russia 
subject to the anti-dumping measures in force. 

In the request pursuant to Article 11(3) of the basic Regulation, EuroChem provided 
prima  facie  evidence  to  support  its  claims  that,  as  far  as  it  is  concerned,  the 
circumstances on the basis of which measures were established had changed and that 
these changes are were of a lasting nature. EuroChem provided evidence showing that 
a comparison between its own costs and its export prices would lead to a reduction of 
dumping significantly below the level of the current measures. Therefore, EuroChem 
claimed that the continued imposition of measures at the existing levels, which were 
based on the level of injury margin previously established, was no longer necessary to 
offset dumping. 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed  for  the  initiation  of  an  expiry  review  pursuant  to  Article  11(2)  of  the  basic 
Regulation  and  of  the  two  partial  interim  reviews,  pursuant  to  Article  11(3)  of  the 
basic Regulation, the Commission initiated these three reviews by publishing notices 
of initiation in the Official Journal of the European Union6. 

3. Investigation 

3.1 Investigation period 

(9) 

As  regards  the  expiry  review,  the  investigation  of  continuation  or  recurrence  of 
dumping and injury covered the period from 1 April 2005 to 31 March 2006 ('review 

5 
6 

OJ C 209, 26.8.2005, p. 2. 
OJ C 105, 4.5.2006, p. 12; OJ C 23, 1.2.2007, p. 8. 

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investigation  period'  or  'RIP').  The  examination  of  the  trends  relevant  for  the 
assessment of a likelihood of a continuation or recurrence of injury covered the period 
from 2002 up to the end of the RIP ('period considered'). The period used in the partial 
interim review for the investigation of the appropriateness of the form of the measures 
is the same as the period considered in the expiry review. The investigation period for 
the partial interim review limited in scope to the examination of dumping concerning 
'EuroChem' was the period from 1 October 2005 to 30 September 2006. 

3.2  Parties concerned by the investigation 

(10)  The  Commission  officially  advised  the  exporting  producers  in  Russia,  importers  and 
users  known  to  be  concerned  and  their  associations,  the  representatives  of  the 
exporting  country  concerned,  the  applicant  and  known  Community  producers  of  the 
initiation  of  the  two  reviews.  Interested  parties  were  given  the  opportunity  to  make 
their views known in writing and to request a hearing within the time limit set in the 
notice of initiation. 

(11)  The  Commission  officially  advised 

the 
representatives of Russia, as well as the applicant of the initiation of the partial interim 
review limited in scope to the examination of dumping. Interested parties were given 
the opportunity to make their views known in writing and to request a hearing within 
the time limit set out in the notice of initiation. 

the  Russian  company  EuroChem, 

(12)  All interested parties, who so requested and showed that there were particular reasons 

why they should be heard, were granted a hearing.  

(13)  With regard to the expiry review and to the partial interim review limited to the form 
of  the  measures,  n  view  of  the  apparent  large  number  of  Community  producers, 
importers  in  the  Community  and  exporting  producers  in  Russia,  it  was  considered 
appropriate, in conformity with Article 17 of the basic Regulation, to examine whether 
sampling  should  be  used.  In  order  to  enable  the  Commission  to  decide  whether 
sampling would  indeed be necessary  and, if so, to select a sample, the above parties 
were requested, pursuant to Article 17(2) of the basic Regulation, to make themselves 
known  within  15  days  of  the  initiation  of  the  investigation  and  to  provide  the 
Commission with the information requested in the notice of initiation. 

(14)  With  regard  to  importers  into  the  Community,  only  one  importer  provided  the 
information requested in the notice of initiation and expressed its willingness to further 
co-operate with the Commission services. It was therefore decided that sampling was 
not necessary with regard to importers. 

(15)  Nine  Community  producers  properly  completed  the  sampling  form  and  formally 
agreed  to  co-operate  further  in  the  investigation.  Four  out  of  these  nine  companies, 
which were found to be representative of the Community industry in terms of volume 
of production and sales of urea in the Community, were selected for the sample. The 
four sampled Community producers accounted for around 50% of the total production 
of the Community industry, as defined in recital (63) below, during the RIP, whilst the 
above  nine  Community  producers  represented  around  60%  of  production  in  the 
Community. This sample  constituted  the largest representative  volume  of  production 
and sales of urea in the Community which could reasonably be investigated within the 
time available. 

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(16)  Five  exporting  producers  properly  completed  the  sampling  form  within  the  deadline 
and  formally  agreed  to  co-operate  further  in  the  investigation.  These  five  exporting 
producers accounted for 60% of the total Russian exports to the Community during the 
RIP. 

(17)  A sample of three exporting producers which could reasonably be investigated within 
the time available was selected in accordance with Article 17 of the basic Regulation, 
based  on  the  largest  quantity  of  exports  of  urea  made  to  the  Community.  The  three 
sampled  exporting  producers  accounted  for  50%  of  the  total  Russian  exports  to  the 
Community during the RIP. 

(18) 

In accordance with Article 17(2) of the basic Regulation, the parties concerned were 
consulted on the samples chosen and raised no objection thereto. 

(19)  As a result of additional information available, it was later established that one of the 
three sampled exporting producers actually was not amongst those having the largest 
quantity of exports to the Community. This exporting producer was therefore excluded 
from  the  sample  and  substituted  with  the  fourth  ranking  exporting  producer.  The 
sample so modified accounted for 48% of the total Russian exports to the Community 
during the RIP. 

(20)  Questionnaires were therefore sent to the four sampled Community producers, to the 
three sampled Russian exporting producers, as well as to all importers and users that 
had made themselves known. 

(21)  Replies  to  the  questionnaire  were  received  from  the  four  sampled  Community 
producers  and  three  exporting  producers  in  Russia,  as  well  as  from  one  unrelated 
importer and 7 users in the Community. In addition, several importers and users and 
their associations submitted comments without replying to the questionnaire. 

(22)  The  Commission  sought  and  verified  all  the  information  it  deemed  necessary  for  its 
analyses and carried out verification visits at the premises of the following companies: 

(a) 

Sampled Community producers 

– 

– 

– 

– 

Fertiberia S.A., Madrid, Spain, 

Nitrogénművek Zrt., Pétfűrdo, Hungary, 

SKW Stickstoffwerke Piesteritz GmbH, Lutherstadt Wittenberg, Germany, 

Yara  S.A.,  Brussels,  Belgium  and  its  related  producer  Yara  Sluiskil  B.V., 
Sluiskil, The Netherlands; 

(b)  Sampled exporting producers in Russia 

– 

JSC  Mineral  and  Chemical  Company  (Eurochem),  Moscow,  Russia,  and  its 
two related manufacturing companies: 

– 

– 

OJSC Azot (NAK Azot), Novomoskovsk, Russia, and 

OJSC Nevinnomyssky Azot (Nevinka Azot), Nevinnomyssk, Russia, 

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– 

– 

JSC Minudobrenia, Perm, Russia, 

JSC Acron, Velikij Novgorod, Russia. 

B. 

PRODUCT CONCERNED AND LIKE PRODUCT 

1. Product concerned 

(23)  The product concerned is the same as in the original investigation and in the previous 
expiry review investigation, i.e. urea falling within CN codes 3102 10 10 and 3102 10 
90 and originating in Russia. 

(24)  Urea is produced mainly from ammonia, which in turn is produced from natural gas. It 
may take a solid or a liquid form. Solid urea can be used for agricultural and industrial 
purposes.  Agricultural  grade  urea  can  be  used  either  as  a  fertiliser,  which  is  spread 
onto the soil, or as an animal feed additive. Industrial grade urea is a raw material for 
certain glues and plastics. Liquid urea can be used both as a fertiliser and for industrial 
purposes.  Although  urea  is  presented  in  the  different  forms  mentioned  above,  its 
chemical properties remain basically the same and may be regarded for the purposes of 
the present proceeding as one product. 

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2. Like product 

(25)  As  established  in  the  original  investigation  and  the  previous  expiry  review 
investigation, the current review investigations confirmed that the product concerned 
and  the  urea  produced  and  sold  by  the  Community  producers  on  the  Community 
market, as well as the urea produced and sold on the Russian domestic market have the 
same basic chemical characteristics and essentially the same uses. They are therefore 
considered  to  be  like  products  within  the  meaning  of  Article  1(4)  of  the  basic 
Regulation. 

C. 

LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING 

1. Continuation of dumping during the review investigation period 

(26) 

In  accordance  with  Article  11(2)  of  the  basic  Regulation,  it  was  examined  whether 
dumping was taking place during the RIP and, if so, whether or not the expiry of the 
measures would be likely to lead to a continuation of dumping. 

1.1 General 

(27)  As  mentioned  in  recital  (16)  above,  five  Russian  exporting  producers  of  urea 
cooperated  in  the  investigation.  These  five  producers  represented  60%  of  exports  of 
urea  originating  in  Russia  to  the  Community  during  the  RIP,  which  corresponded  to 
1,39 million tonnes. Imports into the Community of the product concerned originating 
in  Russia  represented  16%  of  Community  consumption,  which  was  8,98  million 
tonnes in the RIP. 

(28)  Therefore, the level of co-operation is considered high. 

1.2 Normal value  

(29) 

(30) 

It should be noted that one exporting producer controls two related companies, both of 
which are producing and exporting urea. The sample referred to in recital (19) above 
therefore includes four companies. 

It  was  first  established  for  each  of  the  four  companies  whether  their  total  domestic 
sales  of  urea  were  representative  in  accordance  with  Article  2(2)  of  the  basic 
Regulation, i.e. whether they accounted for 5% or more of the total sales volume of the 
product concerned exported to the Community. The investigation showed that all four 
companies sold representative quantities of urea on the domestic market.  

(31)  To establish whether sales of urea on the domestic market were in the ordinary course 
of trade, the cost of manufacturing had to be established. In this regard, it should be 
noted that energy costs, such as electricity and gas represent a major proportion of the 
manufacturing cost and a significant proportion of the total cost of production. It was 
therefore examined, pursuant to Article 2(5) of the basic Regulation, whether the costs 
associated  with  the  production  and  sales  of  the  product  under  consideration  were 
reasonably reflected in the records of the parties concerned. 

(32)  The  investigation  showed  no  indication  that  the  electricity  would  not  be  reasonably 
reflected in the records. In this context, it is inter alia noted that electricity prices paid 

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by the Russian producers during the RIP were in line with international market prices, 
when compared to other countries, such as Canada and Norway. However, the same 
could not be said with regard to gas prices.  

(33)  As concerns gas supplies, in fact, it was established on the basis of data published by 
internationally recognised sources specialised in energy markets, that the price paid by 
the Russian producers were abnormally low. By way of illustration, they amounted to 
one  fifth  of  the  export  price  of  natural  gas  from  Russia  and  were  also  significantly 
lower than the gas price paid by the Community producers. In this regard, all available 
data indicates that domestic gas prices in Russia were regulated prices, which are far 
below market prices paid in unregulated markets for natural gas. Since gas costs were 
not  reasonably  reflected  in  the  four  companies'  records,  they  had  to  be  adjusted 
pursuant  to  Article  2(5)  of  the  basic  Regulation.  The  cost  of  manufacturing  of  the 
sampled companies was adjusted accordingly. 

(34) 

In the absence of any undistorted gas prices relating to the Russian domestic market, 
and  in  accordance  with  Article  2(5)  of  the  basic  regulation,  gas  prices  had  to  be 
established  on  'any  other  reasonable  basis,  including  information  from  other 
representative markets.' The adjusted price was based on the average price of Russian 
gas  when  sold  for  export  at  the  German/Czech  border  ('Waidhaus'),  net  of  transport 
costs. Waidhaus being the main hub for Russian gas sales to the EU, which is both the 
largest  market  for  Russian  gas  and  has  prices  reasonably  reflecting  costs,  can  be 
considered a representative market. 

(35)  After  adjusting  costs  of  manufacturing  as  described  above,  only  two  companies  had 
representative domestic sales in the ordinary course of trade. For these two companies 
therefore, normal value was based on their domestic sales of the like product pursuant 
to Article 2(2) of the basic Regulation. 

(36)  For  the  other  two  companies,  normal  value  was  established  on  the  basis  of  the 
domestic sales prices of the two producers having representative domestic sales in the 
ordinary course of trade mentioned in recital (35) above, pursuant to Article 2(1) of the 
basic  Regulation.  Due  to  confidentiality  reasons,  this  information  could  not  be 
disclosed  in  detail,  as  one  of  the  two  companies  from  which  information  was  taken 
was  related  to  a  company  for  which  normal  value  was  established.  Therefore,  if  the 
information  had  been  disclosed,  it  would  have  been  possible  for  that  company  to 
reconstruct business confidential data of the other company. 

1.3 Export price 

(37) 

(38) 

In all cases where the product concerned was exported to independent customers in the 
Community,  the  export  price  was  established  in  accordance  with  Article  2(8)  of  the 
basic Regulation, namely on the basis of export prices actually paid or payable. 

In  the  case  of  one  exporting  producer  where  sales  were  made  via  a  related  trader  in 
Switzerland, the export price was constructed on the basis of the resale prices of that 
related trader to independent customers. Adjustments were made for all costs incurred 
between  purchase  and  resale  including  freight,  sales,  general  and  administrative 
expenses, and a reasonable profit margin. 

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1.4 Comparison 

(39)  The  normal  value  and  export  price  were  compared  on  an  ex-works  basis.  For  the 
purpose of ensuring a fair comparison between the normal value and the export price, 
due allowance in the form of adjustments was made for differences affecting price and 
price  comparability  in  accordance  with  Article  2(10)  of  the  basic  Regulation. 
Accordingly,  adjustments  were  made  for  differences  in  transport,  handling,  loading 
and ancillary costs, credit costs, commissions and packing costs where applicable and 
supported by verified evidence. 

1.5 Continuation of dumping 

(40)  The  dumping  margin  for  each  exporting  producer  was  established  on  the  basis  of  a 
comparison of a weighted average normal value with a weighted average export price, 
in accordance with Article 2(11) and (12) of the basic Regulation. 

(41)  The  investigation  showed  that dumping took  place  during  the  RIP  mostly  at  a  lower 
level  than  in  the  previous  expiry  review  investigation.  The  dumping  margins, 
expressed  as  a  percentage  of  the  CIF  Community  frontier  price,  duty  unpaid,  are 
nevertheless substantial, i.e. in the range of 6%-23%. 

2. Likelihood of Continuation of Dumping 

2.1 Effect of the removal of the existing measures on the dumped imports 

(42)  As mentioned in recital (1) above, the measures in force are in the form of a MIP of 
EUR 115/tonne. While this MIP initially had an influence on Russian export prices of 
urea to the Community, such prices have been significantly above the MIP since 2003 
as shown in recital (67) below, and during the RIP average Russian export prices have 
been 68% above the MIP. 

(43) 

It  can  therefore  be  concluded  that  the  measures  currently  in  force  had  no  impact  on 
either prices or quantities of exports of urea originating in Russia. As a consequence, it 
is  unlikely  that  there  will  be  an  impact  on  prices  or  quantities  of  exports  of  urea 
originating in Russia should measures be repealed. 

(44)  Notwithstanding the above, the possible effects of (i) existing Russian spare capacity 
and  possible  new  capacity  and  (ii)  the  likelihood  of  redirection  of  other  sales  to  the 
Community were also examined in the investigation, as explained below. 

2.2 Spare capacity 

(45)  The applicant has submitted evidence in its review request that there will be a total of 
nine  projects,  which  would  provide  substantial  new  capacity  in  Russia  in  the 
timeframe  of  2005-2007  due  to  revamps,  upgrades  and  de-bottlenecking,  accounting 
for an increase of at least 10% of the existing capacity. 

2.2.1 Co-operating producers 

(46)  The  possible  effects  of  the  existing  spare  capacity  were  examined.  The  Russian 
sampled producers managed to increase their production capacity by around 5%, while 

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they  increased  their  production  by  around  15%  during  the  period  considered. 
Therefore, their nominal spare capacity has significantly decreased to 170 000 tonnes, 
or around 6% of production capacity: 

2002 

2003 

2004 

2005 

RIP 

Capacity 

2.567.648 

2.567.648 

2.567.648  2.640.100  2.686.591 

Production 

2.179.525 

2.213.096 

2.364.564  2.537.327  2.516.367 

Spare Capacity 

388.123 

354.552 

203.084 

102.773 

170.224 

(47)  A total of five projects out of the nine referred to in the request concerned co-operating 
exporting  producers.  Two  projects  were  already  completed  during  the  period 
considered, and therefore provide no additional capacity compared to the RIP. For one 
project listed, only an insignificant capacity increase was established. 

(48)  As  regards  the  two  largest  projects,  which  account  for  the  majority  of  the  capacity 
increase mentioned in recital (46) above, it was established that the company does not 
only invest in urea capacity, but also in downstream production facilities for products 
such  as  urea-formaldehyde-resins  (UFR)  and  urea  and  ammonium  nitrate  solutions 
(UAN). These projects are either in an advanced stage or have already been completed 
post-RIP.  Therefore,  it  can  be  assumed  that  the  major  part  of  the  capacity  of  this 
project will not be sold to independent customers, but captively used as a feedstock for 
these  downstream  products.  This  part  is  therefore  not  taken  into  account  in  the 
following paragraph. 

(49) 

It follows from the above that the three projects would lead to an additional capacity 
available  for  sale  to  independent  customers  estimated  in  around  150 000-200 000 
tonnes.  This  corresponds  to  10%-15%  of  total  Russian  exports  to  the  Community 
during the RIP or a potential market share of 1,5%-2% of the Community market. 

2.2.2 Non-cooperating producers 

(50)  The overall spare capacity as a percentage of production capacity in Russia is in line 
with  the  spare  capacity  established  for  the  co-operating  producers,  according  to 
information  submitted  by  the  applicant.  It  is  therefore  considered,  that  the  non-
cooperating producers have a spare capacity of around 5% of production capacity as 
well, assessed to be around 140 000 tonnes during the RIP. 

(51)  A  total  of  four  projects  out  of  the  nine  referred  to  in  the  request  concerned  non-
cooperating exporting producers. These projects were  evaluated on the basis of facts 
available.  For  one  project,  it  was  established  that  it  was  not  regarding  the  product 
concerned,  but  methanol.  One  project  was  already  completed  during  the  period 
considered,  and  therefore  provides  no  additional  capacity  compared  to  the  RIP.  One 
project was referring to an insignificant investment of less than 1 million EUR p.a. and 
was  therefore  deemed  not  to  have  a  quantifiable  impact  on  Russian  capacity.  As  for 
the  remaining  project,  it  could  lead  to  a  capacity  increase  of  around  100 000  tons 
(corresponding to ca. 7% of total Russian exports to the Community during the RIP or 
a potential market share of 1% of the Community market). 

EN 

12 

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2.2.3 Conclusion on spare capacity 

(52)  The  investigation  showed  that  the  additional  capacity  available  in  the  medium  term 
will be close to 500 000 tonnes. But as a significant part of the additional quantity due 
to  revamps,  upgrades  and  de-bottlenecking  will  be  used  captively  as  feedstock  for 
downstream products, it is concluded that only about roughly half of this quantity will 
be available for sale to independent customers. 

(53)  Since  the  Russian  domestic  market  is  small  and  there  are  no  indications  that  this  is 
likely to change in the future, any increase in production will be export oriented. As 
the nominal capacity utilisation of the Russian producers is around 95%, only limited 
additional quantities are available for export. 

(54)  The existing spare capacity and non-captive additional capacity expected to be created 
in  the  near  future  represent  together  about  roughly  550.000-600.000  tonnes, 
corresponding  to  around  40%  of  total  Russian  exports  to  the  Community  during  the 
RIP,  a  potential  market  share  of  around  6%  of  the  Community  market.  However, 
according  to  forecasts  of  consultancies  specialized  in  fertilizers  provided  by  the 
applicant, the world-wide demand for urea is predicted to increase at a pace similar to 
the  increase  in  world-wide  capacity.  Therefore  additional  quantities  available  for 
export may be directed to the regions where additional demand exists. It is therefore 
probable that Russian exports to the Community will increase in significant quantities 
only if there is an equivalent increase in demand, i.e. such additional exports should 
not have a negative effect on the price level on the Community market.  

(55) 

It cannot therefore be concluded that that the volume of Russian dumped exports into 
the Community will be affected by the Russian spare capacity. 

2.3 Likelihood of redirection of other sales to the Community 

(56)  During the RIP, export prices to the Community of the sampled exporting producers 
on  an  ex-works  basis  were  about  1%  -  5%  lower  than  export  prices  to  other  third 
countries.  Domestic  prices  were  also  higher  than  export  prices  to  the  Community, 
especially  for  companies  located  in  remote  areas  due  to  the  significant  difference  in 
transport costs. 

(57)  The applicant argues that there are significant investments in urea production capacity, 
mainly in North Africa and the Middle East. This new capacity allegedly will result in 
fewer  opportunities  for  Russian  exporters  on  other  markets,  and  lead  to  increased 
quantities  of  Russian  urea  being  exported  to  the  Community.  It  was,  however, 
established  on  the  basis  of  the  forecasts  referred  to  in  recital  (54)  above  that  these 
investments  will  not have a significant impact on the global  supply/demand  balance, 
as global demand is predicted to increase in line with global capacity. 

(58) 

It cannot therefore be concluded that the volume of Russian dumped exports into the 
Community will be affected by a redirection of goods to the Community. 

EN 

13 

   EN 

 
2.4 Conclusion on the likelihood of continuation of dumping 

(59)  On  the  basis  of  the  analysis  carried  out  above,  and  in  particular  due  to  the  lack  of 
impact  of  current  measures  on  export  prices  to  the  Community,  it  is  concluded  that 
should measures be repealed, there is a likelihood that dumping will continue. 

D. 

DEFINITION OF THE COMMUNITY INDUSTRY 

(60)  Within  the  Community,  the  like  product  is  manufactured  by  16  producers,  whose 
output is deemed to constitute the total Community production within the meaning of 
Article 4(1) of the basic Regulation. Eight of these 16 companies became part of the 
Community producers due to the enlargement of the European Union in 2004. 

(61)  Out  of  the  16  Community  producers,  nine  companies  co-operated  with  the 
investigation, all of them mentioned in the review request. Three other producers made 
themselves  known  within  the  time  limits  and  sent  the  information  requested  for  the 
purpose  of  sampling.  However,  they  did  not  offer  any  further  co-operation.  No 
Community producer opposed the review request. 

(62)  Accordingly, the following nine producers agreed to co-operate:  

– 

– 

– 

– 

– 

– 

– 

– 

– 

Achema AB (Lithuania), 

AMI Agrolinz Melamine International GmbH (Austria),  

Chemopetrol, a.s. (Czech Republic), 

Duslo, a.s. (Slovak Republic), 

Fertiberia S.A. (Spain), 

Grande Paroisse S.A. (France), 

Nitrogénművek Zrt. (Hungary), 

SKW Stickstoffwerke Piesteritz GmbH (Germany), 

Yara:  consolidation  of  Yara  France  S.A.  (France),  Yara  Italia  S.p.a.  (Italy), 
(The 
Yara  Brunsbuttel  GmbH 
Netherlands)7. 

(Germany)  and  Yara  Sluiskil  B.V. 

(63)  As  these  nine  Community  producers  accounted  for  around  60%  of  the  total 
Community  production  during  the  RIP,  it  is  considered  that  the  above  nine 
Community  producers  account  for  a  major  proportion  of  the  total  Community 
production  of  the  like  product.  They  are  therefore  deemed  to  constitute  the 
Community industry within the meaning of Article 4(1) and Article 5(4) of the basic 
Regulation and will hereinafter be referred to as the ‘Community industry’. The seven 

7 

It  should  be  noted  that  as  compared  to  the  original  investigation  and  the  previous  expiry  review 
investigation, the “Hydro Agri” companies have been renamed “Yara”. 

EN 

14 

   EN 

 
                                                 
non-cooperating  Community  producers  will  be  referred  to  as  "other  Community 
producers". 

(64)  As indicated above, a sample consisting of four companies was selected. All sampled 
Community producers cooperated and sent questionnaire replies within the deadlines. 
In  addition,  the  remaining  five  co-operating  producers  duly  provided  certain  general 
data for the injury analysis. 

E. 

SITUATION IN THE COMMUNITY MARKET 

1.  Consumption in the Community market 

(65)  The  apparent  Community  consumption  of  urea  was  established  on  the  basis  of  data 
submitted  by  the  applicant  and  Eurostat  data  for  all  EU  imports.  Given  the 
enlargement of the European Union in 2004, for the sake of clarity and consistency of 
the  analysis,  the  consumption  was  established  on  the  basis  of  the  EU-25  market 
throughout the period considered. As this investigation was initiated before the further 
enlargement of the Community by Bulgaria and Romania, the analysis is limited to the 
situation of the EU-25.  

(66)  Between 2002 and the RIP, Community consumption increased by 4%. 

2002 

2003 

2004 

2005 

RIP 

Total EC 
consumption in 
tonnes 

Index (2002=100) 

8 651 033 

8 945 707

8 954 402

8 873 804 

8 978 696

100 

103 

104 

103 

104 

2.  Volume, market share and prices of imports from Russia 

(67)  The volumes, market shares and average prices of the imports from Russia developed 
as set out below. The following quantity and price trends are based on Eurostat. 

2002 

2003 

2004 

2005 

RIP 

Volume of imports (tonnes) 

1.375.543 1.429.565 1.783.742 1.404.863  1.393.277

Index (2002=100) 

 100 

 104 

 130 

 102 

 101 

Market share 

16% 

16% 

20% 

16% 

16% 

Prices of imports (EUR/tonne) 

 119 

 133 

 154 

 180 

 193 

Index (2002=100) 

 100 

 112 

 129 

 151 

 162 

EN 

15 

   EN 

 
 
 
(68)  The volume of Russian imports as well as their market share remained relatively stable 
throughout the whole period considered, except for a peak in 2004 which is explained 
by  stockpiling  in  the  10  EU  Member  States  before  the  enlargement  of  1 May  2004. 
The prices of Russian imports increased from 119 to 193 EUR/tonne during the period 
considered. This evolution reflects the favourable market conditions described also in 
recital (85) below. 

(69)  The  Russian  import  prices  show  that  as  of  the  beginning  of  the  period  considered 
(2002), the Russian producers have been exporting to the Community at a price level 
well above the minimum import price of EUR 115 per tonne. 

(70)  For  the  purpose  of  calculating  the  level  of  price  undercutting  during  the  RIP, 
Community  industry’s  ex-works  prices  to  unrelated  customers  have  been  compared 
with  the  CIF  Community  frontier  import  prices,  of  co-operating  exporting  producers 
of  the  country  concerned,  duly  adjusted  in  order  to  reflect  a  landed  price.  The 
comparison showed that imports from Russia were not undercutting the prices of the 
Community industry. 

3. 

Imports from other countries  

(71)  The  volume  of  imports  from  other  third  countries  during  the  period  considered  are 
shown in the  table below.  The following  quantity and price trends are also based on 
Eurostat. 

EN 

16 

   EN 

 
2002 

2003 

2004 

2005 

RIP 

imports  from  Egypt 

 579.830  629.801  422.892 

 385.855 

 457.056 

7% 

7% 

5% 

4% 

5% 

Volume  of 
(tonnes) 

Market share 

Prices  of 
(EUR/tonne) 

imports 

from  Egypt 

 149 

 163 

 178 

 220 

 224 

Volume  of  imports  from  Romania 
(tonnes) 

260 298 398 607

235 417

309 195 

239 335

Market share 

3% 

4% 

3% 

3% 

3% 

Prices  of  imports  from  Romania 
(EUR/tonne) 

123 

142 

175 

197 

209 

Volume  of  imports  from  Croatia 
(tonnes) 

 126 400  179 325  205 921 

 187 765 

 187 362 

Market share 

1% 

2% 

2% 

2% 

2% 

Prices  of 
(EUR/tonne) 

imports 

from  Croatia 

 125 

 135 

 145 

 172 

 177 

Volume  of  imports  from  all  other 
countries  not  mentioned  above 
(tonnes) 

 663 940

605 063

536 345

 580 311 

492 659

Market share 

8% 

7% 

6% 

7% 

5% 

Prices  of  imports  from  all  other 
countries  not  mentioned  above 
(EUR/tonne) 

 128 

 172 

 169 

 206 

 216 

(72) 

It should be noted that both Egypt and Romania decreased their export volumes from 
2002  to  the  RIP,  whereas  Croatia's  export  volumes  increased  from  126  thousand 
tonnes in 2002 to 187 thousand tonnes in the RIP. Croatia's Community market share 
however  remained  stable  at  1-2%.  As  for  the  export  prices,  Egypt  exported  to  the 
Community at prices higher than the Community industry prices throughout the period 
considered and Romania as of 2004. The Croatian prices, on the contrary, were lower 
than the Community industry's prices throughout the whole period considered. Croatia 
did, however, not increase its market share in the Community market during the period 
considered. It should be noted that imports from Croatia are, since January 2002, by 

EN 

17 

   EN 

 
 
 
 
Council Regulation (EC) No 92/20028, subject to an anti-dumping duty of EUR 9,01 
per tonne. 

4. 

Economic situation of the Community industry  

(73)  Pursuant  to  Article  3(5)  of  the  basic  Regulation,  the  Commission  examined  all 
relevant economic factors and indices having a bearing on the state of the Community 
industry.  

4.1.  Preliminary remarks 

(74)  Where recourse is made to sampling, in accordance with established practice, certain 
injury indicators (production, production capacity, productivity, stocks, sales volumes, 
market share, growth and employment) are analysed for the Community industry as a 
whole  ('C.I'  in  the  enclosed  tables),  while  those  injury  indicators  relating  to  the 
performances  of  individual  companies,  i.e.  prices,  profitability,  wages,  investments, 
return on investment, cash flow, ability to raise capital, are examined on the basis of 
information  collected  at  the  level  of  the sampled Community  producers ('S.P.' in the 
enclosed tables). 

4.2.  Data relating to the Community industry as a whole 

(a) Production 

(75)  The Community industry’s total production volume, including production for captive 
use,  remained  stable  at  4,3  million  tonnes  between  2002  and  the  RIP,  except  for  a 
slight  temporary  increase  in  2003.  Within  the  total  production,  also  the  share  of  the 
production  used  for  captive  transfers  remained  practically  stable  around  20%  of  the 
total  production,  showing  that  it  cannot  affect  the  injury  picture  of  the  Community 
industry. 

2002 

2003 

2004 

2005 

RIP 

C.I. production (tonnes) 

4.311.986 4.540.021 4.331.387 4.369.705  4.322.214

Index (2002 = 100) 

100 

105 

100 

101 

100 

C.I.  production  used  for  captive 
transfers 

 832.919 

 837.701 

 842.643 

 899.173 

 893.573 

Index (2002 = 100) 

100 

101 

101 

108 

107 

As% of total production 

19,3% 

18,5% 

19,5% 

20,6% 

20,7% 

8 

OJ L 17, 19.1.2002, p. 1. 

EN 

18 

   EN 

 
 
                                                 
 (b) Capacity and capacity utilisation rates 

(76)  Production  capacity  increased  slightly  from  2002  to  RIP  (5%).  In  view  of  the 
production volume of the CI remaining stable, the capacity utilisation rate decreased 
slightly during the period considered, from a level of 84% in 2002 to the level of 81% 
in the RIP. However, as already noted in the previous expiry review investigation, the 
ammonia used for the production of urea can also be used for the production of other 
fertilizers. The capacity utilisation rate for urea production is accordingly also affected 
by the development of other fertilisers, and it is therefore less meaningful as an injury 
indicator.  

2002 

2003 

2004 

2005 

RIP 

production 

C.I. 
(tonnes) 

capacity 

5.109.600 

5.153.906  5.156.743 

5.402.760  5.362.590

Index (2002 = 100) 

100 

101 

101 

106 

105 

C.I. capacity utilisation 

84% 

88% 

84% 

81% 

81% 

Index (2002 = 100) 

100 

104 

100 

96 

96 

(c) Stocks  

(77)  The level of closing stocks of the Community industry was volatile during the period 
considered. An increase of 27% was recorded from 2002 to 2005, but a sharp decrease 
was registered during the three last months of the RIP (January –  March 2006). The 
high volatility of the stock levels can be explained by the seasonality of the sales and 
by the fact that urea used for captive use is stored together with the urea sold on the 
free  market.  Therefore,  the  level  of  stocks  is  considered  a  less  meaningful  injury 
indicator.  

2002 

2003 

2004 

2005 

RIP 

C.I. closing stocks (tonnes) 

 253 853 

 238 888 

 262 194 

 322 766 

 223 941 

Index (2002 = 100) 

100 

94 

103 

127 

88 

EN 

19 

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(d) Sales volume  

(78)  Sales  by  the  Community  industry  on  the  Community  market  decreased  slightly 

between 2002 and the RIP, i.e. by 3%. 

2002 

2003 

2004 

2005 

RIP 

C.I. EC sales volume (tonnes)  

3.155.215 3.242.758 3.054.663 2.996.471  3.048.955

Index (2002 = 100) 

100 

 103 

 97 

 95 

 97 

(e) Market share 

(79)  The market share held by the Community industry also decreased slightly during the 

period considered, being at 36,5% in 2002 and at 34,0% during the RIP. 

2002 

2003 

2004 

2005 

RIP 

36,5% 

36,3% 

34,1% 

33,8% 

34,0% 

100 

99 

93 

93 

93 

Market  share  of  Community 
industry 

Index (2002 = 100) 

(f) Growth  

(80)  The Community industry lost certain part of its market share (1,5 percentage points) in 
a slightly rising market (4%) over the period considered. The market share lost by the 
Community  industry  was  not  taken  over  by  Russian  imports,  since  as  indicated  in 
recital (67) above, the market share of the Russian imports remained stable from 2002 
to  the  RIP.  Also  in  view  of  the  fact  that  the  market  share  of  imports  from  other 
countries  decreased  by  3,5  percentage  points,  it  must  be  concluded  that  the  market 
share  lost  by  the  Community  industry  was  taken  over  by  the  other  Community 
producers.  

(g) Employment 

(81)  The  level  of  employment  of  the  Community  industry  declined  by  6%  between  2002 
and  the  RIP,  while  production  increased  slightly,  reflecting  thus  an  increase  in 
productivity. 

2002 

2003 

2004 

2005 

RIP 

C.I. 
concerned 

employment 

product 

 1 233 

 1 228 

 1 157 

 1 161 

 1 164 

Index (2002 = 100) 

100 

100 

94 

94 

94 

EN 

20 

   EN 

 
 
 
 
 
(h) Productivity  

(82)  The output per person employed by the Community industry per year increased by 6% 
between  2002  and  the  RIP,  due  to  the  reduced  employment  level  of  the  same 
magnitude over a stable production of the Community industry.  

2002 

2003 

2004 

2005 

RIP 

productivity 

C.I. 
employee) 

(tonnes 

per 

 3 497 

 3 697 

 3 744 

 3 764 

 3 713 

Index (2002 = 100) 

100 

106 

107 

108 

106 

(i) Magnitude of dumping margin  

(83)  As  concerns  the  impact  on  the  Community  industry  of  the  magnitude  of  the  actual 
margin  of  dumping  found  in  the  RIP,  given  the  fact  that:  (i)  the  volume  of  imports 
from  Russia  has  remained  at  a  relatively  stable  level  over  the  period  considered,  (ii) 
the Russian import prices have increased significantly throughout the same period, (iii) 
there was no undercutting during the RIP and (iv) the overall financial situation of the 
Community industry, this impact is considered not to be significant and the indicator 
not meaningful. 

(j) Recovery from the effects of past dumping  

(84)  The indicators examined above and below clearly show significant improvement in the 

economic and financial situation of the Community industry. 

4.3.  Data relating to the sampled Community producers 

(a) Sales prices and factors affecting domestic prices 

(85)  The  sampled  Community  industry  producers'  average  unit  sales  price  to  unrelated 
customers increased substantially between 2002 and the RIP, reflecting the prevailing 
favourable international market conditions of urea during the same period. 

S.P. unit price EC market 
(EUR/tonne) 

2002 

2003 

2004 

2005 

RIP 

 137 

 149 

 164 

 188 

 199 

Index (2002 = 100) 

100 

109 

120 

137 

145 

EN 

21 

   EN 

 
 
 
 
(b) Wages  

(86)  Between 2002 and the RIP, the annual labour cost per employee increased moderately 

by 11%. 

2002 

2003 

2004 

2005 

S.P. annual labour cost per employee 
(1 000 EUR) 

 47 

 50 

 50 

 52 

RIP 

 52 

Index (2002 = 100) 

100 

106 

106 

111 

111 

(c) Investments  

(87)  The  annual  flow  of  investments  in  the  like  product  made  by  the  four  sampled 
producers  developed  positively  during  the  period  considered,  i.e.  increased  by  10% 
from 2002 to the RIP, although it showed some fluctuations. 

2002 

2003 

2004 

2005 

RIP 

S. P. Net investments (1 000 EUR) 

 116 186 

 114 079 

 128 191 

 140 967 

 128 259 

Index (2002=100) 

100 

98 

110 

121 

110 

(d) Profitability and return on investments 

(88)  Profitability of the sampled producers shows a significant improvement from 2002 to 
the  RIP,  when  it  reached  the  level  of  16,9%.  In  this  respect,  it  is  noted  that  in  the 
original  investigation,  a  profit  margin  of  5%  that  may  be  reached  in  the  absence  of 
injurious dumping had been established. The return on investments (ROI), expressed 
as  the  profit  in  percent  of  the  net  book  value  of  investments,  broadly  followed  the 
profitability trend. It increased over three-fold during the period considered. 

2002 

2003 

2004 

2005 

RIP 

S.P.  profitability  of  EC  sales  to  unrelated 
customers (% of net sales) 

7,3% 

10,9%  17,7%  18,4%  16,9% 

Index (2002=100) 

 100 

 149 

 242 

 252 

 232 

S.  P.  ROI  (profit  in  %  of  net  book  value  of 
investment) 

13,3%  27,2%  45,7%  47,0%  45,9% 

Index (2002=100) 

 100 

 205 

 344 

 353 

 345 

EN 

22 

   EN 

 
 
 
 
 
(e) Cash flow and ability to raise capital  

(89)  Cash-flow  increased  more  than  three-fold  during  the  period  considered.  This 
development is in line with the development of  the overall profitability and the ROI 
during the period considered. 

2002 

2003 

2004 

2005 

RIP 

S.P. cash flow (1 000 
EUR) 

30 283 

52 110 

84 340  

99 110 

105 287 

Index (2002=100) 

100 

 172 

 279 

 327 

 348 

(90)  The  investigation  did  not  reveal  any  difficulties  encountered  by  the  sampled 

Community producers in raising capital. 

5.  Conclusion 

(91)  Between  2002  and  the  RIP,  the  market  share  of  the  Community  industry  decreased 
slightly,  as  did  its  sales  volume  on  the  Community  market.  However,  the  overall 
financial  situation  of  the  Community  industry  has  overwhelmingly  improved  during 
the period considered, as compared to the period preceding the previous expiry review 
that in 2001 resulted in maintenance of the existing measures, which are in force since 
1995. 

(92)  During  the  period  considered,  profitability  of  the  sampled  producers  increased 
considerably, exceeding significantly, in each year of the period considered, the level 
of  profitability  set  as  a  target  profit  in  the  original  investigation.  Also  return  on 
investment and cash-flow increased manyfold. Production volume of the Community 
industry  remained  stable.  Sales  prices  of  the  sampled  producers  evolved  positively 
over the whole period considered. Wages developed moderately and the Community 
industry continued to invest. 

(93) 

It should be noted that the overwhelmingly positive development of the profitability of 
the  Community  industry  took  place  in  a  context  of  the  Russian  export  prices  to  the 
Community  being  significantly  above  the  MIP  albeit  dumped.  Therefore,  throughout 
the  period  considered,  the  Russian  export  prices  have  not  affected  the  Community 
industry. 

(94)  The  applicant  has,  after  receiving  the  disclosure  of  the  findings  of  the  Commission, 
claimed that the long term profitability requirements, measured as a return on sales, for 
the  urea  industry  should  be  at  the  level  of  25%  after  tax.  This  would  translate  to 
around 36% pre-tax profit on turnover. The applicant claimed that this is justified by 
the cost of establishing a new ammonia/urea complex, which would require a return on 
investment of 11% (allegedly equivalent to the 36% pre-tax profit on turnover). In this 
regard, it is noted that the applicant has never claimed such a high target profit in the 
framework of this proceeding, and in the original investigation a profit margin of 5% 
that  may  be  reached  in  the  absence  of  injurious  dumping  was  established. 
Furthermore,  the  Court  of  First  Instance  has  in  its  judgement  in  Case  T-210/95 
confirmed that "… the profit margin to be used by the Council when calculating the 
target price that will remove the injury in question must be limited to the profit margin 

EN 

23 

   EN 

 
 
which the Community industry could reasonably count on under normal conditions of 
competition,  in  the  absence  of  the  dumped  imports."9  In  the  same  case,  it  was 
confirmed  that  "….  [an]  argument  that  the  profit  margin  which  is  to  be  used  by  the 
Community  institutions  must  be  the  margin  necessary  to  ensure  the  survival  of  the 
Community industry and/or an adequate return on capital, has no basis whatever in the 
basic  regulation."10  Indeed,  in  the  present  case  the  applicant  has  not  submitted  any 
evidence that, in the absence of the dumped imports, the Community industry would 
have been able to achieve returns at the level requested. Neither did the applicant show 
what profit margin the Community industry would have been able to achieve but for 
the dumped imports. This claim was therefore rejected.  

(95) 

In the light of the foregoing, it is concluded that there was no continuation of material 
injury to the Community industry. 

F. 

LIKELIHOOD OF RECURENCE OF INJURY  

(96)  Since there is no continuation of material injury caused by imports from the country 
concerned,  the  analysis  focused  on  the  likelihood  of  recurrence  of  material  injury 
should  the  existing  measures  be  removed.  In  this  respect,  the  lack  of  impact  of  the 
existing measures on Russian import volumes and prices was analysed. In addition, the 
possible  effects  of  the  existing  Russian  spare  capacity  and  possible  new  capacity  as 
well  as  the  likelihood  of  redirection  of  other  sales  by  the  Russian  producers  to  the 
Community were examined. 

1. 

Lack of impact of the existing measures on import volumes and prices 

(97)  As illustrated in the table below, since 2002, the Russian export prices of the product 
concerned to the Community have been always above the MIP of EUR 115 per tonne, 
whereas as of 2003 to the end of the period considered, these prices were significantly 
above  the  MIP.  During  the  RIP,  average  Russian  export  prices  to  the  Community 
market  were  68%  above  the  MIP.  This  clearly  shows  that  at  least  since  2003,  the 
Russian export prices have not been influenced by the existing measures. 

Average unit price (EUR/tonne) 

2002 

2003 

2004 

2005 

IP 

Russian average export price 

MIP  

Russian prices above MIP (%) 

119

115

3%

133

115

154

115

180 

115 

16%

34%

56% 

 193

115

68%

Source: Eurostat for Russian export prices 

(98)  Therefore,  ceteris  paribus,  there  is  no  reason  why  the  Russian  exporting  producers 
would  apply  lower  prices  if  the  existing  measures  were  repealed,  considering  they 
have managed to sustain much higher prices before. 

9 
10 

Case T-210/95 EFMA v Council [1995] ECR II-3291, paragraph 60. 
Ibid. paragraph 59. 

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(99)  Moreover,  as  shown  in  recital  (67),  the  Russian  exporters  have  kept  their  export 
volumes  to  the  Community  market  at  a  relatively  stable  level  over  the  whole  period 
considered, despite the fact that the existing measures have had no practical effect on 
the export prices since 2002 and have consequently not constituted any hindrance for 
increasing Russian exports. 

(100)  Therefore, ceteris paribus, it  is unlikely  that  Russian exporting producers  would sell 
additional volumes on the Community market if the existing measures were repealed, 
as the existing measures have not affected the Russian export volumes. 

(101)  It is therefore concluded that since the existing measures have had no impact either on 
the  export  prices  practiced  by  the  Russian  exporters  or  the  prices  paid  by  the 
Community importers for the same imports, or on the quantities of Russian exports to 
the Community, the removal of the measures is unlikely to have any impact on such 
prices or quantities. Therefore, the removal of the measures would have no impact on 
the  situation  of  the  Community  industry.  Consequently,  it  cannot  be  concluded  that 
there is a likelihood of recurrence of injury to the Community industry, if the existing 
measures were repealed. 

(102)  Notwithstanding  the  above  conclusion,  the  different  allegations  of  the  Community 
industry relating to the possible effects of existing Russian spare capacity and possible 
new capacity and the likelihood of redirection of other sales of the Russian producers 
to the Community were also examined in the investigation, as explained below. 

2. Russian spare capacity 

(103)  As  explained  in  recitals  (46)  and  (50),  none  of  the  sampled  Russian  companies  had 
spare capacity of any significance during the RIP and the overall spare capacity level 
of  all  Russian  producers  was  estimated  to  be  around  5%.  The  findings  of  the 
investigation  are,  in  this  respect,  wholly  in  line  with  what  has  been  argued  by  the 
applicant. 

(104)  As already mentioned in recital (52), it has also been established that the nine projects 
referred to by the applicant are not expected to lead to a significant negative effect on 
the  Community  market,  since  a  significant  part  of  the  additional  quantity  created  by 
such projects will be used captively. In addition, as mentioned in recital (54), Russian 
exports to the Community would be likely to increase in significant quantities only if 
there  is  an  equivalent  increase  in  demand,  in  which  case  such  additional  exports 
should not have a negative effect on the price level on the Community market. 

(105)  On  the  basis  of  the  above,  it  is  concluded  that  the  Russian  producers  will  have  only 
limited  additional  quantities  available  for  increased  sales  due  to  revamps,  upgrades 
and  de-bottlenecking.  This  indicates  that  the  Russian  producers  would  not  have  the 
possibility  to  significantly  increase  their  export  sales  to  the  Community  market,  by 
virtue of Russian spare capacities. 

3. Likelihood of redirection of other sales to the Community 

(106)  As indicated above in recital (67), the imports from Russia to the Community market 
have  remained  relatively  stable  throughout  the  period  considered,  accounting  for 
around  16%  market  share  of  the  Community  consumption  throughout  the  period 

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considered, except for  a  peak  in 2004 (around 20%). This is despite the fact that, as 
shown above, the existing measures have had no practical effect on the export prices 
and export quantities during the whole of the period considered and have consequently 
not constituted a hinder for increasing Russian exports. 

(107)  The  investigation  has  shown  that  during  the  RIP,  export  prices  of  the  sampled 
exporting  producers  to  the  Community  on  an  ex-works  basis  were  about  1%  -  5% 
lower  than  export  prices  to  other  third  countries.  As  indicated  in  recital  (56),  also 
Russian  ex-works  domestic  sales  prices  were  higher  than  export  prices  to  the 
Community,  in  particular  for  companies  in  remote  areas  due  to  the  significant 
differences in transport costs as mentioned already. On this basis it can be concluded 
that as far as prices are concerned, the Community market is not particularly attractive 
as compared to other main markets for Russian producers. 

(108)  Furthermore,  as  mentioned  in  recital  (57),  the  applicant  has  argued  that  production 
stemming from additional capacities being built in particular in North Africa (Algeria 
and  Egypt)  and  the  Middle  East  (Iran)  would  put  pressure  on  the  worldwide  prices, 
thereby  reducing  the  Russian  exporters'  penetration  capacity  on  those  markets  and 
leading  them  to  increase  their  export  quantities  to  the  Community  market.  In  this 
respect, it was established on the basis of the forecasts referred to in recital (54) that 
these investments will not have a significant impact on the worldwide supply/demand 
balance,  as  global  demand  is  predicted  to  increase  in  line  with  global  capacity. 
Furthermore,  the  investigation  has  shown  that  the  Russians  have  already  lost 
significant shares in the Asian (especially the People's Republic of China) and African 
markets  and  that  they  are  holding  quite  well  the  pressure  in  the  Latin  American 
markets.  Considering  the  predicted  global  supply/demand  balance,  the  argument  that 
Russian  exporting  producers  may  lose  additional  market  shares  everywhere  but 
Europe seems unlikely. 

(109)  It  has  been  argued  by  the  applicant  that  the  unfair  cost  advantage  enjoyed  by  the 
Russian  producers  due  to  the  existence  of  the  double  pricing  of  gas  could  lead  to  a 
significant  undercutting  by  the  Russian  exporters,  inter  alia,  if  the  international 
supply/demand  balance  would  become  unfavourable.  While  this  cannot  be  excluded 
because the investigation has shown that the cost structure of the Russian exporters is 
indeed  significantly  distorted  by  the  double  pricing  of  gas  practised  by  Russia,  the 
potential  undercutting  would  not  be  a  direct  consequence  of  the  removal  of  the 
measures, but due to other circumstances. 

(110)  It cannot therefore be concluded that the Russian producers would have an intention to 
redirect  any  significant  part  of  the  volumes  currently  exported  to  third  countries  or 
sold on the domestic market to the Community  market or to reduce their prices as a 
consequence  of  the  removal  of  the  measures,  even  if  it  cannot  be  excluded  that  this 
may happen due to other circumstances. 

4.  Conclusion on likelihood of recurrence of injury 

(111)  As shown above, the existing measures have had no impact either on the export prices 
practiced by the Russian exporters or the prices paid by the Community importers for 
the same imports, or on the Russian export volumes to the Community market. At the 
same time, despite the continuation of dumped imports from Russia, the Community 
industry has not suffered any injury. Therefore the repeal of the existing measures will 

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not have any impact on the Russian export prices or volumes and thus no impact on 
the situation of the Community industry. 

(112)  Moreover,  the  analysis  of  other  exogenous  factors  alleged  by  the  applicant  does  not 
put into question the above conclusion, since they do not even indicate any reasonable 
possibility of increasing the volumes and decreasing the prices of the Russian imports 
to the Community market due to exogenous factors. 

(113)  On  the  basis  of  the  above,  it  cannot  be  concluded  that  there  is  a  likelihood  of 

recurrence of injury to the Community industry, if the existing measures are repealed. 

G. 

ANTI-DUMPING MEASURES 

(114)  All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which it is intended to recommend that the existing measures be repealed. They were 
also granted a period to make representations subsequent to this disclosure. 

(115)  It  follows  from  the  above  that,  as  provided  for  by  Article  11(2)  of  the  basic 
Regulation,  the  anti-dumping  measures  applicable  to  imports  of  urea  originating  in 
Russia should be repealed and the proceeding terminated. 

(116)  In consideration of the circumstances described in recital (109) above, i.e. that the cost 
structure of the Russian exporters is significantly distorted by the double pricing of gas 
practised  by  Russia,  it  is  found  necessary  to  closely  monitor  the  evolution  of  the 
imports  of  urea  originating  in  Russia,  with  a  view  to  facilitating  swift  appropriate 
action should the situation so require. 

(117)  Since  in  accordance  with  the  preceding  recitals  the  existing  measures  should  be 
repealed  and  the  proceeding  terminated,  the  partial  interim  review  concerning  the 
appropriateness of the form of measures and the partial interim review limited in scope 
to the examination of dumping concerning 'EuroChem' should also be terminated, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The anti-dumping duty on imports of urea, falling within CN codes 3102 10 10 and 3102 10 
90 and originating in Russia is hereby repealed and the proceeding concerning these imports 
is terminated. 

Article 2 

The  partial  interim  reviews  of  the  anti-dumping  measures  applicable to the  imports of urea, 
falling  within  CN  codes  3102  10  10  and  3102  10  90  and  originating  in  Russia  are  hereby 
terminated. 

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

Article 3 

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

Done at Brussels,  

For the Council 
The President 

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