Council Regulation (EC) No 907/2007 of 23 July 2007 repealing the anti-dumping duty on imports of urea originating in Russia, following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96, and terminating the partial interim reviews pursuant to Article 11(3) of such imports originating in Russia
Date: 2007-07-23
Institutions: Council of the European Union
Subjects: Russia, anti-dumping duty, anti-dumping legislation, chemical product, dumping, import, originating product

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Official Journal of the European Union

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COUNCIL REGULATION (EC) No 907/2007

of 23 July 2007

repealing the anti-dumping duty on imports of urea originating in Russia, following an expiry
review pursuant to Article 11(2) of 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,

(2)

Having regard to the Treaty
Community,

establishing the European

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)
(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:

(1)

A. PROCEDURE

1. Measures in force

the Council, by Regulation (EC) No
In March 1995,
477/95 (2),
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,
if
free-at-Community frontier price, before duty,
the
latter price was lower. The investigation that
led to
these measures will be referred to as ‘the original inves-
tigation’. Following an expiry review pursuant to Article
11(2) of the basic Regulation, the Council, by Regulation
(EC) No 901/2001 (3), 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’.

(1) 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).

(2) OJ L 49, 4.3.1995, p. 1.
(3) OJ L 127, 9.5.2001, p. 11.

In December 2003, the Council, by Regulation (EC) No
2228/2003 (4),
interim review
terminated a partial
initiated on the initiative of the Commission pursuant
the basic Regulation in order to
to Article 11(3) of
the
examine
the
measures
to the
existing measures.

the
in force, without any amendment

appropriateness of

form of

2. Requests for reviews

impending expiry of

In August 2005 (5), the Commission published a notice
the existing measures. On 9
of
February 2006 the Commission received a request for
an expiry review of these measures pursuant to Article
11(2) of the basic Regulation and a request for a partial
interim review limited to the form of
the measures,
pursuant to Article 11(3) of the basic Regulation.

These requests were lodged by the European Fertiliser
Manufacturers Association (EFMA)
(the applicant) on
behalf of producers representing a major proportion, in
the total Community
this case more than 50 %, of
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 was 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
an
Chemical
exporting producer of urea in Russia subject
to the
anti-dumping measures in force.

(EuroChem),

EuroChem,

Company

(3)

(4)

(5)

(6)

(4) OJ L 339, 24.12.2003, p. 1.
(5) OJ C 209, 26.8.2005, p. 2.

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L 198/5

(7)

(8)

(9)

(10)

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 was concerned, the
circumstances on the basis of which measures were
established had changed and that these changes 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
the current measures. Therefore,
below the level of
the continued imposition of
EuroChem claimed that
measures at the existing levels, which were based on
the level of
injury margin previously established, was
no longer necessary to offset dumping.

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.

(12) All interested parties who so requested and showed that
there were particular reasons why they should be heard
were granted a hearing.

after

determined,
that

consulting
sufficient evidence existed for

the Advisory
Having
Committee,
the
initiation of an expiry review pursuant to Article 11(2)
of the basic Regulation and of 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
Union (1).

3. Investigation

3.1. Investigation period

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

the

advised

officially
exporting
The Commission
importers and users known to be
producers in Russia,
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 oppor-
tunity to make their views known in writing and to
request a hearing within the time limit set
in the
notice of initiation.

the apparent

it was considered appropriate,

(13) With regard to the expiry review and to the partial
interim review limited to the form of the measures, in
view of
large number of Community
importers in the Community and exporting
producers,
producers in Russia,
in
accordance with Article 17 of the basic Regulation, to
examine whether sampling should be used. In order to
enable the Commission to decide whether sampling
to select a
would indeed be necessary and,
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 investi-
gation and to provide the Commission with the infor-
mation requested in the notice of initiation.

so,

if

(14) With regard to importers into the Community, only one
importer provided the information requested in the
notice of
to
cooperate further with the Commission services. It was
therefore decided that sampling was not necessary with
regard to importers.

initiation and expressed its willingness

in the investigation. Four out of

(15) Nine Community producers properly completed the
agreed to cooperate
sampling form and formally
further
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
the above nine
recital
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.

(63), during the RIP, whilst

(11)

The Commission officially advised EuroChem, the repre-
the
sentatives of Russia, as well as the applicant of

(16)

(1) OJ C 105, 4.5.2006, p. 12; OJ C 23, 1.2.2007, p. 8.

exporting producers properly

Five
the
sampling form within the deadline and formally agreed
in the investigation. These five
to cooperate further
exporting producers accounted for 60 % of
the total
Russian exports to the Community during the RIP.

completed

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(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 Regu-
lation, 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.

(b) Sampled exporting producers in Russia

— JSC Mineral and Chemical Company (Eurochem),
Moscow, Russia, and its two related manufac-
turing companies:

(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.

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

and

(19) As a result of additional

the

three

largest

established that one of

information available,
the

it was
sampled
later
those
exporting producers actually was not amongst
the
to
exports
having
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.

quantity

of

(20) Questionnaires were therefore sent to the four sampled
to the three sampled Russian
importers and

Community producers,
exporting producers, as well as to all
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
In
importers and users and their asso-
addition, several
ciations submitted comments without replying to the
questionnaire.

in the Community.

and seven users

(22)

The Commission sought and verified all the information
it deemed necessary for its analyses and carried out veri-
fication visits at the premises of the following companies:

(a) Sampled Community producers

— Fertiberia S.A., Madrid, Spain,

— OJSC Nevinnomyssky Azot

(Nevinka Azot),

Nevinnomyssk, Russia,

— 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 investi-
gation, 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.
forms
Although urea is presented in the different
remain
properties
mentioned
basically the
the
regarded for
same and may be
purposes of the present proceeding as one product.

chemical

above,

its

— Nitrogénművek Zrt., Pétfűrdo, Hungary,

2. Like product

— SKW Stickstoffwerke Piesteritz GmbH, Lutherstadt

Wittenberg, Germany,

— Yara S.A., Brussels, Belgium and its

related
producer Yara Sluiskil B.V., Sluiskil, The Neth-
erlands;

(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 Regu-
lation.

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C. LIKELIHOOD OF CONTINUATION OR RECURRENCE
OF DUMPING

1. Continuation of dumping during the review

investigation period

In this context, it is, inter alia, noted that electricity prices
paid 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.

(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

(16),

cooperated in the

five Russian exporting
(27) As mentioned in recital
producers of urea
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 cooperation is considered high.

(29)

(30)

(31)

1.2. Normal value

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)
therefore includes four companies.

It was first established for each of the four companies
whether their total domestic sales of urea were represen-
tative in accordance with Article 2(2) of the basic Regu-
lation, 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.

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 manufac-
turing 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 elec-
tricity would not be reasonably reflected in the records.

(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 prices 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 signifi-
cantly lower than the gas price paid by the Community
producers. In this regard, all available data indicate that
domestic gas prices in Russia were regulated prices,
which are far below market prices paid in unregulated
for natural gas. Since gas costs were not
markets
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
representative markets’. The
information from other
adjusted price was based on the average price of
Russian gas when sold for export at the German/Czech
border
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.

(Waidhaus), net of

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

(36)

to Article 2(1) of

For the other two companies, normal value was estab-
lished on the basis of the domestic sales prices of the two
producers having representative domestic sales in the
trade mentioned in recital 35,
ordinary course of
pursuant
the basic Regulation. For
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 confi-
dential data of the other company.

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1.3. Export price

2. Likelihood of Continuation of Dumping

(37)

(38)

(39)

(40)

(41)

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.

1.4. Comparison

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 compar-
ability 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

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.

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

a percentage of

as

2.1. Effect of the removal of the existing measures on the

dumped imports

(42) As mentioned in recital 1, the measures in force are in
the form of a MIP of EUR 115 per 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, 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
and possible new
capacity and (ii) the likelihood of redirection of other
sales to the Community were also examined in the inves-
tigation, as explained below.

capacity

(45)

(46)

2.2. Spare capacity

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

and de-bottlenecking,

accounting

for

2.2.1. Cooperating producers

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

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and urea

(48) As regards the two largest projects, which account for
the majority of the capacity increase mentioned in recital
46, it was established that the company invests not only
in urea capacity, but also in downstream production
facilities for products such as urea-formaldehyde resins
(UFR)
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.

and ammonium nitrate

(53)

(54)

(49)

(50)

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

2.2.2. Non-cooperating producers

The overall spare capacity as a percentage of production
capacity in Russia is in line with the spare capacity estab-
lished for the cooperating producers, according to infor-
mation submitted by the applicant.
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.

is

It

already

completed during

(51) A total of four projects out of the nine referred to in the
request concerned non-cooperating exporting producers.
facts
These projects were evaluated on the basis of
available. For one project, it was established that it was
not regarding the product concerned, but methanol. One
the period
project was
considered,
additional
capacity compared to the RIP. One project was related
to an insignificant investment of less than EUR 1 million
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
total Russian
tonnes (corresponding to about 7 % of
exports
a
potential market share of 1 % of the Community market).

to the Community during the RIP or

therefore

provides

and

no

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.

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
the Russian
producers is around 95 %, only limited additional quan-
tities are available for export.

utilisation

nominal

capacity

of

to

forecasts

according

The existing spare capacity and non-captive additional
capacity expected to be created in the near
future
represent together about roughly 550 000 to 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,
consultancies
specialised in fertilisers provided by the applicant, the
worldwide demand for urea is predicted to increase at
a pace similar to the increase in worldwide 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
i.e.
only if there is an equivalent increase in demand,
such additional exports should not have a negative
effect on the price level on the Community market.

of

(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 % to 5 % lower than export prices to other third
countries. Domestic prices were also higher than export
to the Community, especially for companies
prices
located in remote areas, due to the significant difference
in transport costs.

(57)

are

that

argues

applicant

significant
there
The
investments
in urea production capacity, mainly in
North Africa and the Middle East. This new capacity
will allegedly result in fewer opportunities for Russian
exporters on other markets, and lead to increased quan-
tities of Russian urea being exported to the Community.
It was, however, established on the basis of the forecasts
referred to in recital 54 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)

therefore be concluded that

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

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2.4. Conclusion on the likelihood of continuation of dumping

— Nitrogénművek Zrt. (Hungary),

(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 Community producers due to the
enlargement of the EU in 2004.

the

investigation,

(61) Out of the 16 Community producers, nine companies
cooperated with
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 cooperation. No
Community producer opposed the review request.

all

of

— SKW Stickstoffwerke Piesteritz GmbH (Germany),

— Yara: consolidation of Yara France SA (France), Yara
Italia Spa. (Italy), Yara Brunsbuttel GmbH (Germany)
and Yara Sluiskil BV (The Netherlands) (1).

(63) As

the
is considered that

these nine Community producers accounted for
total Community production
around 60 % of
during the RIP,
the above nine
it
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
non-cooperating Community producers will be referred
to as ‘other Community producers’.

(62) Accordingly,

the following nine producers agreed to

cooperate:

— Achema AB (Lithuania),

— AMI Agrolinz Melamine

International GmbH

(Austria),

— Chemopetrol, a.s. (Czech Republic),

(65)

— Duslo, a.s. (Slovak Republic),

— Fertiberia S.A. (Spain),

— Grande Paroisse S.A. (France),

(64) As

sample

consisting of

indicated above,

a
selected. All

four
sampled Community
companies was
producers cooperated and sent questionnaire replies
within the deadlines.
the remaining five
In addition,
cooperating producers duly provided certain general
data for the injury analysis.

E. SITUATION IN THE COMMUNITY MARKET

1. Consumption in the Community market

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
for the sake of
the enlargement of the EU in 2004,
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
the
initiated before the further enlargement of
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

8 651 033

8 945 707

8 954 402

8 873 804

8 978 696

Index (2002 = 100)

100

103

104

103

104

(1) 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’.

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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)

Market share

Prices of imports
(EUR/tonne)

Index (2002 = 100)

100

16 %

119

100

104

16 %

133

112

130

20 %

154

129

102

16 %

180

151

101

16 %

193

162

(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 per tonne during the period considered. This evolution reflects the favourable
market conditions described also in recital 85.

(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, the Community
industry’s ex-works prices to unrelated customers have been compared with the cif Community
frontier import prices, of cooperating 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 volumes 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.

Volume of imports from Egypt (tonnes)

579 830

629 801

422 892

385 855

457 056

2002

2003

2004

2005

RIP

Market share

Prices of imports from Egypt
(EUR/tonne)

Volume of imports from Romania
(tonnes)

7 %

149

7 %

163

5 %

178

4 %

220

5 %

224

260 298

398 607

235 417

309 195

239 335

Market share

3 %

4 %

3 %

3 %

3 %

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Prices of imports from Romania
(EUR/tonne)

Volume of imports from Croatia
(tonnes)

Market share

Prices of imports from Croatia
(EUR/tonne)

2002

123

2003

142

2004

175

2005

197

RIP

209

126 400

179 325

205 921

187 765

187 362

1 %

125

2 %

135

2 %

145

2 %

172

2 %

177

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

imports

663 940

605 063

536 345

580 311

492 659

Market share

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

from all other

8 %

128

7 %

172

6 %

169

7 %

206

5 %

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 126 000 tonnes in 2002 to 187 000 tonnes in
the RIP. Croatia’s Community market share however remained stable at 1 to 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 not, however, 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 Council Regulation (EC)
No 92/2002 (1), 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 following tables),
while those injury indicators relating to the performances of individual companies, i.e. prices, profit-
ability, 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
following tables).

4.2. Data relating to the Community industry as a whole

(a) P r o d u c t i o n

(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, the share of the production used for captive transfers also
remained practically stable at around 20 % of the total production, showing that it cannot affect
the injury picture of the Community industry.

(1) OJ L 17, 19.1.2002, p. 1. Regulation as last amended by Regulation (EC) No 73/2006 (OJ L 12, 18.1.2006, p. 1).

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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

production

C.I.
transfers

used

for

captive

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 %

(b) C a p a c i t y a n d c a p a c i t y u t i l i s a t i o n r a t e s

(76)

Production capacity increased slightly from 2002 to the RIP (5 %). In view of the production volume
of the Community industry 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 fertilisers. 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.

C.I. production capacity (tonnes)

5 109 600

5 153 906

5 156 743

5 402 760

5 362 590

2002

2003

2004

2005

RIP

100

84 %

100

101

88 %

104

101

84 %

100

106

81 %

96

105

81 %

96

Index (2002 = 100)

C.I. capacity utilisation

Index (2002 = 100)

(c) S t o c k s

(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

(d) S a l e s v o l u m e

(78)

Sales by the Community industry on the Community market decreased slightly between 2002 and
the RIP, i.e. by 3 %.

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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) M a r k e t s h a r e

(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

Market share of Community industry

36,5 %

36,3 %

34,1 %

33,8 %

34,0 %

Index (2002 = 100)

100

99

93

93

93

(f) G r o w t h

(80)

The Community industry lost a certain part of its market share (2,5 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, 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) E m p l o y m e n t

(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. employment product concerned

1 233

1 228

1 157

1 161

1 164

Index (2002 = 100)

100

100

94

94

94

(h) P r o d u c t i v i t y

(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 with stable
production in the Community industry.

2002

2003

2004

2005

RIP

C.I. productivity (tonnes per employee)

3 497

3 697

3 744

3 764

3 713

Index (2002 = 100)

100

106

107

108

106

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(i) M a g n i t u d e o f d u m p i n g m a r g i n

(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
imports from Russia has
that:
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.

the volume of

(i)

(j) R e c o v e r y f r o m t h e e f f e c t s o f p a s t d u m p i n g

(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) S a l e s p r i c e s a n d f a c t o r s a f f e c t i n g d o m e s t i c p r i c e s

(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 for urea during the same period.

2002

2003

2004

2005

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

137

Index (2002 = 100)

100

149

109

164

120

188

137

RIP

199

145

(b) W a g e s

(86)

Between 2002 and the RIP, the annual labour cost per employee increased moderately, by 11 %.

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

2002

2003

2004

2005

47

50

50

52

RIP

52

Index (2002 = 100)

100

106

106

111

111

(c) I n v e s t m e n t s

(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 (EUR 1 000)

116 186

114 079

128 191

140 967

128 259

Index (2002 = 100)

100

98

110

121

110

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(d) P r o f i t a b i l i t y a n d r e t u r n o n i n v e s t m e n t s

(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 was 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 threefold 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

(e) C a s h f l o w a n d a b i l i t y t o r a i s e c a p i t a l

(89)

Cash-flow increased more than threefold 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 (EUR 1 000)

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 over-
whelmingly improved during the period considered, as
compared to the period preceding the previous expiry
the
review that
existing measures, which have been in force since 1995.

in 2001 resulted in maintenance of

Also return on investment and cash-flow increased many
times. 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.

(92) During the period considered, profitability of the sampled
producers increased considerably, exceeding significantly,
in each year of the period considered, the level of profit-
ability set as a target profit in the original investigation.

(93)

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

throughout

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(94)

the Court of First

in Case T-210/95 confirmed that

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 %
to the 36 % pre-tax profit on
(allegedly equivalent
it is noted that the applicant
turnover). In this regard,
has never claimed such a high target profit
in the
framework of this proceeding, and in the original inves-
tigation a profit margin of 5 % that may be reached in
injurious dumping was established.
the absence of
Instance has in its
Furthermore,
‘… the
judgement
profit margin to be used by the Council when calculating
the target price that will remove the injury in question
limited to the profit margin which the
must be
Community industry could reasonably count on under
in the absence of
normal conditions of competition,
the dumped imports.’ (1)
it was
‘… [an]
confirmed that
the profit
margin which is to be used by the Community insti-
tutions 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 (2).’ Indeed,
in the present case the applicant
has not submitted any evidence that, in the absence of
the Community industry would
the dumped imports,
have been able
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.

In the same case,
argument

to achieve

returns

that

the

at

(95)

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

injury

(96)

F. LIKELIHOOD OF RECURRENCE OF INJURY

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
In
Russian import volumes and prices was analysed.
addition,
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.

the possible effects of

1. Lack of impact of the existing measures on import

volumes and prices

concerned

(97) As illustrated in the table below, since 2002, the Russian
export prices of
to the
the product
Community have always been 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

133

115

154

115

180

115

RIP

193

115

16 %

34 %

56 %

68 %

Russian average export price

MIP

Russian prices above MIP (%)

Source: Eurostat for Russian export prices.

119

115

3 %

(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.

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
constituted any
consequently not
hindrance to increasing Russian exports.

(99) Moreover, as shown in recital 67, the Russian exporters
to the Community

their export volumes

have kept

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

(100) Therefore,

ceteris paribus,

is unlikely that Russian
it
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.

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(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
the
quantities of Russian exports to the Community,
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
there is a likelihood of recurrence of
concluded that
injury to the Community industry,
the existing
measures were repealed.

if

throughout the period considered, accounting for around
16 % market share of
the Community consumption
throughout the period considered, except for a peak in
2004 (around 20 %). This is despite the fact that, as
the existing measures have had no
shown above,
practical effect on the export prices and export quantities
during the whole of
the period considered and have
consequently not constituted a hindrance to increasing
Russian exports.

(102) Notwithstanding the above conclusion, the different alle-
gations 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
to the
Community were also examined in the investigation, as
explained below.

the Russian producers

sales of

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
the nine projects referred to by the
established that
applicant are not expected to lead to a significant
negative effect on the Community market,
since a
the additional quantity created by
significant part of
such projects will be used captively.
In addition, as
to the
mentioned in recital 54, Russian exports
Community would be likely to increase in significant
quantities only if
increase in
demand,
in which case such additional exports should
not have a negative effect on the price level on the
Community market.

there is an equivalent

(105) On the basis of

it

the above,

is concluded that

the
Russian producers will have only limited additional quan-
tities available for
increased sales due to revamps,
upgrades and de-bottlenecking. This indicates that the
Russian producers would not be able 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

the sampled exporting producers

(107) The investigation has shown that during the RIP, export
to the
prices of
Community on an ex-works basis were about 1 % to
5 % lower than export prices to other third countries.
As indicated in recital 56, Russian ex-works domestic
sales prices were also 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
is not particularly attractive as compared to
market
other main markets for Russian producers.

in particular

(108) Furthermore, as mentioned in recital 57, the applicant
has argued that production stemming from additional
capacities being built
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 quan-
tities 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 were to
become unfavourable. While this cannot be excluded
the cost
because the investigation has
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.

shown that

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(110)

It cannot therefore be concluded that it is the Russian
producers’ 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 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
any
they do not
conclusion,
increasing the volumes and
reasonable possibility of
decreasing the prices of
the Russian imports to the
Community market due to exogenous factors.

even indicate

since

(113) On the basis of the above, it cannot be concluded that
injury to the
are

there is a likelihood of recurrence of
Community
repealed.

existing measures

industry

the

if

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, i.e. that the cost structure of the Russian exporters
is significantly distorted by the double pricing of gas
it is found necessary to monitor
practised by Russia,
closely 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,

the partial

in accordance with the preceding recitals,

the
existing measures should be repealed and the proceeding
terminated,
interim review concerning the
appropriateness of the form of the 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

interim reviews of
to imports of urea

the anti-dumping measures
The partial
applicable
falling within CN codes
3102 10 10 and 3102 10 90 and originating in Russia are
hereby terminated.

Article 3

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

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

Done at Brussels, 23 July 2007.

For the Council
The President

L. AMADO