Proposal for a Council Regulation repealing the anti-dumping duty on imports of urea originating in Belarus, Croatia, Libya and Ukraine, following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96
Date: 2008-02-18
Institutions: European Commission
Subjects: Belarus, Croatia, Libya, Ukraine, anti-dumping duty, anti-dumping legislation, import, organic fertiliser, originating product

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.2.2008 
COM(2008) 87 final 

Proposal for a  

COUNCIL REGULATION  

repealing the anti-dumping duty on imports of urea originating in Belarus, Croatia, 
Libya and Ukraine, following an expiry review pursuant to Article 11(2) of Regulation 
(EC) No 384/96 

(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 Belarus, Croatia, Libya and Ukraine. 

•  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 92/2002 imposing definitive anti-dumping duties ranging 
from  EUR  7,81  to  EUR  16,84  per  tonne  on  imports  of  urea  falling  within  CN  codes 
3102 10 10 and 3102 10 90 originating in Belarus, Croatia, Libya and Ukraine. 

•  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  opportunity  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 

On 22 December 2006, the Commission initiated an expiry review of the anti-dumping 
measures in force in respect of imports of urea originating in Belarus, Croatia, Libya 

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and Ukraine. 

The  purpose  of  this  investigation  was  to  examine  whether  there  is  continuation  or 
recurrence of dumping regarding imports of urea originating in Belarus, Croatia, Libya 
and Ukraine, thereby causing a continuation or recurrence of injury to the Community 
industry. 

The  investigation  showed  that  imports  of  urea  originating  in  Belarus,  Croatia,  Libya 
and Ukraine were dumped and that there was a likelihood of continuation of dumping. 
Nevertheless,  no  likelihood  of  recurrence  of  injury  was  established.  It  is  therefore 
concluded  that  anti-dumping  measures  have  to  be  repealed  on  imports  from  Belarus, 
Croatia, Libya and Ukraine. 

It is therefore proposed that the Council adopts the attached proposal for a Regulation 
which should be published in the Official Journal of the European Union by 21 March 
2008 at the latest. 

•  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 reasons. 

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

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

•  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 (EC) No …./2007 

Of…………….. 

repealing the anti-dumping duty on imports of urea originating in Belarus, Croatia, 
Libya and Ukraine, following an expiry review pursuant to Article 11(2) of Regulation 
(EC) No 384/96 

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 9 and 11(2) thereof, 

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

Whereas: 

A. PROCEDURE 

Measures in force 

In  January  2002,  by  Regulation  (EC)  No  92/20022,  the  Council  imposed  definitive 
anti-dumping  duties  ranging  from  7,81  to  16,84  euros  per  tonne  on  imports  of  urea, 
whether or not in aqueous solution, originating in Belarus, Croatia, Libya and Ukraine. 
By  the  same  Regulation,  definitive  anti-dumping  duties  ranging  from  6,18  to  21,43 
euros  per  tonne  were  imposed  on  imports  of  urea  originating  in  Estonia,  Lithuania, 
Bulgaria  and  Romania  and  were  automatically  repealed  on  1st  May  2004  and  1st 
January  2007  respectively,  the  date  of  accession  of  these  countries  to  the  European 
Community. 

Request for review   

In April 2006, the Commission published a notice of impending expiry of the existing 
measures3.  On  17  October  2006  the  Commission  received  a  request  for  an  expiry 
review of these measures pursuant to Article 11(2) of the basic Regulation. 

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 17, 19.1.2002, p.1 
OJ C 93, 21.4.2006, p.6 

1. 

(1) 

2. 

(2) 

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(3) 

(4) 

(5) 

3. 

(6) 

This request was lodged by the European Fertiliser Manufactures 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 
Belarus, Croatia, Libya and Ukraine (the 'countries concerned'). 

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, the Commission initiated this review by publishing a notice of initiation in 
the Official Journal of the European Union4. 

Investigations concerning other countries 

In May 2006, the Commission initiated a review5 of the definitive anti-dumping duties 
imposed by Council Regulation (EC) No 901/20016 on imports of urea originating in 
Russia  pursuant  to Article 11 (2) and (3) of the basic Regulation. As a result of this 
review,  the  Council,  by  Regulation  (EC)  No  907/2007  7  repealed  the  anti-dumping 
duties  on  imports  of  urea  originating  in  Russia.  It  was  concluded  that  there  was  no 
continuation  of  material  injury  to  the  Community  industry  and  that  there  was  no 
likelihood of recurrence of injury thereto in the absence of measures.  

4. 

Current investigation 

4.1. Investigation period 

(7) 

(8) 

The  investigation  of  continuation  or  recurrence  of  dumping  and  injury  covered  the 
period  from  1  October  2005  to  30  September  2006  ('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') 

4.2. Parties concerned by the investigation 

The  Commission  officially  advised  the  applicant,  the  Community  producers,  the 
exporting producers in Belarus, Croatia, Libya and Ukraine (hereinafter ‘the exporters 
concerned’),  the  importers,  traders,  users  and  their  associations  known  to  be 
concerned, as well as the representatives of the government of the exporting countries, 
of the initiation of the review.  

(9) 

The  Commission  sent  questionnaires  to  all  these  parties  and  to  those  who  made 
themselves known within the time limit set in the notice of initiation.  

(10)  The Commission also gave the parties directly concerned 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. 

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OJ C 316, 22.12.2006, p. 13. 
OJ C 105, 4.5.2006, p. 12. 
OJ L 127, 9.5.2001, p. 11. 
OJ L 198, 31.7.2007, p. 4. 

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

why they should be heard were granted a hearing. 

(12) 

In  view  of  the  apparently  large  number  of  Community  producers,  importers  in  the 
Community and exporting producers in the Ukraine, it was considered appropriate, 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 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. 

(13)  With regard to importers into the Community, very low cooperation was obtained as 
only one importer expressed its willingness to cooperate. It was therefore decided that 
sampling was not necessary with regard to importers. 

(14)  Twelve  Community  producers  properly  completed  the  sampling  form  and  formally 
agreed to cooperate further in the investigation. Four out of these twelve 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 60% of the total production 
of  the  Community  industry  during  the  RIP,  whilst  the  above  twelve  Community 
producers represented around 80% of the 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. 

(15)  Four exporting producers in Ukraine properly completed the sampling form within the 
deadline  and  formally  agreed  to  cooperate  further  in  the  investigation.  These  four 
exporting producers accounted for almost 100% of the total exports from Ukraine to 
the Community during the RIP. Due to the low number of cooperating companies in 
Ukraine,  it  was  decided  not  to  apply  sampling  and  all  companies  were  invited  to 
submit a questionnaire. 

(16)  Replies  to  the  questionnaires  were  received  from  four  Community  producers,  one 
importer, two users, and four exporting producers in Ukraine and one each in Belarus, 
Croatia  and  Libya.  In  addition,  several  importers  and  users  and  their  associations 
submitted comments without replying to the questionnaire. 

(17)  The  Commission  sought  and  verified  all  information  deemed  necessary  for  the 
purpose of a determination of the likely continuation of dumping and injury and of the 
Community  interest.  Verification  visits  were  carried  out  at  the  premises  of  the 
following companies:  

(a) 

Sampled Community producers: 

– 

– 

– 

Fertiberia S.A., Madrid, Spain 

SKW Stickstoffwerke Piesteritz GmbH , Lutherstadt Wittenberg, Germany  

Yara  Group  (Yara  Spa  Ferrara,  Italy  and  Yara  Sluiskil  B.V.,  Sluiskil,  The 
Netherlands); 

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– 

Zaklady Azotowe Pulawy S.A., Pulawy, Poland 

(b) 

Exporting producers  

– 

Ukraine:  

– 

– 

– 

– 

Joint Stock Company Concern Stirol, Gorlovka, 

Close Joint Stock Company Severodonetsk, Severodonetsk, 

Joint Stock Company Dnipro Azot, Dneprodzerzhinsk, 

Open Joint Stock Company Cherkassy Azot, Cherkassy 

– 

Croatia: 

– 

Petrokemija D.D., Kutina 

(c) 

Community importers 

– 

Dynea Austria GmbH , Krems, Austria 

(d) 

Community users 

– 

– 

Associazione Liberi Agricoltori Cremonesi, Cremona, Italy 

Acefer, Asociación Comercial Española de Fertilizantes, Madrid , Spain 

B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. 

Product concerned 

(18)  The product concerned is the same as determined in the original investigation, i.e. urea 
currently  classifiable  within  CN  codes  3102  10  10  and  3102  10  90  ('the  product 
concerned') and originating in Belarus, Croatia, Libya and Ukraine. 

(19)  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. 

2. 

Like product  

(20)  As  established  in  the  original  investigation,  this  review  investigation  has  confirmed 
that  the  products  manufactured  and  exported  by  the  exporting  producers  in  Belarus, 
Croatia,  Libya  and  Ukraine,  those  manufactured  and  sold  on  the  domestic  market  of 
these countries, as well as those manufactured and sold by the Community producers 
on  the  Community  market  all  have  the  same  basic  physical,  chemical  and  technical 

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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 

(21)  Given  the  conclusions  reached  regarding  likelihood  of  continuation  or  recurrence  of 
injury, only the core arguments regarding likelihood of continuation or recurrence of 
dumping are developed below. 

1. 

Dumping of imports during the review investigation period  

1.1 General principles 

(22) 

(23) 

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. 

In  case  of  the  three  export  countries  with  market  economy  status,  namely  Croatia, 
Libya and Ukraine, normal value was determined in accordance with Articles 2(1) to 
(3) of the basic Regulation. In case of Belarus, normal value was established according 
to Article 2(7) of the basic Regulation. 

1.2 Croatia 

(24)  The dumping margin for the sole exporting producer in Croatia 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 (5), (11) and (12) of the basic Regulation. 

(25)  Croatia  exported  more  than  200  000  tons  of  urea  to  the  Community  during  the  RIP, 
capturing 2.3% of the Community market. The sole known and co-operating exporting 
producer was still found to export at significantly dumped prices to the Community, as 
far as the RIP is concerned. The dumping margin found exceeded 20%.  

(26)  There were significant doubts regarding whether the costs for gas, which is the major 
input  to  produce  urea,  were  reasonably  reflected  in  the  records  of  the  exporting 
producer.  Indeed,  it  was  found  that  gas  was  sourced  under  particular  conditions, 
determined  by  the  fact  that  both  the  exporting  producer  and  the  gas  supplier  are 
majority-owned by the Croatian state and that gas prices were abnormally low. In the 
absence of any undistorted gas prices relating to the Croatian domestic market, and in 
accordance  with  Article  2(5)  of  the  basic  Regulation,  gas  prices  would  have  to  be 
established  on  ‘any  other  reasonable  basis,  including  information  from  other 
representative markets’. As the majority of the gas used for manufacturing the product 
concerned is of Russian origin, the adjusted price could be 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.  This 
would increase the dumping margin significantly. Given the fact that dumping exists 
without this adjustment, and the conclusions on likelihood of recurrence of injury set 
out below, this matter was not pursued further. 

1.3 Belarus, Libya and Ukraine 

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(27)  As explained infra in recitals (29), (38) and (45), the quantities exported from the three 
other  exporting  countries  concerned  reached  such  low  levels  that  it  was  considered 
that  the  export  prices  associated  therewith  would  not  be  sufficiently  reliable,  in 
isolation, to establish a finding regarding continuation of dumping. 

2. 

Likelihood of Recurrence of Dumping 

2.1 Belarus 

(28)  Since  Belarus  is  not  considered  a  market  economy  country,  the  normal  value  was 
determined on the basis of data obtained from a producer in a market economy third 
country. In the notice of initiation, the USA was envisaged as an appropriate analogue 
country,  as  it  was  already  used  in  the  original  investigation.  No  interested  party 
submitted comments in this respect. The US producer that already co-operated in the 
original  investigation  filed  a  questionnaire  response  which  was  used  for  the 
determination of normal value. 

(29)  The  sole  known  Belorussian  producer  filed  a  questionnaire  reply.  Overall,  Belarus 
exported  about  25,000  tons  urea,  which  amounts  to  a  Community  market  share  of 
0.3%. Given such low market share, the analysis in regard of Belarus concentrates on 
the likelihood of recurrence of dumping.  

(30)  The  export  behaviour  of  Belarus  to  all  third  countries  was  analysed.  Exports  to  all 
regions  of  the  world  were  made  at  prices  which  were  consistently  lower  than  the 
normal  value  found  in  the  analogue  market,  showing  that  prices  to  other  export 
markets were dumped.  

(31) 

In addition, it was examined whether Belarus export prices, if they were made at levels 
equal  to  the  current  price  levels  prevailing  in  the  Community,  would  be  dumped. 
Indeed,  for  a  commodity  product  such  as  urea,  it  would  be  unlikely  to  sell  at  levels 
above current market prices. The result of this analysis also led to significant dumping 
margins.  

(32)  At  the  same  time,  export  prices  charged  for  exports  to  other  export  markets  were 
found  to  be  slightly  higher  than  prices  to  the  European  Community.  Therefore,  it  is 
questionable that the Community would be a more attractive market in terms of prices 
than other third country markets. 

(33) 

In  light  of  the  above  facts  and  considerations,  there  are  indications  that  dumping  is 
likely to recur in the absence of measures. 

2.2 Croatia 

(34)  As  indicated  in  above  recital  (25),  exports  to  the  Community  were  found  to  be 
dumped.  The  export  behaviour  of  Croatia  to  all  third  countries  was  also  analysed. 
Exports  to  all  regions  of  the  world  were  made  at  prices  which  were  lower  than  the 
normal  value  showing  that  dumping  was  taking  place  even  in  the  absence  of  the 
adjustment mentioned above. 

(35) 

In addition, it was examined whether Croatian export prices would be dumped if they 
were made at levels which would be equal to the current price levels prevailing in the 
Community. Indeed, for a commodity product such as urea, it would be unlikely to sell 

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at levels above current market prices. The result of this analysis also led to significant 
dumping margins.  

(36)  At  the  same  time,  export  prices  charged  for  exports  to  other  export  markets  were 
found  to  be  slightly  higher  than  prices  to  the  European  Community.  Therefore,  it  is 
questionable that the Community would be a more attractive market in terms of prices 
than other third country markets. 

(37)  There  are  therefore  indications  that  dumping  is  likely  to  recur  in  the  absence  of 

measures. 

2.3 Libya 

(38)  The  sole  known  exporting  producer  filed  a  questionnaire  response  that  was 
incomplete.  Since  it  failed  to  submit  some  of  the  missing  information,  recourse  to 
Article  18  of  the  basic  Regulation  had  to  be  made,  where  appropriate.  Available 
information  showed  that  overall,  Libya  exported  about  70  000  tons  of  urea  to  the 
Community  during  the  RIP,  which  amounts  to  a  Community  market  share  of  0.8%. 
Given  this  low  market  share,  the  analysis  with  regard  to  Libya  concentrates  on  the 
likelihood  of  recurrence  of  dumping.  The  analysis  on  dumping  and  likelihood  of 
recurrence of dumping was done on the basis of the information available. 

(39) 

In  the  absence  of  representative  domestic  sales  on  the  Libyan  market,  normal  value 
was established on the basis of the cost of production in the country of origin plus a 
reasonable  amount  for  selling,  general  and  administrative  costs  and  for  profits,  in 
accordance  with  Article  2.3  of  the  basic  Regulation.  A  margin  of  profit  of  8  %  was 
found to be reasonable in this case. 

(40)  Analysis of the questionnaire submitted by the cooperating company in Libya showed 
that its core activity was to export to other third markets. In the RIP, around 570 000 
tonnes  were exported  to  third markets,  id  est more than eight  times the total exports 
made  to  the  Community  market.  Comparison  of  exports  prices  charged  for  these 
exports  with  the  normal  value  established  as  described  above  showed  a  significant 
level of dumping. 

(41)  There were significant doubts regarding as to whether the costs for gas, which is the 
major input to produce urea, were reasonably reflected in the records of the exporting 
producer.  On  the  basis  of  the  information  available,  it  is  held  that  gas  was  sourced 
under  particular  conditions,  determined  by  the  fact  that  both  the  exporting  producer 
and the gas supplier are majority-owned by the Libyan state and that gas prices were 
abnormally  low.  An  adjustment  would  increase  the  dumping  margin  significantly. 
Given  the  fact  that  dumping  exists  without  this  adjustment,  and  the  conclusions  on 
likelihood of recurrence of injury set out below, it was not found necessary to apply 
such adjustment although it was warranted.  

(42) 

In addition, it was examined whether Libyan export prices would be dumped if they 
were made at levels which would be equal to the current price levels prevailing in the 
Community. Indeed, for a commodity product such as urea, it would be unlikely to sell 
at levels above current market prices. The result of this analysis also led to significant 
dumping margins.  

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(43)  At  the  same  time,  export  prices  charged  for  exports  to  other  export  markets  were 
found  to  be  slightly  higher  than  prices  to  the  European  Community.  Therefore,  it  is 
questionable that the Community would be a more attractive market in terms of prices 
than other third country markets. 

(44) 

In  light  of  the  above,  there  are  indications  that  dumping  is  likely  to  recur  in  the 
absence of measures. 

2.4 Ukraine  

(45)  Four  producers  co-operated  with  the  investigation.  Only  two  of  them  made  export 
sales to the Community during the RIP. Overall, Ukraine exported only about 20,000 
tons  of  urea,  which  amounts  to  a  Community  market  share  of  0.2%.  Given  this  low 
market  share,  the  analysis  with  regard  to  Ukraine  concentrates  on  the  likelihood  of 
recurrence of dumping.  

(46)  As  regards  gas  costs,  it  was  found  that  Ukraine  is  importing  the  majority  of  the  gas 
consumed  in  the  production  of  urea  from  Russia.  In  this  regard,  all  available  data 
indicates that Ukraine imports natural gas from Russia at prices which are significantly 
below the market prices paid in unregulated markets for natural gas. The investigation 
revealed  that  the  price  of  natural  gas  from  Russia  when  exported  to  the  European 
Community was approximately twice as high as the domestic gas price in the Ukraine. 
Therefore, as provided for in Article 2(5) of the basic Regulation, the gas costs borne 
by  the  applicant  were  adjusted  on  the  basis  of  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 within the meaning of Article 2(5) of the basic Regulation. 

(47)  The  adjustment  led  to  domestic  prices  being  below  cost  for  three  of  the  companies 
involved and thus the cost of production, together with a reasonable profit margin of 
8% was used as normal value. For the fourth company, duly adjusted domestic prices 
were used for this purpose. 

(48)  The export behaviour of Ukrainian exporting producers to all third countries was then 
analysed.  Exports  to  all  regions  of  the  world  were  made  at  prices  which  were 
consistently and significantly below the normal value thus established.  

(49) 

In addition, it was examined whether Ukrainian export prices would be dumped if they 
were made at levels which would be equal to the current price levels prevailing in the 
Community. Indeed, for a commodity product such as urea, it would be unlikely to sell 
at levels above current market prices. The result of this analysis also led to significant 
dumping margins. At the same time, export prices charged for exports to other export 
markets were found to be at a comparable level as prices to the European Community. 
Therefore, it is questionable that the Community would be a more attractive market in 
terms  of  prices  than  other  third  country  markets.  In  view  of  the  above  facts  and 
considerations, there are indications that dumping is likely to recur in the absence of 
measures. 

3. 

Development of imports should measures be repealed 

EN 

11 

   EN 

3.1 Belarus  

(50)  According to the information on file, Belarus had, at most, a spare capacity of ca. 150 
000 tons during the RIP. In addition, exports to other third countries accounted for ca. 
225 000 tons.  

(51) 

It  is  not  excluded  that  part  of  the  spare  capacity  will  be  directed  to  the  Community 
once  measures  are  repealed.  The  sole  Belarusian  exporter  has  well  developed 
distribution  channels  in  the  Community,  and,  in  general,  the  size  of  the  Community 
market is attractive, particularly for countries with geographical proximity.  

(52)  However, it is not excluded that some of these quantities will be exported also to other 
third countries, as the likely price levels in those territories yield ex-work prices which 
are similar (or even higher) than those which could be obtained when exporting to the 
Community. In addition, it is not excluded that urea consumption will increase in other 
regions  of  the  world,  given  current  trends  for  larger  agricultural  production.  On 
balance, it is not expected that exports would reach the full amount of spare capacity, 
if measures expire, but they would be likely to exceed de minimis levels. 

(53)  As to a potential redirection of exports from third countries to the Community, similar 
arguments  apply,  making  it  unlikely  that  significant  additional  quantities  would  be 
exported to the Community market in the foreseeable future, should measures expire.  

3.2 Croatia 

(54)  According to the information on file, Croatia had, at most, a spare capacity of ca. 120 
000 tons during the RIP. In addition, exports to other third countries accounted for ca. 
60  000  tons.  It  is  not  excluded  that  part  of  the  spare  capacity  is  directed  to  the 
Community  once  measures  are  repealed.  The  sole  Croatian  exporter  has  well 
developed  distribution  channels  in  the  Community,  and,  in  general,  the  size  of  the 
Community  market  is  attractive,  particularly  for  countries  with  geographical 
proximity.  

(55)  However,  anti-dumping  measures  have  not  prevented  Croatia  from  exporting 
significant quantities to the Community. There are no indications that they would have 
been  any  impediment  for  exporting  further  quantities  to  the  Community.  Given  that 
this  has  not  been  the  case,  it  is  not  likely  that  significant  additional  exports  to  the 
Community would be made via the activation of such capacities. In addition, it is not 
excluded that some of these quantities could be exported also to other third countries, 
as the likely price levels in those territories yield ex-work prices which are similar (or 
slightly higher) to those which could be obtained when exporting to the Community.  

(56) 

In addition, it is not excluded that urea consumption will increase in other regions of 
the world, given current trends for larger agricultural production. On balance, it is not 
expected that a significant proportion of the spare Croatian capacity would be used for 
additional  exports  to  the  Community,  but  given  the  current  export  levels,  export 
volumes to the Community are expected to remain above de minimis levels. 

(57)  As to a potential redirection of exports from third countries to the Community, similar 
arguments  apply,  making  it  unlikely  that  significant  additional  quantities  would  be 
exported to the Community market in the foreseeable future, should measures expire.  

EN 

12 

   EN 

3.3 Libya 

(58)  According to the information available, Libya had, at most, a spare capacity of ca. 140 
000 tons during the RIP. In addition, exports to other third countries accounted for ca. 
570  000  tons.  It  is  not  excluded  that  part  of  the  spare  capacity  is  directed  to  the 
Community once measures are repealed. The sole Libyan exporter has well developed 
distribution  channels  in  the  Community,  and,  in  general,  the  size  of  the  Community 
market markets is attractive, particularly for countries with geographical proximity. 

(59)  However,  it  is  not  excluded  that  some  of  these  quantities  are  exported  also  to  other 
third countries, as the likely price levels in those territories yield ex-work prices which 
are similar (or even higher) than those which could be obtained when exporting to the 
Community. In addition, it is not excluded that urea consumption will increase in other 
regions  of  the  world,  given  current  trends  for  larger  agricultural  production.  On 
balance, it is not expected that exports would reach the full amount of spare capacity, 
if measures expire, but they would be likely to exceed de minimis levels.  

(60)  As to a potential redirection of exports from third countries to the Community, similar 
arguments  apply,  making  it  unlikely  that  significant  additional  quantities  would  be 
exported to the Community market in the foreseeable future, should measures expire.  

3.4 Ukraine 

(61)  According to the information on file, Ukraine had, at most, a spare capacity of ca. 375 
000 tons during the RIP. In addition, exports to other third countries accounted for ca. 
3 500 000 tons. It is not excluded that part of the spare capacity will be directed to the 
Community once measures are repealed. The Ukrainian exporters have well-developed 
distribution  channels  in  the  Community,  and,  in  general,  the  size  of  the  Community 
market  markets  it  attractive,  particularly  for  countries  with  geographical  proximity. 
However,  it  is  not  excluded  that  some  of  these  quantities  are  exported  also  to  other 
third countries, as likely price levels in those territories yield ex-work prices which are 
similar  to  those  which  could  be  obtained  when  exporting  to  the  Community.  In 
addition, it is not excluded that urea consumption will increase in other regions of the 
world,  given  current  trends  for  larger  agricultural  production.  On  balance,  it  is  not 
expected  that  exports  would  reach  the  full  amount  of  spare  capacity,  if  measures 
expire, but they would be likely to exceed de minimis levels. 

(62)  As  to  a  potential  redirection  of  exports  from  third  countries  to  the  Community,  the 
applicants  have  argued  that  the  forecasted  increased  capacity  in  other  regions 
(particularly  the  Middle  East)  would  replace  Ukrainian  exports  mainly  in  Asia,  but 
also  in  Africa  and  Latin  America,  to  the  tune  of  over  3  000  000  tons,  which  would 
then be redirected to the Community. However, on the basis of the information on the 
file, it is not possible to conclude that such displacement would take place, i.a. because 
increasing  global  consumption  could  well  absorb  these  additional  quantities,  if  they 
were to enter the market. In addition, it is not excluded that capacity increases would 
take place over a longer time period than suggested by the applicant. In sum, it is not 
possible  to  confirm  that  significant  additional  quantities  would  be  likely  to  be 
redirected to the Community market in the foreseeable future, should measures expire.  

4. 

Conclusion on the likelihood of continuation or of recurrence of dumping 

EN 

13 

   EN 

(63)  On  the  basis  of  the  aforementioned  analysis,  it  is  concluded  that  dumping  of 
significant quantities of urea would be unlikely to continue in the case of Croatia, nor 
to  recur  in  the  case  of  the  other  three  countries  concerned,  should  measures  be 
repealed.  

D.DEFINITION OF COMMUNITY INDUSTRY 

1. 

Definition of Community Production 

(64)  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  them  became  Community  producers 
following the enlargement of the European Union ("EU") in May 2004. 

(65)  Out  of  the  16  Community  producers,  twelve  agreed  to  cooperate  with  the 
investigation, while three sent the information requested for the purpose of sampling 
but did not offer further cooperation. No Community producer opposed the request for 
review. 

(66)  Accordingly, the following twelve producers agreed to cooperate:  

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Achema AB (Lithuania), 

Adubos de Portugal (Portugal),  

AMI Agrolinz Melamine International GmbH (Austria), 

Duslo AS (Slovak Republic), 

Fertiberia S.A.(Spain), 

AS Nitrofert (Estonia), 

Nitrogénmüvek Zrt (Hungary), 

SKW Stickstoffwerke Piesteritz (Germany), 

Yara Group (consolidation of Yara France SA (France), Yara Italia Spa (Italy), 
Yara Brunsbuttel GmbH (Germany) and Yara Sluiskil BV (The Netherlands) 

Zaklady Azotowe Pulawy (Poland), 

ZAK SA (Poland), 

BASF GmbH (Germany). 

(67)  As  these  twelve  Community  producers  accounted  for  around  80%  of  the  total 
Community production during the RIP, it is considered that they 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  four  non-cooperating  Community  producers  will  be 
referred to as "other Community producers". 

EN 

14 

   EN 

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

E. 

SITUATION IN THE COMMUNITY MARKET  

1. 

Consumption in the Community market 

(69)  The  apparent  Community  consumption  was  established  on  the  basis  of  the  sales 
volumes of the Community industry on the Community market, the sales volumes of 
the  other  Community  producers  on  the  Community  market  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  European  Union  by  Bulgaria  and 
Romania, the analysis is limited to the situation of the EU-25. 

(70)  Between 2002 and the 2003, Community consumption increased by 3% and remained 

stable until the RIP. 

2002 

2003 

2004 

2005 

RIP 

Total  EC  consumption  in 
tonnes 

8 650 000 

8 945 000 

8 955 000

8 875 000 

8 950 000 

Index (2002=100) 

100 

103 

104 

103 

103 

2. 

Imports from the countries concerned 

2.1. Volume, market share and prices of imports 

(71)  With  respect  to  Belarus,  Croatia,  Libya  and  Ukraine,  the  import  volumes,  market 
shares and average prices developed as set out below. The data are based on Eurostat 
statistics 

EN 

15 

   EN 

 
 
2002 

2003 

2004 

2005 

RIP 

Belarus – Volume of 
imports (tonnes)

Market share 

Prices  of 
(EUR/tonne) 

imports 

Index (2002=100) 

134.931 

167.981 

62.546 

62.044 

1,6% 

1,9% 

0,7% 

0,7% 

107,5 

126,6 

148,5 

165,7 

100 

118 

138 

154 

Ukraine – Volume of 
imports (tonnes)

44.945 

36.304 

77.270 

84.338 

Market share 

Prices  of 
(EUR/tonne) 

imports 

Index (2002=100) 

Croatia  –  Volume  of 
imports (tonnes)

Market share 

Prices  of 
(EUR/tonne) 

imports 

Index (2002=100) 

Libya  –  Volume  of 
imports (tonnes)

Market share 

Prices  of 
(EUR/tonne) 

imports 

Index (2002=100) 

0,5% 

0,4% 

0,8% 

0,9% 

117,4 

134,5 

139,6 

192,7 

100 

115 

119 

164 

126.400 

179.325 

205.921 

187.765 

1,5% 

2,0% 

2,3% 

2,1% 

125,1 

135,0 

145,0 

171,7 

100 

108 

116 

137 

142.644 

227.793 

153.390 

124.515 

1,6% 

2,5% 

1,7% 

1,4% 

114,1 

134,9 

147,2 

193,8 

100 

118 

129 

170 

25.193 

0,3% 

190,5 

177 

52.553 

0,5% 

194,0 

165 

208.050 

2,3% 

185,0 

148 

73.361 

0,8% 

201,6 

177 

(72)  With respect to Belarus, the volume of imports increased slightly between 2002 and 
2003, then constantly decreased throughout the period considered (-81% for the whole 
period).  Similarly,  its  market  share  slightly  increased  between  2002  and  2003  then 
dropped continuously, falling at 0.3% in the RIP. The volumes were de minimis from 
2004 onwards. The prices evolved positively from 107 to 190 EUR/tonne during the 
period considered.  

EN 

16 

   EN 

 
(73)  Concerning  Ukraine,  import  levels  remained  consistently  below  the  de  minimis 
threshold, whereas import prices increased by 65% between 2002 and the RIP.  

(74)  Croatian imports were rather stable throughout the period, at around 2% share of the 

Community market, whereas import prices increased by 48%.  

(75) 

Imports from Libya increased in 2003 but then dropped constantly until the end of the 
RIP.  During  the  whole  period  they  decreased  by  49%  and  their  market  share  passed 
from 1.6% in 2002 to 0.8% in the RIP. As with the other countries concerned, Libyan 
import prices increased, by 77% between 2002 and the RIP.  

(76)  The price evolution of the four countries is proportionally higher or comparable to the 

sales price increase by the Community industry. 

(77)  For  the  purpose  of  calculating  the  level  of  price  undercutting  during  the  RIP  for 
Croatia,  Community  industry’s  ex-works  prices  to  unrelated  customers  have  been 
compared  with  the  CIF  Community  frontier  import  prices  of  the  sole  co-operating 
exporting  producer  of  Croatia,  duly  adjusted  in  order  to  reflect  a  landed  price.  The 
comparison  showed  that  imports  were  undercutting  the  prices  of  the  Community 
industry  by  4,7%.  However,  these  prices  were  similar  to  the  non-injurious  price 
established for the Community industry. 

(78) 

In  view  of  the  fact  that  market  shares  of  three  of  the  four  countries  concerned  were 
below  de  minimis,  whether  individually  or  collectively,  it  was  considered  that  their 
exports to the Community did not cause injury and that therefore undercutting margins 
were not relevant as a part of the analysis of continuation of injury.  

3. 

Imports from other countries  

(79)  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 

17 

   EN 

2002 

2003 

2004 

2005 

RIP 

1 360 025 

1 429 543  1 783 742  1 404 863 

15,7% 

16,0% 

19,9% 

15,8% 

119 

133 

154 

180 

579 830 

629 801 

422 892 

385 855 

6,7% 

7,0% 

4,7% 

4,3% 

149 

163 

178 

220 

260 298 

398 606 

235 417 

309 195 

3,0% 

4,5% 

2,6% 

3,5% 

123 

142 

175 

197 

1 488 367

16,6% 

196 

624 718 

7,0% 

222 

248 377 

2,8% 

210 

373.732

291.620

254.311 

336.110 

326.579

4,3%

3,3%

2,8% 

3,8% 

3,6%

141

170

194 

221 

224

29,7%

30,8%

30,0% 

27,4% 

30,0%

Volume  of 
from Russia (tonnes) 

imports 

Market share 

Prices of imports from 
Russia (EUR/tonne) 

Volume  of 
from Egypt (tonnes) 

imports 

Market share 

Prices of imports from 
Egypt (EUR/tonne) 

Volume  of 
from 

imports 
Romania 

Market share 

Prices of imports from 
Romania (EUR/tonne) 

Volume  of 
all 
from 

imports 
other 

Market share 

Prices of imports from 
countries 
all  other 

Market  share  all  third 
countries 

(80) 

It  should  be  noted  that  the  overall  imports  from  third  countries  increased  by  4,4% 
during  the  whole  period.  This  result  is  mainly  due  to  the  increase  of  imports  from 
Russia (+9,4%), which is the main exporter by far. It should also be noted that imports 
from Russia were subject to measures in the form of a MIP during the whole period, 
measures  repealed  by  Council  Regulation  (EC)  907/20078  (see  recital  (6)  supra). 
Between 2002 and the RIP imports from Egypt increased by 7.7% while imports from 
other third countries decreased in the same range, Romania accounting for more than 
40% of these imports. As for the export prices, all the above countries have exported 
to the Community at prices which do not undercut the Community industry’s prices in 
the RIP and/or are above the non-injurious price of the Community industry 

4. 

Economic situation of the Community industry  

8 

OJ L 198, 31.7.2007, p. 4. 

EN 

18 

   EN 

                                                 
 
(81)  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 

(82)  Most  of  the  co-operating  Community  industry  producers  were  found  to  use  the  like 
product  for  further  processing  to  blended  or  synthetic  fertiliser  products  which  are 
further downstream nitrogenous fertilisers containing in addition to the nitrogen, other 
substances such as water-soluble phosphorus, or/and water-soluble potassium.  

(83)  Such internal transfers of urea production were found not to enter the open market and 
not  to  be  in  competition  with  imports  of  the  product  concerned.  The  investigation 
showed  that  this  captive  use  represents  a  stable  share  of  around  20%  of  the  total 
Community  industry's  production.  It  is  therefore  considered  that  it  cannot  affect 
significantly the injury picture of the Community industry.  

(84)  Where recourse is made to sampling, in accordance with established practice, certain 
injury indicators (production, production capacity, stocks, sales, market share, growth 
and  employment)  are  analysed  for  the  Community  industry  as  a  whole  (‘C.I.'  in  the 
tables below), while those injury indicators relating to the performances of individual 
companies, i.e. prices, costs of production, 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 tables below). 

4.2.  Data relating to the Community industry as a whole 

(a) Production 

(85)  The  Community  industry’s  production,  including  volumes  destined  to  captive  use, 
remained practically stable between 2002 and the RIP, increasing by 5% in 2003 and 
decreasing  by  the  same  percentage  in  2004.  In  2005  and  during  the  RIP  a  small 
increase of respectively 2% and 1 percentage point was registered, reaching a level of 
4,45 million tonnes. 

2002 

2003 

2004 

2005 

RIP 

C.I. 
(tonnes) 

Production 

4 300 000 

4 500 000 

4 300 000 

4 400 000 

4 450 000 

Index (2002 = 100) 

100 

105 

100 

102 

103 

C.I.  production  used 
for captive transfers 

As  % 
production 

of 

total 

800 000 

800 000 

800 000 

900 000 

900 000 

19,3% 

18,5% 

19,5% 

20,6% 

20,2% 

Source: Complainants, sampling questionnaire replies and verified questionnaire replies 

(b) Capacity and capacity utilisation rates 

EN 

19 

   EN 

 
(86)  Production capacity increased slightly (5%) between 2002 and the RIP. In view of the 
stable production volume, the resulting capacity utilisation decreased slightly, from a 
level of 84% in 2002 to a level of 81% in the RIP. However, capacity utilisation for 
this  type  of  production  and  industry  can  be  affected  by  the  production  of  other 
products  which  can  be  produced  on  the  same  production  equipment  and  is  therefore 
less meaningful as an injury indicator. 

2002 

2003 

2004 

2005 

RIP 

C.I. 
capacity (tonnes) 

Production 

Index (2002=100) 

C.I. 
utilisation 

Capacity 

Index (2002=100) 

(c) Stocks  

5 100 000 

5 200 000

5 200 000

5 400 000 

5 360 000

100 

101 

101 

106 

84% 

100 

88% 

104 

84% 

100 

81% 

96 

105 

81% 

96 

(87)  The level of closing stocks of the Community industry was rather stable between 2002 
and 2004 and increased sharply (by 24 p.p. in 2005 and by further 13 p.p. at the end of 
the RIP.). Nevertheless, as urea used for captive applications is stored with the product 
sold on the free market, the level of the stocks is considered a less meaningful injury 
indicator. It should also be noted that the end of the RIP coincides with the starting of 
seasonal sales. 

2002 

2003 

2004 

2005 

RIP 

C.I. 
(tonnes) 

Closing 

stocks 

250 000 

240 000 

260 000 

320 000 

350 000  

Index (2002 = 100) 

100 

94 

103 

127 

140 

(d) Sales volume  

(88)  Sales by the Community industry on the Community market decreased slightly, i.e. by 

3% between 2002 and the RIP. 

2002 

2003 

2004 

2005 

RIP 

C.I.  EC 
(tonnes)  

sales 

volume 

3 150 000 

3 240 000

3 050 000

3 000 000 

3 070 000 

Index (2002 = 100) 

100 

103 

97 

95 

97 

(e) Market share 

EN 

20 

   EN 

 
 
 
 
 
 
 
 
 
(89)  The market share held by the Community industry also decreased moderately between 

2002 and the RIP, passing from 36,5% to 34,3%.  

2002 

2003 

2004 

2005 

RIP 

Market  share  of  Community 
industry 

Index (2002 = 100) 

100 

99 

93 

93 

94 

36,5% 

36,3% 

34,1% 

33,8% 

34,3% 

(f) Growth  

(90)  The Community industry lost a small part of its market share in a stable market over 
the period considered. The market share lost by the Community industry was not taken 
over by the imports of the four countries concerned, which registered a decrease from 
5,8% to 4,4% of their market share between 2002 and the RIP. 

(g) Employment 

(91)  The level of employment of the Community industry decreased by 6% between 2002 
and  the  RIP,  while  production  slightly  increased,  reflecting  thus  the  concern  of  the 
Community industry to continuously increase its productivity and competitiveness. 

2002 

2003 

2004 

2005 

RIP 

C.I.  Employment  product 
concerned 

Index (2002 = 100) 

100 

100 

94 

94 

94 

1 235 

1 230 

1 155 

1 160 

1 165 

(h) Productivity  

(92)  The output per person employed by the Community industry per year increased by 6% 
between  2002  and  2003  and  remained  constant  until  the  RIP,  showing  thus  the 
combined  positive  impact  of  reduced  employment  and  increase  in  production  of  the 
Community industry.  

2002 

2003 

2004 

2005 

RIP 

C.I.  Productivity  (tonnes  per 
employee) 

3 500 

3 700 

3 745 

3 765 

3 735 

Index (2002 = 100) 

100 

106 

107 

108 

107 

(i) Magnitude of dumping margin  

(93)  As  concerns  the  impact  on  the  Community  industry  of  the  magnitude  of  the  actual 
margin  of  dumping  in  the  RIP,  given  the  fact  that  (i)  the  volume  of  imports  from 
Belarus,  Ukraine  and  Libya,  were  below  de  minimis  levels;  ii)  imports  from  Croatia 
were  stable,  at  prices  increased  in  line  with  EU  sales  prices;  and  (iii)  the  overall 

EN 

21 

   EN 

 
 
 
 
 
 
financial  situation  of  the  Community  industry  was  very  positive,  this  impact  is 
considered not to be significant and the indicator not meaningful. 

(j) Recovery from the effects of past dumping 

(94)  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 

(95)  The  sampled  Community  industry  producers'  average  net  sales  price  increased 
substantially as from 2004 to the RIP, reflecting the consistent and continuous increase 
of  the  cost  of  the  raw  material  and  the  prevailing  favourable  international  market 
conditions of urea during the same period. 

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

Index (2002 = 100) 

(b) Wages  

2002 

2003 

2004 

2005 

RIP 

138 

100 

149 

108 

164 

120 

189 

138 

207 

151 

(96)  Between 2002 and the RIP, the average wage per employee increased by 13%, as the 
table below shows. In light of the inflation rate and the overall reduced employment, 
this increase of wages is considered to be moderate. 

2002 

2003 

2004 

2005 

RIP 

S.P.  Annual  labour  cost  per  employee 
(000 EUR) 

44,2 

47,2 

47,1 

48,6 

49,9 

Index (2002 = 100) 

100 

107 

107 

110 

113 

(c) Investments  

(97)  Annual investments in the like product made by the four sampled producers developed 
positively  during  the  period  considered,  i.e.  increased  by  74  %,  although  it  showed 
some  fluctuations.  These  investments  related  mainly  to  modernisation  of  machinery 
and  to  environmental  requirements.  This  confirms  the  efforts  of  the  Community 
industry to continuously improve its productivity and competitiveness. The results are 
apparent in the evolution of productivity which increased substantially (see recital (92) 
above) during the same period.  

S.P. Net investments (000 EUR) 

20 493 

11 095 

31 559 

40 001 

35 565 

2002 

2003 

2004 

2005 

RIP 

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Index (2002 = 100) 

100 

54 

154 

195 

174 

(d) Profitability and return on investments 

(98)  Profitability  of  the  sampled  producers  shows  a  comfortable  improvement  between 
2002 and 2005, when it reaches over 19% of the sales value. A steady increase of the 
gas  price  beginning  2006  brings  back  the  result  at  10,7%  during  the  RIP.  In  this 
respect, it is noted that in the original investigation, a profit margin of 8% 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 over the whole period considered. 

2002 

2003 

2004 

2005 

RIP 

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

to 

4,6% 

11,1% 

18,4% 

19,3% 

10,7% 

Index (2002 = 100) 

100 

241 

400 

419 

233 

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

10,7% 

31,0% 

48,8% 

51,1% 

29,4% 

Index (2002 = 100) 

100 

290 

456 

477 

275 

(e) Cash-flow and ability to raise capital  

(99)  Cash-flow has increased considerably between 2002 and 2005 and decreased steadily 
during  the  RIP.  This  development  is  in  line  with  the  development  of  the  overall 
profitability during the period considered. 

2002 

2003 

2004 

2005 

RIP 

S.P. Cash flow (000 EUR) 

38 534 

60 289 

92 671 

111 722 

58 912 

Index (2002 = 100) 

100 

156 

240 

290 

153 

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

Community producers in raising capital 

5. 

Conclusion 

(101)  Between  2002  and  the  RIP,  the  market  share  of  the  Community  industry  decreased 
slightly, together with sales volume on the Community market. However, the overall 
situation of the Community industry has improved during the period considered.  

(102)  Almost all other injury indicators, with the exception of the increase of stock volumes, 
developed  positively:  production  volume  and  unit  sales  prices  of  the  Community 

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industry  increased  and  profitability  was,  after  2002,  significantly  above  the  level  of 
profit set as a target profit in the original investigation. 

(103)  Return  on  investment  and  cash-flow  evolved  positively  as  well.  Wages  developed 
moderately  and  the  Community  industry  continued  to  invest.  The  productivity 
increased  also  substantially  reflecting  the  positive  evolution  of  production  and  the 
efforts of the Community industry to improve it through investments. 

(104)  The  applicant  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 mean around 36% pre-tax profit on turnover. The applicant claimed that this is 
justified by the cost of establishing a new ammonia/urea plant, which would require a 
return  on  investment  of  11%  (allegedly  equivalent  to  the  36%  pre-tax  profit  on 
turnover).  To  this  purpose,  it  is  noted  that  the  applicant  never  claimed  such  a  high 
target profit in this proceeding and in the original investigation a profit margin of 8% 
that may be reached in the absence of injurious dumping was established. Moreover, 
the Court of First Instance, 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  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.'  

(105)  The applicant further alleged that, in the case of the fertiliser industry, return on sales 
is not an appropriate indicator of injury as pertains profits, and that return on capital 
employed  and/or  return  on  investment  are  qualitatively  more  adequate  for  such  an 
assessment. Furthermore, it was  argued that, on the  basis of the latter indicators, the 
Community industry was suffering injury.  

(106)  Given  the  particular  characteristics  of  the  fertiliser  industry  (inter  alia  or  e.g.,  its 
capital-intensiveness)  and  the  nature  of  the  fertiliser  market  (the  volatility  of  its  raw 
materials  prices  and  of  final  product  prices),  it  is  agreed  that  return  on  sales,  on  its 
own, may not necessarily be the most telling indicator regarding profitability, and that 
it  should  be  complemented  with  indicators  such  as  return  on  capital  employed  and 
return on investment. However, the applicant has not submitted any evidence that, in 
the absence of the dumped imports, the Community industry would have been able to 
obtain returns at the level requested. Neither did the applicant show what profit margin 
would  have  been  achieved  by  the  Community  industry  but  for  the  dumped  imports. 
This claim was therefore rejected. 

(107)  It  is  therefore  concluded  that  there  was  no  continuation  of  material  injury  to  the 

Community industry.  

F. 

LIKELIHOOD OF RECURRENCE OF INJURY 

1. 

General 

9 

Case T-210/95 EFMA v. Council (1195) ECR II-3291, point 60. 

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(108)  Since there is no continuation of material injury caused by imports from the country 
concerned,  the  analysis  focused  on  the  likelihood  of  recurrence  of  injury  should  the 
measures be removed. In this respect, two main parameters were analyzed: (i) possible 
export  volumes  and  prices  of  the  countries  concerned  and  (ii)  the  effect  of  those 
projected  volumes  and  prices  from  the  countries  concerned  on  the  Community 
industry.  

(109)  The  analysis  is  set  against  a  general  market  context  of  continuing  high  prices  and 
profits not only in the Community but across the world. To a large extent, this is due 
to demand outstripping supply. There are no indications that such general context will 
vary significantly in the short to medium term. 

2. 

Possible export volumes and prices of the countries concerned 

(110)  As stated in above, Ukrainian exporting producers are likely, at most, to export ca. 375 
000 additional tonnes of urea to the Community, should measures expire. The figures 
for  Libya  and  Belarus  indicate  at  most  140  000  and  150  000  tonnes,  respectively. 
Similarly  the  figures  for  Croatia  would  not  be  likely  to  increase  significantly  from 
their current level.  

(111)  Export  prices  to  the  Community  and  to  third  countries  have  been  analysed  supra. 
Together  with  the  market  conditions  described  below  and  the  likely  development  of 
key  cost  drivers  such  as  gas,  this  analysis  points  to  the  likelihood  that  export  prices 
would remain high. As a result, it can not be concluded that the prices would be likely 
to materially undercut and/or undersell the Community industry's prices or costs. 

3. 

Impact on the Community industry of the projected export volumes and price 
effects in case of repeal of measures  

(112)  The  urea  market  is  forecast  to  grow  significantly  in  the  coming  years  both  in  the 
Community  10and  worldwide,  mainly  due  to  increased  agricultural  production  (for 
biofuel  applications)  and  also  due  to  expanding  industrial  use  for  AdBlue11.  As  an 
example, prospects for agricultural markets in the European Union 2007-2014 released 
by  Directorate-General  for  Agriculture  in  July  2007  confirm  that  cereals  production 
will likely increase by up to 20% in this period. The applicant own evaluation suggests 
a  10%  growth.  Moreover,  end  September  2007,  Council  Regulation  (EC)  No 
1107/2007  12  established  to  derogate  from  set-aside  lands  for  the  year  2008.  The 
foreseen  Community  market  growth  (around  1  million  additional  tonnes)  is  likely  to 
exceed  the  maximum  likely  volumes  that  the  exporting  countries  could  export  to  the 
Community. Therefore, no major volume imbalances would be likely to emanate from 
these  additional  exports,  not  least  because  the  gap  between  maximum  potential 
Community production and consumption is quantified at roughly 2 million tonnes, and 
there is no indication that this gap would be filled by other exports (i.a. originating in 

10 

11 

12 

Source:  "Global  fertilisers  and  raw  materials  supply  and  supply/demand  balances:  2005-2009", 
A05/71b, June 2005, International Fertiliser Industry Association 'IFA'. 
AdBlue is a registered trademark for an Aqueous Urea Solution (32.5%) and is used in a process called 
Selective  Catalytic  Reduction  to  reduce  emissions  of  oxides  of  nitrogen  from  the  exhaust  of  diesel 
vehicles. 
OJ L 253, 28.9.2007, p.1 

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25 

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Russia,  as  described  in  Council  Regulation  (EC)  No  907/2007)  to  an  extent  that 
oversupply would suppress or depress market prices. 

(113)  In view of the foregoing, it is not likely that the Community industry would have to 
decrease  its  sales,  production  or  prices  to  an  extent  that  its  profitability  and  overall 
position  would  be  materially  affected.  Therefore,  it  is  likely  that  profits  would 
maintain their current level, reflecting the favourable market conditions prevailing in 
particular from 2004 to the RIP. 

4. 

Conclusion on likelihood of recurrence of injury 

(114)  Given the foregoing, it cannot be concluded that there is a likelihood of recurrence of 

injury to the Community industry if the existing measures are repealed.  

H. 

ANTI-DUMPING MEASURES 

(115)  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.  No 
comments were received that were apt to alter the conclusions set out above. 

(116)  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 
Belarus,  Croatia,  Libya  and  Ukraine  should  be  repealed  and  the  proceeding 
terminated.  

(117)  In consideration of the circumstances described above, i.e. the significant distortions in 
the  cost  structure  and/or  the  export  operations  by  exporters  in  all  four  countries 
concerned, it is found necessary to monitor closely the evolution of the imports of urea 
originating  in  Belarus,  Croatia,  Libya  and  Ukraine,  with  a  view  to  facilitating  swift 
appropriate action should the situation so require. 

HAS ADOPTED THIS REGULATION: 

Article 1 

The anti-dumping duty on imports of urea, whether or not in aqueous solution, falling within 
CN codes 3102 10 10 and 3102 10 90 and originating in Belarus, Croatia, Libya and Ukraine 
is hereby repealed and the proceeding concerning these imports is terminated. 

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

Article 2 

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

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Done at Brussels, […] 

For the Council 
The President 
[…] 

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