Council Regulation (EC) No 240/2008 of 17 March 2008 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: 2008-03-17
Institutions: Council of the European Union
Subjects: Belarus, Croatia, Libya, Ukraine, anti-dumping duty, anti-dumping legislation, chemical fertiliser, dumping, import

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Official Journal of the European Union

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COUNCIL REGULATION (EC) No 240/2008

of 17 March 2008

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
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 Articles 9 and 11(2)
thereof,

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

Whereas:

(1)

(2)

(3)

A. PROCEDURE

1. Measures in force

In January 2002, by Regulation (EC) No 92/2002 (2), the
Council imposed definitive anti-dumping duties ranging
from EUR 7,81 to EUR 16,84 per tonne on imports of
urea, whether or not in aqueous solution, originating in
Belarus, Croatia, Libya and Ukraine. By the same Regu-
lation, definitive anti-dumping duties ranging from EUR
6,18 to EUR 21,43 per tonne were imposed on imports
of urea originating in Estonia, Lithuania, Bulgaria and
Romania and were automatically repealed on 1 May
the date of
2004 and 1 January 2007 respectively,
accession of these countries to the Community.

2. Request for review

In April 2006, the Commission published a notice of
existing measures (3). On
impending expiry of
17 October 2006 the Commission received a request
to
for an expiry review of
Article 11(2) of the basic Regulation.

these measures pursuant

the

This request was lodged by the European Fertiliser Manu-
factures 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.

(4)

(5)

(6)

(7)

(8)

The applicant alleged, and provided sufficient prima facie
evidence for its allegation, 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).

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, the Commission initiated this
review by publishing a notice of
initiation in the
Official Journal of the European Union (4).

3. Investigations concerning other countries

In May 2006, the Commission initiated a review (5) of
the definitive anti-dumping duties imposed by Council
Regulation (EC) No 901/2001 (6) 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.
there was no con-
tinuation of material injury to the Community industry
and that there was no likelihood of recurrence of injury
thereto in the absence of measures.

It was concluded that

4. Current investigation

4.1. Investigation period

and

covered

recurrence of
The investigation of continuation or
dumping
from
period
the
injury
1 October 2005 to 30 September 2006 (RIP). The exam-
ination of the trends relevant for the assessment of a
likelihood of a continuation or
injury
covered the period from 2002 up to the end of the
RIP (period considered).

recurrence of

4.2. Parties concerned by the investigation

the

the
The Commission officially advised the applicant,
in
exporting producers
Community producers,
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.

(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 17, 19.1.2002, p. 1. Regulation as last amended by Regulation

(EC) No 73/2006 (OJ L 12, 18.1.2006, p. 1).

(3) OJ C 93, 21.4.2006, p. 6.

(4) OJ C 316, 22.12.2006, p. 13.
(5) OJ C 105, 4.5.2006, p. 12.
(6) OJ L 127, 9.5.2001, p. 11.
(7) OJ L 198, 31.7.2007, p. 4.

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(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.

(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
several
Libya.
importers and users and their associations submitted
comments without replying to the questionnaire.

addition,

and

In

(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.

(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,
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 investi-
gation and to provide the Commission with the infor-
mation requested in the notice of initiation.

so,

if

(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)

in the investigation. Four out of

Twelve Community producers properly completed the
agreed to cooperate
sampling form and formally
these 12
further
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
the total
producers accounted for around 60 % of
production of the Community industry during the RIP,
whilst the above 12 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
time
available.

investigated within the

(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,
to apply
sampling, and all companies were invited to submit a
questionnaire.

it was decided not

(17)

information
The Commission sought and verified all
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) S a m p l e d C o m m u n i t y p r o d u c e r s :

— Fertiberia SA, Madrid, Spain,

— SKW

Stickstoffwerke
Lutherstadt Wittenberg, Germany,

Piesteritz

GmbH,

— Yara Group (Yara Spa Ferrara,

Italy and Yara

Sluiskil BV, Sluiskil, the Netherlands),

— Zakłady Azotowe Puławy SA, Puławy, Poland;

(b) E x p o r t i n g p r o d u c e r s :

— Ukraine:

— Joint

Stock

Company

Concern

Stirol,

Gorlovka,

— Close Joint Stock Company Severodonetsk,

Severodonetsk,

— Joint Stock Company Dnipro Azot, Dneprod-

zerzhinsk,

— Open Joint Stock Company Cherkassy Azot,

Cherkassy;

— Croatia:

— Petrokemija DD, Kutina;

(c) C o m m u n i t y i m p o r t e r s :

— Dynea Austria GmbH, Krems, Austria;

(d) C o m m u n i t y u s e r s :

— Associazione

Cremona, Italy,

Liberi Agricoltori

Cremonesi,

— Acefer, Asociación Comercial Española de Fertili-

zantes, Madrid, Spain.

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B. PRODUCT CONCERNED AND LIKE PRODUCT

(23)

1. Product concerned

(18)

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

the three export countries with market-
In case of
economy status, namely Croatia, Libya and Ukraine,
normal value was determined in accordance with
Article 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.

(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 on to 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
the
regarded for
same and may be
basically the
purposes of the present proceeding as one product.

chemical

above,

its

2. Like product

(20) As established in the original

investigation, this review
investigation has confirmed that
the products manu-
factured 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 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
injury, only the core
recurrence of
continuation or
regarding likelihood of

continuation or
arguments
recurrence of dumping are developed below.

(24)

(25)

(26)

1.2. Croatia

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.

Croatia exported more than 200 000 tonnes of urea to
the Community during the RIP, capturing 2,3 % of the
Community market. The sole known and cooperating
exporting producer was still found to export at signifi-
cantly dumped prices to the Community, as far as the
RIP is concerned. The dumping margin found exceeded
20 %.

Indeed,

There were significant doubts 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.
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 undis-
relating to the Croatian domestic
torted gas prices
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
exists
without this adjustment, and the conclusions on like-
lihood of
this
matter was not pursued.

injury set out below,

that dumping

recurrence of

fact

1. Dumping of imports during the review investi-

gation period

1.1. General principles

(22)

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.

1.3. Belarus, Libya and Ukraine

(27) As explained 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.

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(28)

(29)

(30)

(31)

2. Likelihood of recurrence of dumping

2.1. Belarus

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
respect. The US
producer that already cooperated in the original investi-
gation filed a questionnaire response which was used for
the determination of normal value.

in this

The sole known Belorussian producer
filed a ques-
tionnaire reply. Overall, Belarus exported about 25 000
tonnes of 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.

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.

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
for a commodity product such as
dumped.
urea,
levels above
current market prices. The result of this analysis also
led to significant dumping margins.

it would be unlikely to sell at

Indeed,

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

(33)

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

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 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 charged for exports to the 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 appro-
priate. Available information showed that overall, Libya
exported about 70 000 tonnes 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 carried out 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 admin-
in accordance with
istrative
Article 2(3) of the basic Regulation. A margin of profit
of 8 % was found to be reasonable in this case.

costs and for profits,

2.2. Croatia

(34) As indicated in 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

(40) Analysis of the questionnaire submitted by the coop-
erating 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, namely,
more than eight times the total exports made to the
Community market. Comparison of
exports prices
charged for these exports with the normal value estab-
lished as described above showed a significant level of
dumping.

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(41)

There were significant doubts as to whether the costs for
gas, which is the major input to produce urea, were
the exporting
reasonably reflected in the records of
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 signifi-
cantly. Given the fact that dumping exists without this
conclusions on likelihood of
adjustment,
and the
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.

(43) At the same time, export prices charged for exports to
other export markets were found to be slightly higher
than prices for exports to the Community. Therefore, it is
the Community would be a more
questionable that
in terms of prices than other third
attractive market
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 cooperated with the investigation. Only
two of them made export sales to the Community during
the RIP. Overall, Ukraine exported only about 20 000
tonnes 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
the gas consumed in the
importing the majority of
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 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

(47)

(48)

(49)

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.

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.

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.

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
for exports to the Community. Therefore,
is ques-
tionable 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.

it

3. Development of

imports should measures be

repealed

3.1. Belarus

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

(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 distri-
bution channels in the Community, and, in general, the
size of the Community market is attractive, particularly
for countries with geographical proximity.

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

increase in other

spare capacity,

In addition,

regions of

larger

for

(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 about 120 000 tonnes during
the RIP.
In addition, exports to other third countries
accounted for about 60 000 tonnes. It is not excluded
the spare capacity is directed to the
that part of
Community once measures
sole
Croatian exporter has well developed distribution
channels in the Community, and, in general, the size of
is attractive, particularly for
the Community market
countries with geographical proximity.

repealed. The

are

(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 quan-
tities 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.
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 to (or
slightly higher than) those which could be obtained when
exporting to the Community.

In addition,

it

(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.

3.3. Libya

(58) According to the information available, Libya had, at
most, a spare capacity of around 140 000 tonnes
third
during the RIP.
In addition, exports to other
countries accounted for around 570 000 tonnes.
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
the
in general,
in the Community, and,
Community market
for
attractive,
is
countries with geographical proximity.

the size of
particularly

(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 to (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
it is not expected
agricultural production. On balance,
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

In addition, exports to other

(61) According to the information on file, Ukraine had, at
most, a spare capacity of around 375 000 tonnes
during the RIP.
third
countries accounted for around 3 500 000 tonnes. 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
is attractive, particularly for
the Community market
countries with geographical proximity. However,
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
it is not excluded that urea
Community.
the
consumption will
world, given current
agricultural
trends
production. On balance, it is not expected that exports
would reach the full amount of
if
measures expire, but they would be likely to exceed de
minimis levels.

increase in other

spare capacity,

In addition,

regions of

larger

for

it

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(62) As to a potential

the

to the Community,

redirection of exports from third
countries
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
to the tune of over 3 000 000
and Latin America,
tonnes, which would then be
redirected to the
Community. However, on the basis of the information
is not possible to conclude that such
on the file,
alia, because
displacement would take place,
increasing global consumption could well absorb these
additional quantities, were they 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. All things considered, 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.

inter

it

— Fertiberia SA (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)
Sluiskil BV (the
and Yara
Netherlands),

4. Conclusion on the likelihood of continuation or

— Zakłady Azotowe Puławy (Poland),

of recurrence of dumping

(63) On the basis of

the aforementioned analysis,

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.

it

— ZAK SA (Poland),

— BASF AG (Germany).

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
them
Article 4(1) of
became Community producers following the enlargement
of the EU in May 2004.

the basic Regulation. Eight of

(67) As these 12 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’.

(65) Out of

the 16 Community producers, 12 agreed to
cooperate with the investigation, while three sent the
information requested for the purpose of sampling but
did not offer
cooperation. No Community
further
producer opposed the request for review.

(68) As above indicated, a sample of

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

(66) Accordingly,

the following 12 producers agreed to

cooperate:

— Achema AB (Lithuania),

(69)

— Adubos de Portugal (Portugal),

— AMI Agrolinz Melamine

International GmbH

(Austria),

— Duslo AS (Slovak Republic),

E. SITUATION IN THE COMMUNITY MARKET

1. Consumption in the Community market

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 EU 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 EU by Bulgaria and
Romania, the analysis is limited to the situation of the
EU-25.

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Official Journal of the European Union

18.3.2008

(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.

Belarus – Volume of imports (tonnes)

134 931

167 981

62 546

62 044

25 193

2002

2003

2004

2005

RIP

Market share

Prices of imports
(EUR/tonne)

1,6 %

107,5

1,9 %

126,6

0,7 %

148,5

0,7 %

165,7

0,3 %

190,5

Index (2002 = 100)

100

118

138

154

177

Ukraine – Volume of imports (tonnes)

44 945

36 304

77 270

84 338

52 553

Market share

Prices of imports
(EUR/tonne)

0,5 %

117,4

0,4 %

134,5

0,8 %

139,6

0,9 %

192,7

0,5 %

194,0

Index (2002 = 100)

100

115

119

164

165

Croatia – Volume of imports (tonnes)

126 400

179 325

205 921

187 765

208 050

Market share

Prices of imports
(EUR/tonne)

1,5 %

125,1

2,0 %

135,0

2,3 %

145,0

2,1 %

171,7

2,3 %

185,0

Index (2002 = 100)

100

108

116

137

148

Libya – Volume of imports (tonnes)

142 644

227 793

153 390

124 515

73 361

Market share

Prices of imports
(EUR/tonne)

1,6 %

114,1

2,5 %

134,9

1,7 %

147,2

1,4 %

193,8

0,8 %

201,6

Index (2002 = 100)

100

118

129

170

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 EUR
107 to EUR 190 per tonne during the period considered.

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Official Journal of the European Union

L 75/41

(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 than, 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 cooperating 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.

2002

2003

2004

2005

RIP

Volume
(tonnes)

of

imports

from Russia

1 360 025

1 429 543

1 783 742

1 404 863

1 488 367

Market share

15,7 %

16,0 %

19,9 %

15,8 %

16,6 %

Prices of imports from Russia
(EUR/tonne)

119

133

154

180

196

Volume of imports from Egypt (tonnes)

579 830

629 801

422 892

385 855

624 718

Market share

Prices of imports from Egypt
(EUR/tonne)

6,7 %

149

7,0 %

163

4,7 %

178

4,3 %

220

7,0 %

222

imports

from Romania

260 298

398 606

235 417

309 195

248 377

Volume of
(tonnes)

Market share

Prices of imports from Romania
(EUR/tonne)

3,0 %

123

4,5 %

142

2,6 %

175

3,5 %

197

2,8 %

210

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2002

2003

2004

2005

RIP

Volume of
countries (tonnes)

imports

from all other

373 732

291 620

254 311

336 110

326 579

Market share

4,3 %

Prices of
countries (EUR/tonne)

imports

from all other

141

3,3 %

170

2,8 %

194

3,8 %

221

3,6 %

224

Market share all third countries

29,7 %

30,8 %

30,0 %

27,4 %

30,0 %

(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 Regulation (EC) No 907/2007 (see
recital 6). 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

(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 cooperating Community industry producers were found to use the like product for
further processing to blended or synthetic fertiliser products which are further downstream nitro-
genous 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 industrys 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, namely prices, costs of production, profitability,
wages, investments, return on investment, cash flow and 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) P r o d u c t i o n

(85)

The Community industry’s production, including volumes intended for captive use, remained prac-
tically stable between 2002 and the RIP, increasing by 5 % in 2003 and decreasing by the same
percentage in 2004.
increase of respectively 2 % and 1
percentage point was registered, reaching a level of 4,45 million tonnes.

In 2005 and during the RIP a small

18.3.2008

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Official Journal of the European Union

L 75/43

2002

2003

2004

2005

RIP

C.I. Production (tonnes)

4 300 000

4 500 000

4 300 000

4 400 000

4 450 000

Index (2002 = 100)

100

105

100

102

103

production

C.I.
transfers

used

for

captive

800 000

800 000

800 000

900 000

900 000

As % of total production

19,3 %

18,5 %

19,5 %

20,6 %

20,2 %

Source: Complainants, sampling questionnaire replies and verified questionnaire replies

(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

(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. Production capacity (tonnes)

5 100 000

5 200 000

5 200 000

5 400 000

5 360 000

Index (2002 = 100)

C.I. Capacity utilisation

Index (2002 = 100)

100

84 %

100

101

88 %

104

101

84 %

100

106

81 %

96

105

81 %

96

(c) S t o c k s

(87)

The level of closing stocks of the Community industry was rather stable between 2002 and 2004
and increased sharply (by 24 percentage points in 2005 and by further 13 percentage points at the
end of the RIP). Nevertheless, as urea intended for captive use 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. Closing stocks (tonnes)

250 000

240 000

260 000

320 000

350 000

Index (2002 = 100)

100

94

103

127

140

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

(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 sales volume (tonnes)

3 150 000

3 240 000

3 050 000

3 000 000

3 070 000

Index (2002 = 100)

100

103

97

95

97

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

(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

36,5 %

36,3 %

34,1 %

33,8 %

34,3 %

Index (2002 = 100)

100

99

93

93

94

(f) G r o w t h

(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) E m p l o y m e n t

(91)

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

reflecting thus the concern of

C.I. Employment product concerned

Index (2002 = 100)

2002

1 235

100

2003

1 230

100

2004

1 155

94

2005

1 160

94

RIP

1 165

94

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

(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, thus showing the combined positive impact of
reduced employment and increase in production of the Community industry.

2002

C.I. Productivity (tonnes per employee)

3 500

Index (2002 = 100)

100

2003

3 700

106

2004

3 745

107

2005

3 765

108

RIP

3 735

107

(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

(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, was below de minimis levels; (ii)
imports from Croatia were stable, at prices increased in
line with EU sales prices; and (iii) the overall financial situation of the Community industry was
very positive, this impact is considered not to be significant and the indicator not meaningful.

(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

(94)

The indicators examined above and below clearly show significant improvement in the economic and
financial situation of the Community industry.

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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

(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)

2002

138

100

2003

149

108

2004

164

120

2005

189

138

RIP

207

151

(b) W a g e s

(96)

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

S.P. Annual
(000 EUR)

labour cost per employee

2002

44,2

2003

47,2

2004

47,1

2005

48,6

Index (2002 = 100)

100

107

107

110

RIP

49,9

113

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

(97) Annual investments in the like product made by the four sampled producers developed positively
during the period considered, that is to say, it increased by 74 %, although it showed some fluc-
tuations. 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) during the same period.

2002

2003

2004

2005

RIP

S.P. Net investments (000 EUR)

20 493

11 095

31 559

40 001

35 565

Index (2002 = 100)

100

54

154

195

174

(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

(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 at the beginning of
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 per cent of the net book
value of investments, broadly followed the profitability trend over the whole period considered.

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

2002

4,6 %

2003

2004

2005

RIP

11,1 %

18,4 %

19,3 %

10,7 %

Index (2002 = 100)

100

241

400

419

233

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

2002

2003

2004

2005

RIP

10,7 %

31,0 %

48,8 %

51,1 %

29,4 %

Index (2002 = 100)

100

290

456

477

275

(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

(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

difficulties
encountered by the sampled Community producers in
raising capital.

reveal

any

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
industry has
the Community
improved during the period considered.

situation of

(102) Almost all other injury indicators, with the exception of
stock volumes, developed positively:
the increase of
production volume
the
and unit
Community industry increased and profitability was,
after 2002, significantly above the level of profit set as
a target profit in the original investigation.

sales prices of

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

evolution

reflecting

positive

(104) The applicant claimed that

requirements, measured as a return on sales,

the long-term profitability
for the

it

of

is noted that

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 was justified
by the cost of establishing a new ammonia/urea plant,
which would require a return on investment of 11 %
to the 36 % pre-tax profit on
(allegedly equivalent
the
turnover). To this purpose,
applicant never claimed such a high target profit
in
investigation a
this proceeding and in the original
profit margin of 8 % that may be reached in the
absence
established.
injurious
Moreover, the Court of First Instance,
in its judgment
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
the
conditions of
dumped imports’ (1). 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
the
Community industry and/or an adequate return on
capital, has no basis whatever in the basic regulation.’

dumping was

competition,

survival of

absence of

to ensure

in the

the

(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 quali-
an assessment.
tatively more
such
Furthermore,
it was argued that, on the basis of the
latter indicators, the Community industry was suffering
injury.

adequate

for

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

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(106) Given the particular

the

characteristics of

fertiliser
industry (inter alia,
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

(108) Since there is no continuation of material injury caused
the analysis
by imports from the country concerned,
focused on the
injury
should the measures be removed. In this respect, two
(i) possible export
main parameters were analysed:
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.

recurrence of

likelihood of

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 cannot be concluded that the prices would be
the
likely materially to undercut
Community industry’s prices or costs.

and/or undersell

3. Impact on the Community industry of

the
projected export volumes and price effects in
the event of repeal of measures

(112) The urea market is forecast to grow significantly in the
coming years both in the Community (1) and worldwide,
mainly due to increased agricultural production (for
biofuel applications) and also due to expanding industrial
use for AdBlue (2). As an example, prospects for agri-
in the European Union 2007-14
cultural markets
for Agriculture in
released by the Directorate-General
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, at
the end of September 2007, Council Regulation (EC)
No 1107/2007 (3) established derogations
from set-
aside
anticipated
year 2008. The
the
Community market growth (around one million addi-
is likely to exceed the maximum likely
tional
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 two million tonnes, and there is no indication
that this gap would be filled by other exports (inter alia,
originating in Russia, as described in Regulation (EC) No
907/2007) to an extent that oversupply would suppress
or depress market prices.

tonnes)

lands

for

(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
such general context will vary
significantly in the short to medium term.

that

(113)

it

is not

likely that

the foregoing,

the
In view of
Community industry would have to decrease its sales,
production or prices to an extent such that its profit-
and overall position would be materially
ability
affected. Therefore,
likely that profits would
it
is
level, reflecting the favourable
maintain their current
market conditions prevailing in particular from 2004
to the RIP.

2. Possible export volumes

and prices of

the

countries concerned

(110) As already stated, Ukrainian exporting producers are
likely, at most,
to export around 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.

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 were the existing measures to be repealed.

‘Global

(1) Source:

fertilisers and raw materials supply and supply/
demand balances: 2005-2009’, A05/71b, June 2005, International
Fertiliser Industry Association ‘IFA’.

(111) Export prices to the Community and to third countries
have been analysed above. Together with the market

(2) AdBlue is a registered trade mark 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.
(3) OJ L 253, 28.9.2007, p. 1.

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G. 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.

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

(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.

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.

(117)

In consideration of the circumstances described above,
namely the significant distortions in the cost structure
and/or the export operations by exporters in all
four
it is found necessary to monitor
countries concerned,

Article 2

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, 17 March 2008.

For the Council
The President

I. JARC