Council Regulation (EC) No 237/2008 of 10 March 2008 terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the anti-dumping duty on imports of ammonium nitrate originating, inter alia , in Ukraine
Date: 2008-03-10
Institutions: Council of the European Union
Subjects: Ukraine, anti-dumping duty, anti-dumping legislation, fertiliser, import, originating product

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Official Journal of the European Union

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COUNCIL REGULATION (EC) No 237/2008

of 10 March 2008

terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the
anti-dumping duty on imports of ammonium nitrate originating, inter alia, in Ukraine

THE COUNCIL OF THE EUROPEAN UNION,

(3)

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(3) thereof,

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

Whereas:

(1)

(2)

A. PROCEDURE

1. Measures in force

On 22 January 2001 the Council imposed, by Regulation
(EC) No 132/2001 (2), a definitive anti-dumping duty (the
existing measures) of EUR 33,25 per tonne on imports
falling within CN codes
of
inter alia,
3102 30 90 and 3102 40 90 and originating,
in Ukraine. The investigation that
led to the existing
measures will be referred to as the original investigation.

ammonium nitrate

On 17 May 2004, following a partial interim review, by
Regulation (EC) No 993/2004 (3) the Council exempted
from the anti-dumping duties imposed by Regulation
(EC) No 132/2001 imports to the Community of the
product concerned produced by companies from which
undertakings would be accepted by the Commission. By
Commission Regulation (EC) No 1001/2004 (4), under-
takings were accepted for a period of 6 months and by
Commission Regulation (EC) No 1996/2004 (5)
for a
further period until 20 May 2005. The purpose of
these undertakings was to take account of certain conse-
quences of the enlargement of the European Union to 25
Member States on 1 May 2004.

(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 23, 25.1.2001, p. 1. Regulation as last amended by Regulation

(EC) No 945/2005 (OJ L 160, 23.6.2005, p. 1).

(3) OJ L 182, 19.5.2004, p. 28.
(4) OJ L 183, 20.5.2004, p. 13.
(5) OJ L 344, 20.11.2004, p. 24.

By Regulation (EC) No 945/2005, following an interim
review limited in scope to the definition of the product
concerned, the Council decided that the definition of the
product concerned should be clarified and that
the
to the product
measures
concerned when incorporated in other
in
fertilisers,
proportion to their content of ammonium nitrate,
together with other marginal substances and nutrients.

should apply

in force

Following an expiry review initiated in January 2006, the
Council, by Regulation (EC) No 442/2007 (6), renewed
these measures at their current level for two years. The
measures consist of specific duties.

2. Request for a review

for a partial

interim review pursuant

to
A request
Article 11(3) of
the basic Regulation was lodged by
Open Joint Stock Company (OJSC) Azot Cherkassy (the
applicant), an exporting producer from Ukraine. The
request was limited in scope to dumping as far as the
applicant is concerned.

to Article 11(3) of

In its request pursuant
the basic
Regulation, the applicant claimed that the circumstances
with regard to dumping, on the basis of which the
measures in force were established, had changed and
that
these changes were of a lasting nature. The
applicant further alleged that a comparison of normal
value based on its own costs or domestic prices and
export prices
to the Community would lead to a
reduction of dumping significantly below the level of
the current measures. Therefore,
the
continued imposition of measures at the existing levels
was no longer necessary to offset dumping.

it claimed that

3. Investigation

after

evidence,

consulting

determined,

the Advisory
Having
Committee, that the request contained sufficient prima
facie
on
19 December 2006 the initiation of a partial
interim
review pursuant to Article 11(3) of the basic Regulation
by a notice of initiation published in the Official Journal of
the European Union (7).

Commission

announced

the

(4)

(5)

(6)

(7)

(6) OJ L 106, 24.4.2007, p. 1.
(7) OJ C 311, 19.12.2006, p. 57.

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(8)

(9)

The review was limited in scope to the examination of
dumping in respect of the applicant. The investigation of
dumping covered the period from 1 October 2005 to
30 September 2006 (the review investigation period or
RIP).

(15)

The Commission officially informed the applicant, the
representatives of the exporting country and the associ-
ation of Community producers about the initiation of the
review. Interested parties were given the opportunity to
make their views known in writing and to request a
in the notice of
hearing within the time limit
initiation.

set

2. Like product

This review investigation confirmed what was established
investigation — that AN is a pure
in the original
commodity product, and its quality and basic physical
the country of
characteristics are identical whatever
origin. The AN manufactured and sold by the applicant
on its domestic market in Ukraine and the one exported
to the Community have the same basic physical and
chemical characteristics and essentially the same uses.
these products are considered to be like
Therefore,
products within the meaning of Article 1(4) of
the
basic Regulation. Since the present review was limited
to the determination of dumping as
the
is concerned, no conclusions were reached
applicant
with regard to the product produced and sold by the
Community industry in the Community market.

far

as

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

(11)

(12)

(13)

(14)

In order to obtain the information deemed necessary for
its investigation, the Commission sent the questionnaire
to the applicant and received the reply within the
deadline set for that purpose.

information
The Commission sought and verified all
deemed necessary for the determination of dumping.
The Commission carried out verification visits at
the
applicants premises in Cherkassy.

Interested parties were informed of the essential facts and
considerations on the basis of which it was intended to
recommend that the present review be terminated and
that the existing anti-dumping measures be maintained
on imports of the product concerned by the applicant,
and the parties were given an opportunity to comment.
The comments received were duly considered and taken
into account, where appropriate.

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

clarified

The product concerned is the same as in the original
investigation as
by Regulation (EC) No
945/2005, namely solid fertilisers with an ammonium
nitrate content exceeding 80 % by weight originating
falling within CN codes 3102 30 90,
in Ukraine,
ex 3102 60 00,
3102 40 90,
ex 3105 20 10,
ex 3105 10 00,
ex 3102 90 00,
ex 3105 51 00, ex 3105 59 00 and ex 3105 90 91 (here-
inafter referred to as AN). AN is a solid nitrogen fertiliser
commonly used in agriculture. It is manufactured from
ammonia and nitric acid, and its nitrogen content
exceeds 28 % by weight in prilled or granular form.

ex 3102 29 00,

C. RESULTS OF THE INVESTIGATION

1. Normal value

(16)

In order to establish the normal value, it was first verified
that the total domestic sales of the applicant were rep-
resentative in accordance with Article 2(2) of the basic
Regulation, namely that the total volume of such sales
represented at least 5 % of the total export sales volume
of the applicant to the Community. The investigation
showed that the applicant sold only one type of AN
and that this type was sold in representative quantities
on the domestic market.

(17)

The Commission subsequently examined whether the
domestic sales of AN could be regarded as having been
made in the ordinary course of trade in accordance with
Article 2(4) of
the basic Regulation, by comparing
domestic net sales price with the calculated cost of
production.

(18) When the applicants cost of production was assessed, it
was found that gas costs were not reasonably reflected in
the applicants records. It should be noted that energy
costs, such as gas, represent a major proportion of the
manufacturing cost and a significant proportion of the
total cost of production.

(19) As regards gas costs,

In this

it was found that Ukraine is
the gas consumed in the
importing the majority of
production of AN from Russia.
regard, all
available data indicate that Ukraine imports natural gas
from Russia at prices which are significantly below
market prices paid in unregulated markets for natural
gas. The investigation revealed that the price of natural
gas from Russia when exported to the 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.

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(20)

the applicant argued that any
Following disclosure,
adjustment of
its gas price paid on the domestic
market would be unwarranted because the accounting
records of
the company fully reflected the costs as-
sociated with the activity of production and sales of
the like product in the country of origin.

(21) However, when the cost of production of

the like
product under Article 2(5) of the basic Regulation is
examined,
it must be determined whether the costs as
booked in the companys accounts reasonably reflect the
the
costs associated with the production and sale of
product under investigation. For the reasons set out in
recital 19, this was found not to be the case.

(22)

(23)

(24)

Furthermore, the applicant claimed that its normal value
should be based on its sales of the product concerned on
its domestic market alleging that there is no reason to
consider that these sales were not made in the ordinary
course of trade. In this regard, it should be noted that in
order to establish whether domestic sales were made in
the ordinary course of trade by reason of price, namely
whether they were profitable, it must first be established
whether the costs of the applicant were a reliable basis
within the meaning of Article 2(5) of the basic Regu-
lation. Only after costs have been reliably established,
can it be determined which methodology to establish
normal value should be used. As outlined in recitals 28
and following, since the comparison of domestic net
sales price with the adjusted cost of production during
the RIP showed that no domestic sales were made in the
ordinary course of trade, domestic prices of the applicant
could not be used for the establishment of the normal
value.

fertilisers in Ukraine.

In this respect,
in accordance with Article 6(1) of

The applicant also argued that
the investigation was
based on data during the RIP and that the conclusions
did therefore not take into account developments after
this period such as, in particular, the continuous increase
of gas prices and the increase in domestic consumption
it should be
of
recalled that
the
basic Regulation,
for the purpose of a representative
finding, an investigation period is to be selected which,
in the case of dumping, is normally to cover a period of
not
less than six months immediately before to the
initiation of the proceeding. It is also recalled that in
line with usual Community practice, the RIP concerning
dumping lasted one year.

It was considered whether the development of gas prices
in Ukraine subsequent to the RIP should have been taken
into consideration when determining the dumping
margin of
it should be
noted that in accordance with Article 6(1) of the basic

In this regard,

the applicant.

Regulation, information relating to a period subsequent
to the investigation period is, normally, not to be taken
into account. In line with consistent Community practice,
this was interpreted as meaning that events relating to a
to the IP can only be taken into
period subsequent
account if they are manifest, undisputed and lasting. In
this regard, although an increase in gas prices could be
observed after the RIP, it could not be established with
sufficient certainty that this price increase was indeed of
the information
It was found that
a lasting nature.
available on future developments of gas prices
in
Ukraine consisted in mere estimates rather than verifiable
information in relation to actual gas prices. Article 6(1)
allows the use of information and data outside the IP (or
in cases of reviews the RIP) only under very exceptional
circumstances. The situation in the present case was not
considered such as to justify the use of data or infor-
mation outside the RIP. Furthermore, the applicant did
substantiate its arguments as no evidence was
not
submitted to show that data relating to a period after
the RIP are more representative than those relating to the
RIP. The argument was therefore rejected.

(25) As for the fact that the consumption of fertilisers in
Ukraine has increased after the RIP, the applicant did
not explain or show to what extent
this fact could
have an impact on the findings made on the basis of
the information related to the RIP. Thus, the applicant
did not submit sufficient information on the basis of
which meaningful conclusions could have been drawn,
nor was any other information available which could
have supported the applicant’s claim in this regard.
Since any conclusions on this basis would have been
speculative the applicants claim was rejected.

(26)

(27)

The adjusted gas 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
of
representative market within
Article 2(5) of the basic Regulation.

the meaning

The applicant further argued that Ukraine purchases gas
at similar market conditions as the Community and that
the prices paid for gas by the applicant in 2007 were
higher than the gas price at the Ukrainian-Russian border
the applicant did not
in the same period. However,
submit any evidence to substantiate its claims and has
thus failed to show that the conditions mentioned in
recital 24 for taking into account events relating to a
period subsequent
fulfilled. The
to the RIP
argument was therefore rejected.

are

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(28)

The comparison of domestic net sales price with the
adjusted cost of production during the RIP showed that
no domestic sales were made in the ordinary course of
trade pursuant of Article 2(4) of the basic Regulation.

(32)

Following the disclosure the applicant alleged that there
was a significant difference between the market situation
in North America and Ukraine. The applicant however
failed to explain the alleged difference and to substantiate
its claims. It also failed to propose any other reasonable
basis for calculations,
in the absence of which this
argument had to be rejected.

(29)

(30)

(31)

It was therefore considered that domestic prices did not
provide an appropriate basis for the establishment of the
normal value and another method had to be applied. In
accordance with Articles 2(3) and 2(6) of the basic Regu-
lation, normal value was constructed by adding to the
applicants manufacturing costs of the product concerned,
adjusted where necessary as mentioned in recital 19, a
reasonable amount
for SG&A costs and a reasonable
amount for profit.

2. Export price

(33)

Since the product concerned was exported to inde-
pendent customers in the Community, the export price
was established in accordance with Article 2(8) of the
basic Regulation, namely on the basis of
the export
price actually paid or payable.

SG&A costs and profit could not be established on the
basis of the introductory wording of Article 2(6) of the
basic Regulation because the applicant did not have
representative domestic sales of the product concerned
in the ordinary course of trade. Article 2(6)(a) of the
basic Regulation could not be applied, since only the
applicant is subject to the investigation. Article 2(6)(b)
was not applicable either, since the applicants manufac-
turing cost for products belonging to the same general
category of goods would also need to be adjusted in
respect of gas costs, for the reasons indicated in recital
19. Therefore, SG&A costs and profit were established
pursuant to Article 2(6)(c) of the basic Regulation.

The North American market showed a significant volume
of domestic sales and a considerable level of competition
from both domestic and foreign companies.
In this
respect, consideration was given to publicly available
information relating to major companies operating in
the fertilisers business sector. It was found that the corre-
sponding data from North American (USA and Canadian)
producers would be the most appropriate for the purpose
of the investigation, given the extensive availability of
reliable and complete public financial information from
listed companies in this region of the world. Therefore,
SG&A costs and profit were established on the basis of
the weighted average SG&A costs and profit from three
North American producers, which were found to be
amongst the largest companies in the nitrogen fertilisers
sector, with regard to their domestic sales of the same
general category of products (nitrogen fertilisers). These
three producers were considered to be representative of
the nitrogen fertilisers business and their SG&A costs and
profit thereby representative of those normally incurred
by companies operating successfully in that business
It should be noted that there were no indi-
segment.
so established
for profit
cations
that
other Ukrainian
exceeded
by
profit
producers on sales of products of
the same general
category on their domestic market.

the amount

realised

the

3. Comparison

(34)

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

(35) After disclosure, the association of Community producers
argued that the rail tariffs in Ukraine for transport of,
inter alia, the product concerned when exported to the
Community were artificially low and therefore needed to
be adjusted. The investigation did not reveal however
transport costs in Ukraine were not reasonably
that
reflected in the records of
the applicant. This claim
therefore had to be rejected.

4. Dumping margin

(36)

The dumping margin was established on the basis of a
comparison of a weighted average normal value with a
weighted average
in accordance with
Article 2(11) of the basic Regulation.

export price,

(37)

This comparison showed a dumping margin of 38,2 %,
expressed as a percentage of the cif Community frontier
price, duty unpaid.

5. Lasting nature of the changed circumstances

(38)

In accordance with Article 11(3) of the basic Regulation,
an analysis was made as to whether the change in
circumstances with regard to dumping could reasonably
be said to be of a lasting nature.

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a

using

normal

original

investigation

in a market-economy

In this context, it was noted that the dumping margin
currently applicable to the applicant was established in
the
value
determined on the basis of data obtained from a
in
producer
third country
accordance with Article 2(7) of
the basic Regulation.
However,
review normal value was
calculated based on information relating to the applicants
own data in accordance with Article 2(1) to (6) of the
following the granting of market-
basic Regulation,
economy status to Ukraine (amendment of
the basic
Regulation by Regulation (EC) No 2117/2005).

in the present

currently in force depends on the specific product type
and varies between EUR 29,26 per tonne and EUR 33,25
per tonne.

(45)

Since the duty established on the basis of the current
margin of dumping is higher than the current duty, the
review should be terminated without amending the level
of the duty applicable to the applicant, which should be
maintained at the level of the definitive anti-dumping
duty rate established in the original investigation.

(39)

(40)

There were no indications that the level of the normal
value or the export price established for the applicant in
the current investigation could not be considered of a
lasting nature. It could be argued that the evolution of
the prices of natural gas as the main raw material could
have a significant influence on the normal value. It was,
however, considered that the effect of the price increase
would affect all actors on the market and therefore have
an impact on both the normal value and the export
price.

(46)

E. UNDERTAKINGS

set

the

deadlines

offer within

The applicant expressed an interest in offering an under-
taking but failed to submit a sufficiently substantiated
undertaking
in
Article 8(2) of the basic Regulation. Consequently no
undertaking offer could be accepted by the Commission.
However, it is considered that the complexity of several
the
the volatility of
issues, namely (1)
product concerned which would require some form of
indexation of minimum prices, while at the same time
the volatility is not sufficiently explained by the key cost
driver; and (2) the particular market situation for the
product concerned (inter alia,
there are limited
imports
review)
points to the need to consider whether an undertaking
combining an indexed minimum price and a quantitative
ceiling would be workable.

from the exporter

that
subject

the price of

to this

(47) As mentioned above, due

to this

complexity the
applicant could not formulate an acceptable undertaking
offer within the statutory deadline. As a result,
the
Council considers that the applicant should exceptionally
be allowed to complete its undertaking offer beyond the
statutory deadline but within 10 calendar days from
entry into force of this Regulation.

F. DISCLOSURE

(48)

Interested parties were informed of the essential facts and
considerations on the basis of which it was intended to
terminate the present review and to maintain the existing
anti-dumping duty on imports of the product concerned
produced by the applicant. All parties were given an
opportunity to comment. Their comments were taken
into account where warranted and substantiated by
evidence,

(41)

The export price of the applicant to the Community
during the RIP was found to be similar to that of its
exports to other countries, where considerably higher
quantities were sold during the RIP.

(42)

Therefore, although the dumping margin found in the
RIP is based on a relatively low volume of exports of
the applicant to the Community, there are reasons to
consider that the dumping margin found is based on
changed circumstances of a lasting nature.

D. TERMINATION OF THE REVIEW

(43)

Since in the original investigation the duty was imposed
in the form of a specific amount per tonne,
it should
have the same form in the current investigation. The duty
calculated on the basis of the current margin of dumping
would be EUR 47 per tonne.

(44)

It is recalled that, as outlined in recital 59 of Regulation
(EC) No 132/2001, when imposing definitive measures
in 2001, the injury margin was used when determining
the amount of
the definitive duty to be imposed in
accordance with the lesser duty rule. As defined by
Article 1(2) of Regulation (EC) No 442/2007, the duty

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HAS ADOPTED THIS REGULATION:

Sole Article

The partial interim of the anti-dumping measures applicable to
imports of solid fertilisers with an ammonium nitrate content
exceeding 80 % by weight originating in Ukraine, falling within
ex 3102 29 00,
CN
ex 3105 10 00,
ex 3102 60 00,

ex 3102 90 00,

3102 30 90,

3102 40 90,

codes

ex 3105 51 00,

and
ex 3105 20 10,
ex 3105 90 91, initiated pursuant to Article 11(3) of Regulation
(EC) No 384/96,
is hereby terminated without amending the
anti-dumping measures in force.

ex 3105 59 00

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, 10 March 2008.

For the Council
The President

D. RUPEL