Commission Implementing Regulation (EU) 2020/2100 of 15 December 2020 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia following an expiry review pursuant to Article 11(2) of the Regulation (EU) 2016/1036 of the European Parliament and of the Council

(235) The Commission noted that the calculation of the so called ‘market premium’ attributed to the anti-dumping duty is erroneous. Applicable anti-dumping duty for imports from Russia was established on the injury elimination level, whose calculation takes into the account applicable customs duties. Therefore, the calculation provided by the farmers’ association double-counts the customs duty, which then they attribute to ‘the market protection from the anti-dumping duty’. Furthermore, the injury elimination level that set the current duties is not a ‘market premium’, as argued by the users association. The injury elimination level is established to eliminate the injury suffered by the Union industry. The injury would be eliminated if the Union industry was able to cover its costs of production and to obtain a profit before tax on sales of the like product in the Union market that could be reasonably achieved under normal conditions of competition by an industry of this type in the sector, namely in the absence of dumped imports. These claims were therefore rejected.

(236) Users associations (61) further claimed that the Union AN producers were able to set prices artificially high to achieve significant profit levels. While the European Commission has found that the Union AN industry should achieve a 8 % target profit under normal market conditions.

(237) The Commission noted that the target profit used for establishing the target price for the injury level calculation was found to be the appropriate minimum profit as established in the last interim review (62), which the Union industry could have expected to obtain in the absence of injurious dumping. The fact that an industry in question was able to achieve even higher profit margins demonstrates the effectiveness of the measures in place and the viability of the Union industry. This claim was therefore rejected.

(238) Users associations (63) claimed that the high AN prices also have an influence on the calcium ammonium nitrate (‘CAN’) prices and similar ‘market premium’ was estimated for CAN (the Irish farmers use CAN, since AN is prohibited in Ireland).

(239) First, CAN is outside the scope of current investigation. Second, the measures in place do not prevent Russian (or other third countries’) companies to produce and export CAN to the Union market (no anti-dumping or anti-subsidy duties are applicable for this product); even more, the price of it in the Union market may be attractive, as claimed. Third, it is natural that the prices of nitrogen fertilisers, where the major raw material is gas, closely correlate and therefore AN and CAN prices may follow the same trends. This claim was therefore rejected.

(240) Following the disclosure, users associations (64) reiterated their claim regarding the anti-competitive behaviour of over-protected fertiliser producers and trade distortions induced by high entry barriers in the Union fertiliser market (stating that these trade barriers (customs and anti-dumping duties) muted competition, allowing Union producers, collectively, to impose excessively high prices), without providing supporting evidence. Furthermore, the allegedly excessive nature of the union prices is discussed in recital (244). The claim was therefore rejected.

(241) Same users associations then claimed that the Commission failed to carry a comprehensive forward-looking (i.e. post-RIP) assessment considering the collapse of gas prices (65) and parallel increase in AN prices (based on forecast by own market intelligence (66)) in the Union.

(242) Indeed, according to the World Bank (67), natural gas price in Europe started to decrease in 2019, they will begin picking-up in 2021 and will reach the level of 2016 (beginning of the period considered) in 2023. Following the findings of this investigation, as detailed in the recital (223), AN sales price followed the trend of natural gas price in the Union during the period considered. Thus, there is no reason to foresee the diverging trend in the future. No additional evidence regarding the evolution of AN prices in relation to natural gas prices in the Union was presented, allowing to question the relation of the two. This claim was therefore rejected.

(243) The same users associations further claimed that the Commission denied, against all available facts (68), the existence of a significant ‘market premium’ for AN in the Union, as compared to AN in the other regions.

(245) As evidenced by the data submitted by the farmer’s association, and verified sales figures of the Union industry, in 2016 and 2017 the prices in the Union were actually lower than submitted by the farmer’s association as the global prices. In 2018, they were at a similar level and then in the RIP the prices in the Union were only marginally higher (by less than 9 EUR/tonne or less than 4 %). Therefore, for 3 out of 4 the periods considered, prices in the Union were either lower or at the same level as what the farmers consider the global price. The mere increase to less than 4 % above what is being considered ‘a global price’ in the RIP was not permanent, nor substantial. The alleged existence of a premium on the Union market was therefore not supported by the evidence supplied by the farmer’s association when crosschecked with the data verified during the investigation. Third, the Black Sea spot price in the RIP, resubmitted by the associations in their comments on disclosure (73) had decreased from the one submitted in November 2019 (74) (from [210 – 215] EUR/tonne originally submitted to 178 EUR/tonne. No explanation for this difference was provided. Finally, the Black Sea spot price of AN was the price of Russian and Georgian AN exporters mainly and represented prices in that one region. Thus, it could not be considered as a global price. Based on this, the claim of the parties was rejected.

(246) Following the disclosure, the permanent mission of the Russian Federation commented that the Union industry was in a stable position and financially healthy situation. They benefitted from the decrease in gas prices. Some indicators, such as employment, unit sales price, average labour costs, and investments had a tendency to steadily increase.

(247) It is recalled that these were, indeed, the finding of this investigation during the period considered. The likely situation of the Union industry, should the measures be allowed to lapse, was analysed separate from injury, in the recitals (298) to (303).

(248) The same interested party reiterated, without providing evidence, the statement that the AN producers dominate the Union market and are almost the sole suppliers, which consequently harms end-users and agricultural sector of the Union. The measures on the AN in the Union led to distortions of competition, inflation of the AN prices in the Union and disconnection between the Union and the world prices.

(249) Without further evidence and considering that the similar claims regarding the market share held by the Union industry and the prices of AN in the Union during the period considered were addressed in the recitals (222), (223) and (225), the statement of the party was rejected.

(250) Several interested parties (75) claimed that the analysis of the Union industry was based on a manifest error of assessment, since in its findings the Commission explicitly excluded ‘stabilised’ AN. More specifically, no data on ‘stabilised’ AN was included in micro- or macroeconomic indicators. They further claimed that, based on their presented market intelligence database, if ‘stabilised’ AN was included, AN consumption in the Union was materially larger than what was stated in the recital (172).

(251) As specified in the section 4.5.2, macroeconomic indicators, among other named sources, were obtained from the verified data provided by the Union industry, based on Fertilizers Europe surveys, which included full scope of the product under review, as described in the recital (54). In particular, regarding the ‘stabilised’ AN, data on AN with phosphorus and/or potassium nutrient was collected in these surveys.

(252) In terms of the Union consumption, verifications of the sales of the sampled and non-sampled Union producers on the Union market confirmed that both data sets included the full scope of the product under review, as described in the recital (54). In particular, regarding the ‘stabilised’ AN, data on AN with phosphorus and/or potassium nutrient was collected in the Fertilizers Europe surveys and questionnaires of the Union producers. Furthermore, when adding the sales of AN, NK (AN including potassium nutrient) and NP (AN including phosphorus nutrient) (76) of the Union producers in the EU from the market intelligence database provided by these interested parties (77), the sales volumes were largely in line with the total sales volumes of the Union producers provided in the recital (193).

(253) Likewise, import statistics from Russia and all other third countries were based on TARIC code level, therefore they included all codes indicated in the recital (54). It is therefore confirmed that the analysis of the Union industry and Union consumption covers full scope of the product under review defined in the recital (54). The claim was therefore rejected.

(254) Same interested parties claimed that the Commission made a manifest error of assessment, when it determined the sample of Union producers. Namely, the sample did not reflect the costs of production of the Union industry as a whole, since two sampled producers (AB Achema and Grupa Azoty Zaklady Azotowe Pulawyu S.A.) allegedly incurred artificially high natural gas costs. They also claimed that there was nothing in the findings of the investigation indicating whether the gas prices paid by these two Union producers were representative of the Union gas market prices and how this point was investigated.

(255) The sample consist of three Union producers in Lithuania, Poland and France and is representative of the situation of the Union industry as a whole, in accordance with Article 17(1) of the basic Regulation. In this regard it should be clarified that a standard verification practice comprise the check if the raw materials prices reported in the questionnaire replies are at arm’s length (namely, the raw materials recorded in the cost of production are in line with the free market value). The costs of the raw materials provided by two sampled Union producers were therefore crosschecked with publicly available information (78) and were in line with the prevailing market prices and their evolution in the Union during the whole period considered. While gas prices and other gas sourcing costs may vary from one Member State to another, the findings of the Commission were based on a representative sample of three Union producers. Considering that there is a significant production of AN in Poland and Lithuania (31 % of the total Union production and 43 % of the cooperating Union producers of AN in the RIP), the Commission was correct to conclude that a finding including the data provided by the two sampled Union producers sourcing gas was representative for the whole Union industry. The claim was therefore rejected.

(256) The same interested parties further claimed that recital (200) refers to an increase in the raw material price, namely natural gas, as the reason behind increase in the cost of production of the Union industry. However, the Commission should have disclosed the supporting data for this statement, namely the natural gas purchase prices of the sampled Union producers. They claimed that publicly available gas prices in the Union do not address concerns about the evolution of the natural gas purchase price of the sampled Union producers. They added that the Commission should have also confirmed to what extent the findings of the recital (200) apply to Yara France, which does not purchase gas for the production of AN and that the statement (of same recital) claiming that gas is the most important raw material for production of ammonium nitrate representing over 60 % of the total cost of production does not relate to all three sampled Union producers.

(257) The Commission confirms that the cost of production per tonne stated in the recital (200) is the weighted average cost of production per tonne of all three sampled Union producers. The fact that two of the sampled Union producers are vertically integrated and produce the intermediate raw materials for production of AN, like ammonia, on the site, while the third sampled Union producer purchases it, does not contradict the statement that the natural gas is the most important raw material for production of ammonium nitrate representing over 60 % of the total cost of production. Namely, the cost of production of ammonium nitrate is either directly driven by the natural gas cost (for the vertically integrated producers) or, by the cost of ammonia, which is an intermediate raw material produced from natural gas and which price is also driven by the natural gas price. The costs of the raw materials provided by the sampled Union producers in their questionnaire replies were crosschecked with publicly available information (79) and were found in line with the prevailing market prices and their evolution in the Union during the whole period considered. The claims were therefore rejected.

(258) The same interested parties also claimed that the Commission should have explained on what basis they concluded and verified that there was a time lag in the Union between the reduction of gas prices and reduction of AN prices during the RIP and why (recital (223)).

(259) It should be clarified that the AN prices of the sampled Union producers in the RIP were collected on a transaction basis in their questionnaire replies and therefore could be calculated for each month of the RIP. The evolution of the gas price in the Union on a monthly basis was available from the World Bank (80). The two sets of data were the basis for the conclusion in the recital (223). The reason for a time lag of few months, as explained in that recital, was that, at the beginning of the RIP, AN prices needed to cover/catch-up the cost of production first (i.e. they were increasing, since they were below the cost of production for some sampled EU producers, as reflected in decreased profit in 2018) and then followed the same decreasing trend.

(260) Another Russian exporting producer claimed the contrary, that the cost of natural gas and AN prices follow different trends. As evidence of its statement it presented AN spot prices (i.e. concluded sales transactions, offers, bids) in different regions in comparison to the natural gas prices published by the World Bank and IMF.

(261) First, AN spot prices could not be conclusive when comparing them to the actual ex-works AN prices of concluded and verified sales transactions of the sampled Union producers, as detailed in recital (199), since they included prices of offers and bids that were not necessarily settled. Furthermore, the spot prices come from only one Member State, namely France, whereas the actual prices used by the Commission come from a representative sample of three Member States, namely France, Lithuania and Poland. Second, as explained in the same recital, during the period considered, the increase in AN prices in the Union was influenced by increase in the cost of production, namely natural gas. As further detailed in recital (257), the cost of the raw materials of the sampled Union producers (including natural gas) were in line with the prevailing market prices and their evolution in the Union during the whole period considered. Therefore, the cost of natural gas and AN prices followed the same trend in the Union during the period considered. The claim was therefore rejected.

(262) The same Russian exporting producer claimed that the AN prices in the Union found in this investigation (recital (199)) lacked explanation on how they were calculated. The party claimed that these prices were ex-works prices in Poland and Lithuania. Furthermore, the party alleged that the Commission deducted SG&A and profit of the related traders of these Union producers to construct the ex-works prices.

(263) It should be clarified that the AN prices of the sampled Union producers were collected in their questionnaire replies. These prices were not calculated by the Commission, instead, they were verified during respective verification visits at the Union producers. The AN prices in the recital (199), as indicated under table 8, relate to the verified data of all three sampled Union producers. The questionnaire with instructions for the sampled Union producers where these prices were collected is available on DG TRADE’s page of the case (81). It indicates that the sales prices are collected at an ex-works (factory) level, (i.e. sales value net of any transport cost to the customer’s premises), exclusive of VAT, net of credit notes and trade discounts. No SG&A and profit cost of the related traders is deducted. Therefore, these are ex-works prices of all three sampled union producers. The claim was therefore rejected.

(264) The same Russian exporting producer claimed that the average export prices of the Union producers to third country markets could not be higher than their prices on the Union market, as detailed in recital (227). It argued that the prices of the Union producers to the third country markets were potentially dumped, referring to the findings of the Australian government imposing the anti-dumping duty on imports of ammonium nitrate from Sweden in 2019 (82).

(265) As stated in recital (227) the AN prices of the Union producers to the third country markets were based on Eurostat data. (83) On this basis, prices to China, Ukraine and Brazil were respectively 426 EUR/tonne, 308 EUR/tonne and 375 EUR/tonne FOB delivery level in the RIP. The average export price to the third countries (in total) were 397 EUR/tonne FOB delivery level during the same period. These prices were higher than the average sales price of the Union industry in the EU in the RIP. The anti-dumping duties imposed on Sweden in Australia relate to one Member State only and different period and therefore did not put in question the Commission’s findings in this review. The claim of the party was therefore dismissed.

(266) Several interested parties (84) also claimed that the Commission should have explained on what basis they concluded and verified the statement that ‘in addition, AN prices are also driven by urea prices, which are a factor during price negotiations’ (recital (222)).

(267) This particular statement was provided in the questionnaire reply of a sampled Union producer (85). Urea is a global commodity, whose price also follows the price of the natural gas, its main raw material (86). Based on this, the Commission concluded that, among other factors, the price of urea is a factor driving the AN price.

(268) The same interested parties also claimed that the Commission should have explained how the conclusion that ‘the price of gas was higher in the Union than in many other markets’ was reached (recital (222)).

(269) This conclusion was reached based on the publicly available quarterly report on European Gas Markets (87), where the EU average industrial retail gas price of around 2,5 Euro cent/kWh in the RIP was compared to the prices of some important trade partners of the EU and significant AN producers, including Russia. As reported, industrial retail gas prices were below 1 Euro cent/kWh in Russia and around 1,2 Euro cent/kWh in the United States during the RIP.

(270) Several interested parties (88) further claimed that the Commission made a manifest error of assessment when it determined the sample of Union producers. Namely, it failed to acknowledge that injury on UAN case (89) could have an impact AN.

(271) The fact that AN production could impact all upstream (ammonia, nitric acid), downstream (UAN) and related (CAN, A5, urea) production lines (as referred in recital (350) does not contradict to the fact that injury (reflected in different economic indicators including the indicator of the cost of production) could be attributed distinctively to the specific product. Furthermore, the Commission found no injury to the Union industry of AN during the RIP and based its conclusion that measures should not be allowed to lapse in its analysis of likelihood of recurrence of injury. Thus, the Commission found that the claim was not only incorrect but also irrelevant because of the facts of this case. The claim was therefore rejected.

(272) Several interested parties (90) reiterated the claim that the Commission made a manifest error of assessment when it determined the sample of Union producers. According to those parties, the sampled Union producers were not representative of the full scope of the like product, since they did not produced ‘stabilised’ AN and industrial grade AN and therefore only partly reflected the Union industry. Furthermore, they claimed that the Commission selected two Union producers which were affiliated to Russian producers: Grupa Azoty Zaklady Azotowe Pulawyu S.A. was affiliated with the Russian producers; while another of the sampled Union producers was engaged in the purchases of Russian AN for importing it worldwide, including the Union market.

(273) As stated in the recital (33), the sampled Union producers were the largest Union producers of ammonium nitrate in terms of the production and sales volumes. They accounted for 30 % of total production of the like product (that is, including ‘stabilised’ AN and industrial grade AN) in the Union in the RIP. The sample of Union producers was therefore representative of the situation of the Union industry as a whole, in accordance with Article 17(1) of the basic Regulation. Moreover, there is no legal requirement that the sample of producers cover all product types investigated for the sample to be representative. In this sense, the sample included Union producers making product types directly competing with the subject imports. Finally, in the present case the Commission found no injury to the Union industry. The claim that the sample of Union producers was not representative of the situation of the Union industry was therefore dismissed.

(274) In relation to the alleged affiliation of two of the sampled Union producers with Russian producers, the Commission found based on the information collected during the investigation that both sampled companies were considered Union producers within the meaning of Article 4(1) of the basic Regulation. In relation to the Grupa Azoty Zaklady Azotowe Pulawyu S.A., a Russian exporting producer owned a minority share of this Union producer via the holding company and there were no commercial links between them. Regarding the other sampled Union producer, as explained in recital (309), the trading of Russian AN was made by entities of the group to which the Union producer belongs and were not material in relation to that sampled Union producer (91). There were no reasons for excluding these companies from the definition of the Union industry and therefore the claim was dismissed.

(275) One Russian exporting producer claimed that the capacity utilization of the Union producers was incorrectly calculated, since it was based on the prilling capacity. The two of the sampled Union producers produced UAN and AN, which used the same intermediate product, ammonium nitrate melt. The party claimed that for these producers the availability of ammonium nitrate melt is a bottleneck and that the capacity utilization for such producers should be calculated based on the available AN melt or based on actual production of AN. This claim was rejected for the reasons as explained in the recital (110).

(276) The same Russian exporting producer claimed that the Commission’s price comparison (undercutting calculation) was static and did not take into account it’s evolution over time, nor its combination with other relevant facts (like price movements, increases in market shares, product substitutability, the product types with respect to which it had made a finding of price undercutting). Such an examination should reveal price movements and trends in the relationship between the prices of the imports and those of domestic like products.

(277) The undercutting calculation, as standard, was performed for the RIP period and related to the product types (PCN – product control numbers established for this investigation) that were traded by the Russian producers. The undercutting calculation was based on limited import quantities during the RIP, which had been found to be unrepresentative. Thus, any conclusion drawn from this calculation can only have limited relevance. Consequently, future projections of the relationship between the prices of the Russian imports and those of the domestic like products could not be performed on this basis. The claim was therefore dismissed.

(278) The same Russian exporting producer claimed that the deduction of antidumping duty was not warranted in the undercutting calculations for a commodity product, when the price is set by supply and demand, without explaining why that would be the case.

(279) For the undercutting calculation described in the section 4.3.3, as explained in recital (181), the comparison of Russian export prices to the Union to the prices of the Union producers was done using two methods, one where the anti-dumping duties in place were taken into account and one where they were not. For the potential undercutting (in the absence of measures) calculation described in recital (294), the comparison of Russian export prices to the third countries to the prices of the Union producers did not include anti-dumping duties, as this was a part of the prospective analysis. The claim was therefore dismissed.

(281) Regarding the undercutting calculation using the actual Russian export sales to the Union market, the Commission underlined that its decision to extend the measures in place do not rely on the undercutting found during the RIP. First, the Commission found that the Union industry was not injured during the RIP. Second, as acknowledged by several parties, the undercutting was based in limited import quantities during the review investigation period, which were found to be unrepresentative. Therefore, the finding of undercutting during the RIP has limited relevance as regards the situation of the Union industry during the RIP.

(282) In relation to the undercutting calculation referred to in recital (294), that calculation aimed at estimating the potential undercutting level in the future in case measures were allowed to lapse. Thus, this potential undercutting level and the constructed CIF prices (based on the export prices to third markets) served only as the proxy. It was an exercise conducted for the purposes of establishing a likely import price. Having said that, regarding point (i) summarised in recital (280), the adjustments disputed by the interested parties would not materially affect the conclusion that the Russian imports would likely enter the Union market at dumped prices in the absence of the anti-dumping measures and would still considerably undercut the prices of the Union producers (92).

(283) Points (ii), (iii) and (iv) summarised in recital (280) have been addressed in recitals (183), (244) and (73), respectively. Regarding point (v) the Commission did not exclude imports of above two million tonnes. The information provided in recital (294) and related footnote in fact means that the Commission considered the sampled Russian exporting producers’ exports to all destinations when they were above two million tonnes in the RIP. Concerning point (vi), the Commission only used certain transport related costs, which remained valid irrespective of the representativity of the sales volumes and prices to the EU. These claims were therefore rejected. For confidentiality reasons, the details on alleged miscalculations concerning freight costs were provided in a separate reply to the company. The Commission partly agreed with the claims on calculations raised by the company. However, the resulting change in the CIF level of less than 1 % at country-wide level did not have any material effect on the Commission’s findings regarding undercutting.

(284) Following the arguments of the interested parties that the Commission failed to disclose duly the method for constructing the CIF values for the sampled exporting producers, the Commission made additional disclosures on 30 September and 21 October 2020 addressing this claim accordingly.

(285) The Commission concluded in recital (214) that the Union industry did not suffer material injury during the review investigation period. Thus, the Commission further examined the likelihood of recurrence of injury originally caused by dumped imports from Russia if measures were repealed.

(286) To establish the likelihood of recurrence of injury should the measures be repealed, the following elements were analysed: (a) production capacity and spare capacity in Russia, (b) likely price levels of imports from Russia in the absence of anti-dumping measures and (c) attractiveness of the Union market.

(287) Production capacity and spare capacity in Russia

(288) The production capacity in Russia during the review investigation period was over 10,5 million tonnes, with an estimated spare capacity of 440 000 tonnes. This spare capacity found in Russia would amount to 6 % of Union consumption. If fully directed to the Union market, significant volumes could still be exported and have a particularly strong effect on some of the Member States neighbouring with Russia.

(289) In view of the Roadmap for the development of production of mineral fertilizers for the period until 2025 adopted by the Russian government (93), the production of nitrogen fertilizers (AN being one of the most important ones) is foreseen to increase (94), with the increasing export share in the volume of output, reaching 65 % in 2025. This indicates that the larger part of Russian nitrogen fertilizers industry is export driven.

(290) RFPA claimed that the Roadmap is not aimed at promoting AN export to the Union.

(291) The Roadmap foresees an increase of production of nitrogen fertilizers to 11,7 million tonnes in 2020 and 12,3 million tonnes in 2025. Export share in volume of output of nitrogen fertilizers is aimed to increase to 65 % in 2020, which indicates that the bigger part of Russian nitrogen fertilizers industry is export driven. It also notes that the demand of mineral fertilizers (AN being one of the most important ones) on the Russian market will not exceed 4-5 million tonnes (calculated as 100 percent of the active substance) and will not exceed 40 percent load on existing capacity. The development of the Russian market of mineral fertilizers until 2025 will be constrained by the low level of effective demand of agricultural producers and the lack of a culture of using mineral fertilizers. As discussed in recital (296), the Union market is attractive to Russian exporting producers. Considering this together with the figures discussed above, even if the Roadmap does not explicitly target the Union, the increases discussed therein potentially may be exported to third country markets, including to the Union market, especially if measures were to be lifted.

(292) This claim was therefore rejected.

(293) In recital (169) it was concluded that it is likely that the Russian exporting producers would export large quantities of AN to the Union should measures be allowed to lapse and that these exports would likely be made at dumped prices.

(294) To consider the price level of Russian AN without the measures, an undercutting calculation aimed at estimating the potential undercutting level in the future in case measures were allowed to lapse was made using the cooperating exporting producers’ prices to third countries (95) and found a significant undercutting of 24,0 %. At these price levels, there would be a sharp increase of imports of AN from Russia in a small period of time.

(295) Considering these elements together, the Commission found that it is likely that Russian imports would enter the Union market at dumped prices and would undercut Union producers’ prices, thereby exerting significant price pressure on Union producers, should the measures be allowed to lapse.

(296) As mentioned in recitals (118) and (137), the Union market is attractive in terms of its size and prices. The Union is the largest AN market in the world. The Union market remains attractive in terms of price (96). The Russian exporters have well-established fertilizers distribution channels in the Union, which facilitates logistically the exports. Also, import prices from Russia are likely to undercut the Union industry’s prices on the EU market, which further indicates that the Union market is attractive for Russian producers.

(297) As mentioned in recital (120), countries such as Ukraine, Australia and India (97) have trade defence measures imposed on ammonium nitrate from Russia. Should the current measures lapse, these measures would make the Union market even more attractive for Russian producers, which encounter more difficulties to export to other third markets.

(298) As concluded in the recital (169) above, it is likely that Russian AN producers would export large quantities of AN to the Union at dumped prices should the measures be allowed to lapse. Moreover, it can be reasonably expected that, as a consequence of the attractiveness of the Union market as described in recital (296) should the measures be repealed, at least part of the spare capacity in Russia would be directed to the Union market. When considering the likely future evolution of Russian export prices, as explained in recital (294), it is likely that the prices of Russian imports would considerably undercut Union industry prices.

(299) In this regard, in terms of volumes, the lapse of the measures would very likely allow Russian exporting producers to rapidly gain market shares in the Union market. The Union industry would then face an immediate drop in its sales volumes, market share and an increase in its fix costs per unit. Indeed, the AN industry is a capital intensive industry which needs to maintain a certain volume of production to keep the fixed costs at sustainable levels. The increase in fixed costs following a decrease in production and sales will negatively affect the profitability.

(300) Furthermore, as detailed under recital (174), the consumption of AN is expected to decrease further. The Union industry therefore competes with Russian imports in a shrinking market. In turn, this is very likely to exert a downward pressure on prices with a negative impact on the Union industry’s profitability and financial situation. In parallel, the Union industry would be precluded from making the necessary investments to meet health, safety and environmental standards of the EU.

(301) All those factors combined would lead to a situation of recurrence of injury.

(302) A simulation based on a scenario where the Union industry would have to match the Russian import price (at the levels currently observed to third countries including the customs duty and post importation cost) while maintaining its sales volumes and incurring the same cost as in the RIP indicated that the profitability of the Union industry would turn to a loss of [-25 – -29 %].

(303) Based on the above, the Commission concluded that that there is a likelihood of recurrence of injury should the measures be repealed.

(304) The Russian Federation claimed that the Union producers tightly controlled the AN sector, since they have a high market share, increasing production and sales. According to the Russian Federation, Union producers were therefore ready for elimination of the duties on their Russian competitors, as confirmed by the growing exports of AN from the Union.

(305) The investigation confirmed that despite the decreasing production and sales volumes, the Union industry had a market share of above 90 % during the whole period considered. However, this does not put in question the Commission’s finding that of the increase of dumped imports from Russian if measures were lifted would cause material injury to the Union industry. The investigation showed that AN market is price sensitive. For that reason, the increase of dumped imports from Russia (if the measures were to be lifted) would make the Union industry lose the sales volume and consequently, production volume, necessary to keep the fixed costs at a competitive level (the fixed cost will increase, as it will be spread over lower volume produced, with a negative impact on the profitability). As explained in recitals (298) to (302), the Union industry would face an immediate drop in its sales volumes, market share and an increase in its fix costs per unit. The profitability level would significantly drop to negative. Indeed, this was observed in the original investigation where the Union producers had to reduce their prices to well below cost in order to maintain a certain level of sales to be able to compete with Russian imports that were undercutting the Union industry’s prices. This lead to the injury to the Union industry that consisted of the decline in sales and market share, and, most significantly, in the fall on the Union’s industry’s prices and profits. This claim was therefore rejected.

(306) RFPA claimed that the attractiveness of the Union AN market was overstated. The EU in this context was not distinguished by any additional advantages. For example, transport cost from Russia (Baltic) to Brazil, US and Central America was almost the same as the cost of transportation to the EU. Even more, due to the safety restrictions and a requirement in the UK to ship AN in small vessels only, often transportation cost was higher to the EU than to Brazil.

(307) This claim was found to be factually incorrect. The investigation showed that transport cost of the cooperating exporting producers to other third countries were nearly 30 % higher than to transport costs to the Union. This claim was therefore dismissed.

(308) RFPA further claimed in a submission that one of the largest Union producers re-sold AN purchased in Russia to a destination outside the Union. According to RFPA this was evidence that Union producers were engaged in double dealing, to the detriment of Union farmers. Anti-dumping measures were not supposed to result in the growth of the Union industry on global export markets, by using proceeds from the increased sales in Union to engage in purchases of the allegedly dumped products for re-sale in the global market.

(309) The investigation demonstrated that the re-sales of AN purchased from Russia referred to by RFPA were made by non-Union and Union entities of a group a Union producer belongs to. These re-sales were made to Latin America. As can be seen from the annual reports of the group, revenues generated by this group (around 75 % of the revenues were from fertilizer sales) in Latin America were less than 10 % of all group revenues. It can be seen from the same group reports, that the major revenues of the group are still generated in Europe (more than 30 %). Therefore, these re-sales of AN purchased from Russia by the group companies could not have benefited this Union producer in its performance in the global export markets and to the detriment of the Union farmers. The claim was therefore rejected.

(310) RFPA then claimed that these re-sales were a long-term commitment to act as a distributor of Russian AN on export markets outside the European Union and therefore significantly reduced any risk of redirection of exports following the termination of the anti-dumping measures. This long-term commitment locked volumes of Russian AN outside the EU market and should be considered as evidence of an absence of likelihood of recurrence of injury, should the anti-dumping measures be allowed to lapse.

(311) The Commission noted that the behaviour of the group to which the Union producer belongs does not reflect the behaviour of the Russian exporting producers should the anti-dumping measures lapse because these are independent economic operators. For instance, other capacities from this or other exporting producers could be (re)directed to the Union, should the measures be allowed to lapse. Furthermore, agreements concluded in the context of applicable anti-dumping duties in the Union could be renegotiated should the measures be allowed to lapse and an attractive market became more available to Russian AN producers. This claim was therefore dismissed.

(312) RFPA further claimed that the increased AN consumption in the Russian domestic market and the existing distribution networks of Russian AN producers outside the EU, served as evidence of an absence of likelihood of recurrence of injury, should the anti-dumping measures be allowed to lapse.

(313) Analysis of the AN consumption on the Russian domestic market in recitals (130) to (134) above concluded that an increase was not guaranteed. In addition, the existing distribution networks in other third countries do not prevent exporters from using the existing or establishing new distribution networks in the Union market. This claim was therefore dismissed.

(314) A cooperating exporting producer claimed that the production capacities in Russia were fully utilized. Therefore, it was not possible to significantly increase the production of ammonium nitrate and its exports to the EU. The demand for ammonium nitrate has significantly increased worldwide and would continue to increase. Fertilizer demand in Latin American and APAC regions were driving up the ammonium nitrate market growth due to the expansion of agricultural lands in these countries. Demand for ammonium nitrate was also growing in Russia. At the same time, market growth for demand in the EU was slower compared to other regions. Therefore, should the measures be allowed to lapse, there would be no significant increase of imports of ammonium nitrate from Russia.

(315) In view of the Union market size, geographic proximity, prices, likely undercutting found, as well as the fact that some of the Russian exporters have well-established distribution channels in the Union facilitates logistically the exports, the Union market was considered attractive for Russian producers. The Commission considered that the projected consumption in the countries in question was at a level which would only allow for the partial absorption of the Russian producers’ spare capacity.

(316) A cooperating exporting producer claimed that the investments in Brazil and other third countries by various Russian exporting producers showed the attractiveness of Brazil and other third countries by contrast to the Union.

(317) The Commission noted that these investments confirm the willingness of Russian producers to export to third countries. However, these investments were made while measures were in place in the Union. They do not indicate that these markets would be more attractive than the Union market should the measures be terminated.

(318) Several interested parties claimed that the measure on import of AN into the EU has been in force for more than 25 years and that such situation was unprecedented and did not comply with the nature of anti-dumping measures.

(319) The basic Regulation does not establish a maximum time for the application of anti-dumping measures. In accordance with Article 11(2) of the basic Regulation, the Commission found that there was a likelihood of recurrence of dumping and of injury should measures be allowed to lapse. Therefore, the claim of these parties was rejected.

(320) Following the disclosure, several interested parties (98) claimed that the Commission failed to consider the actual position of Union producers in the Union market, which were large groups with strong distribution networks, protected by import barriers and currently able to charge premiums for AN as compared to global markets, including Black Sea, Baltic and Brazil. They claimed that the existing antidumping measure represented an over-correction because the Union industry, while using only half of its production capacity, achieved profit of above 8 % of the Union industry’s target profit and high return on investments.

(321) First, the fact that some of the Union producers belong to some large groups does not necessarily translate into the ability to charge price premiums. Furthermore, contrary to what was claimed, the mere existence of four large groups and various smaller producers does not in itself make them an oligopoly.

(322) Second, the premium alleged charged by these interested parties was found to be the difference between AN spot prices (i.e. concluded sales transactions, offers, bids) with different delivery terms in France and the Black Sea, Baltic, Brazil and other regions, i.e. the basis of comparison was not at the same delivery level, as presented by these parties. This is particularly important as the parties themselves acknowledge in their comments that transport of AN is costly. Furthermore, no conclusion can be reached on the basis of those prices, as detailed in recital (199), since they included prices of offers and bids that were not necessarily settled and relate to only one Member State. Prices of AN vary across the Union, as implicitly acknowledged in by Acron in their comments reproduced in recital (262), when arguing that Union prices reported by the Commission are too low and thus must come only from Poland and Lithuania. Third, AN prices of the Union producers in the Union, as found and described in recital (199), were by 14 to 25 % lower than AN spot prices in France (99), as provided by these interested parties during the period considered. Fourth, as exemplified in recital (244), after adjusting AN spot prices in the Black Sea, Baltic and Brazil regions to the EU CIF border (100), the actual AN prices in the Union were at the same level in 2016 – 2017 and higher by mere 9 to 15 EUR/tonne in 2018 and the RIP. Therefore, such difference of actual AN price in the Union versus the other markets could not be considered as permanent and/or substantial.

(323) As to the above 8 % profitability of the Union industry being an evidence of a premium being charged, the Commission notes that the target profit is not a profit above which a price premium occurs, a high return on investment is not a proof of the price premium. Furthermore, the profitability of the sampled Russian exporting producers is far above the profitability of the Union industry. By the logic of this argument, it would actually be the Russian exporting producers charging a significant price premium on their domestic as well export markets rather than the Union industry. With regards to capacity utilisation, as recognised in the previous investigations on ammonium nitrate, a low capacity utilisation rate for the product concerned is a less meaningful indicator of the overall economic situation of the industry. This is because liquid ammonium nitrate (an intermediate product) can be used to produce the solid ammonium nitrate, but also other downstream products. Consequently, statistical distortions can occur due to the existence of multi-purpose plants that can switch production to or from other fertilisers. Based on this, the claim of the parties was dismissed.

(324) Several interested parties (101) claimed that the Commission was inconsistent when it alleged that competitive interactions in the third countries would not be relevant for determining whether injury is likely to recur, since, the Russian export prices to third countries were considered to be appropriate to establish the likelihood of recurrence of dumping and to establish the likely price levels of imports from Russia in the absence of anti-dumping measures. Furthermore, the interested parties argued that the data on exports used by the Commission was not supported by Eurostat figures for CN310230 90 and 310240 90. They argued that China was not an export destination for the AN of the Union producers and that the free on board (FOB) delivery export sales prices were below the average ex-works sales price in the Union.

(325) In relation to the recurrence of injury, the Commission’s investigation relates to the situation in the Union market. The Union industry operates mostly in its local market, which is its core business. The fact that Russian exporting producers and the Union industry may compete in other third country markets with different market characteristics does not directly relate to that analysis. Especially, as recognised in recital (174), the Union market is a shrinking market in terms of AN consumption, which may not be the case, indeed as claimed by the exporting producers, of the other markets. On the contrary, the likelihood of recurrence of dumping analysis involves analysis of such factors as the exporting producers behaviour and pricing in third country and its incentives to redirect exports to the Union.

(326) Furthermore, even if some interaction between the Union industry and the exporting producers in third markets occurs, it cannot be seen as an evidence of the capacity of the Union industry to compete with the Russian exporting producers in third markets, and much less in the Union market. First, the Union industry and the Russian exporting producers are focused on different export markets. The Union industry exports to China, Ukraine, Brazil, Serbia and Australia, as the main destinations. As mentioned in recital (120), Ukraine and Australia are de facto closed for the Russian exports. The only real interaction with the sales on the Union industry occurs in Brazil. However, even there, according to export statistics (102), the volume of exports of the Union industry represents only around 4 % of the volume of exports of the Russian exporting producers. More importantly, it is clear that Union industry would not be able to withstand unfair competition from Russian exporting producers in the Union market, since, as concluded in the recital (169), it is likely that Russian AN producers would export large quantities of AN to the Union at dumped prices, in the absence of the EU measures.

(327) With regard to the allegation of the interested parties that the Eurostat data does not confirm Commission’s findings with regards to the destinations and the prices, the Commission noted that the interested parties considered only two of the CN codes related to the product under review. Therefore, they looked only at a snapshot of the relevant Union exports. Furthermore, CIF price delivery level to the export destination and not FOB price delivery level is the right basis to compare the export prices to the Union ex-works prices because the prices should be compared at the same point of delivery.

(328) Finally, Russian exporting producers were highly profitable (profitability ranging from 24 % to 50 %) with their average sales prices of 133 EUR/tonne to third markets in the RIP. Even with the transport and insurance costs to the Union (103), the average CIF Union frontier price of Russian exporting producers would be below the break-even price (104) of the Union industry. As a result, the Russian exporting producers would be profitable in the Union market, while the Union industry would merely be covering their costs. These claims were therefore rejected.

(330) First, as mentioned in recitals (325) and (326), the export performance of the Union industry cannot be used as an indication of Union industry’s ability to compete with the Russian exporting producers. Meanwhile, as explained in recitals (296) and (297) as well as recitals (340) and (341) the Union market is attractive to Russian exporting producers from the price and proximity point of view.

(331) Second, an increase in the volumes of the Russian imports at the price levels estimated in the investigation would be sufficient to cause an immediate drop in its sales volumes, market share and an increase in its fix costs per unit of the Union industry, with a following negative effect on the profitability, as demonstrated in the recital (302).

(332) Third, in relation to the recurrence of injury, the investigation concerns the situation in the Union market. The Commission does not see why injury caused to the industry in the Union market should be mitigated by alleged gains somewhere else. The fact that there are third country markets to which the Union industry may (re)direct its sales does not directly relate to the recurrence of injury analysis.

(333) Fourth, the Commission has not found material injury to the Union industry.

(334) Fifth, a simulation described in the recital (302) was placed on the file of the case accessible to all interested parties (105). The data of the sampled Union producers in this simulation was indicated in ranges in order not to disclose sample specific information, which was considered confidential (it may have revealed sample specific information among the sampled Union producers and could have served as a commercial advantage for them or other interested parties). The values being in ranges do not render the simulation placed on file meaningless nor deprives the exporting producers of their right of defence as both values from the bottom to the top of the ranges used prove the point that the Union industry would be heavily loss making at the price level used. Further, the simulation assumed that the average sales price of the Union industry would be pushed down to the level of the Russian import price observed in the third countries. Then, other parameters of the simulation, namely, sales volume and cost of the sampled Union producers, were based on verified data of the sampled Union producers. It is noted that the simulation considered the Union producers’ cost for the volume sold in the Union, instead of the cost for the volume produced. The claims were therefore rejected.

(335) The same interested parties claimed that the Commission erroneously assessed the potential impact of Russian imports on the situation of the Union industry. Notably, it omitted the favourable market conditions in which Union producers will operate for the next five years due to the declining gas costs in the Union. They claimed that a forward-looking analysis of the likelihood of injury should consider such lower costs and their impact on the ability of Union producers to effectively compete with Russian producers in the absence of antidumping measures.

(336) Based on the gas price forecast issued by the World Bank (106), gas price in Europe will reach the level observed in 2016, the start of the period considered, in 2023. The cost of production of the Union producers should follow the same trend, as these are linked (recital (200)). With these assumptions, the cost of the Union producers would then be around 174 EUR/t, as in 2016. Assuming that the Russian export prices to third country remained at the same level as in the RIP (since the Russian regulated gas price remains stable (107)), these prices would still be below the cost of production of the Union producers (i.e. below 174 EUR/t). Based on this, it is likely that Russian exports to the Union would still exert a strong price pressure to the Union industry. The claim of the parties was therefore rejected.

(337) The same interested parties claimed that removing the anti-dumping measures would not deprive the Union industry from all protection, as they would continue to benefit from the MFN (108) customs duty.

(338) The aim of the anti-dumping measure is to re-establish fair competition in the Union market. Existing conventional customs duties do not serve this purpose and therefore cannot be the reason why anti-dumping measures would not be maintained/imposed on unfairly priced imports. The claim of the parties is rejected.

(340) First, in order to consider a likely AN price level of the Russian exporting producers to the Union without the measures, the Commission estimated the potential undercutting level in the absence of measures using the cooperating exporting producers’ actual prices to third countries (recital (294)). The conclusion that Russian exporting producers were likely to re-direct their exports to the Union market was because the prevailing AN prices in the Union were higher than the Russian export prices in the third country markets, creating an economic incentive. This investigation established that the ex-works price in the Union was around 219 EUR/tonne (recital (200)), which was significantly higher than average ex-works export price of 133 EUR/tonne of the three sampled exporting producers to third countries (recital (81)). Based on this, Russian exporting producers have an economic incentive to sell to the Union instead of third markets. In particular, considering the fact that, as based on the questionnaire replies of the sampled Russian exporting producers, they already cover the cost of sales to the Union and achieve profits when selling under the existing anti-dumping measures. This implies that when selling at even higher price to the Union, they would achieve even higher profits.

(341) Second, as noted in the recital (307), based on the transport cost of all the cooperating exporting producers, this investigation found that the transport cost to third countries were nearly 30 % higher than to the Union. This claim pertaining to one Russian exporting producer was therefore dismissed.

(342) One Russian exporting producer claimed that the Commission was self-contradictory and the causal link analysis lacked of reasoning. On the one hand, the Commission concluded that no causality analysis was needed and, on the other hand, it concluded that injury was caused by Russian imports.

(343) This claim was based on the misunderstanding of the assessment conducted by the Commission in this case. As stated in recital (216), the Commission concluded that the Union industry was not materially injured. Thus, an analysis of the causal link was not warranted and therefore not conducted. However, in its subsequent analysis of the likelihood of recurrence of injury, the Commission concluded that it was likely that material injury would recur should the existing anti-dumping measures against imports from Russia were allowed to lapse. The claim was therefore dismissed.

(344) The same Russian exporting producer argued that third countries were attractive to them and that the demand in those markets was growing. The exporting producer explained how the domestic and Ukrainian markets (which according to the exporting producer amounted for 7 % of the global AN consumption) used up all of its capacity during the relevant season for sales in the Union. Furthermore, it explained how it built up its export capacity to regions other than the Union. Other interested parties claimed that the Union market was only one of many markets to which Russian exporting producers could export. They did not have any specific incentive to redirect exports to the Union and breach existing long-term contracts if the anti-dumping measures were terminated;

(345) The Commission noted that it did not deny that third country markets may be attractive to the Russian exporting producers when compared with the Union market with anti-dumping measures on imports from Russia in place. However, should these measures be allowed to lapse, as explained in recitals (296) and (297) as well as recitals (340) and (341) the Union market would be attractive to Russian exporting producers from the price and proximity point of view. The prices on the Union market are much higher and therefore more profitable than those on the domestic and other third markets. The contractual engagements of the economic operators may be renegotiable following the gains. Furthermore, as explained in recital (143), the Ukrainian market remains closed to the Russian AN exports. Finally with regards, to the build up of the capacity in third country markets whilst Union remains under anti-dumping measures, it merely proves that exports are important to the Russian exporting producers. It does not contradict the fact that, as stated in recital (340), the prices in the Union are much more attractive than in those markets and, as stated in recital (341), that cost of transport to the Union are lower than to those other destinations. This claim was therefore rejected.

(346) In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures against Russia would be against the interest of the Union as a whole. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users.

(347) All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation.

(348) On this basis, the Commission examined whether, despite the conclusions on the likelihood of a continuation of dumping and recurrence of injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures. It is recalled that, in the original investigation, the adoption of measures was considered not to be against the interest of the Union.

(349) As explained in recital (213), the measures enabled the Union industry to maintain its positive micro economic situation. At the same time, it was also concluded in recitals (298) to (303), that the Union industry would be likely to experience a deterioration of its situation in case the anti-dumping measures against Russia were allowed to lapse. Indeed, the investigation showed that the continuation of the measures would most likely ensure the current state economic situation of the Union industry. The Union industry would be able to make and continue the on-going investments, in particular those related to the health, safety and environmental standards of the EU.

(350) The termination of measures would undoubtedly lead to a quick deterioration of their economic situation. Considering the fact that AN is not the sole product in the nitrogen fertilizer portfolio but it is the component of the general integrated production profile, a recurrent injury to AN production would immediately impact all upstream (ammonia, nitric acid), downstream (UAN) and related (CAN, A5, urea) production lines. Therefore, AN business would have a direct negative impact on the whole nitrogen fertilizer business.

(351) Therefore, the continuation of the measures against Russia would benefit the Union industry.

(352) As mentioned in recital (41), no importers cooperated or made themselves known in the current investigation. Therefore, there were no indications that the conclusions reached in the last expiry review investigation (109) are no longer valid and that the maintenance of the measures would have a negative impact on the importers outweighing the positive impact of the measures.

(353) As mentioned in recital (49), two users (farmers) replied to the questionnaire. Several users’ (farmers) association came forward expressing their opposition to the continuation of the measures on the grounds that these create ‘market premium’ for AN (and CAN) traded in the Union as compared to other markets and there was an urgent need to alleviate the cost burden on farmers. Their claim assumed that the ‘market premium’ created by the anti-dumping and customs duties was transferred at 100 % to the price of fertilizer.

(354) The analysis of the interest of users was based on the data of the European Commission, Directorate-General for Agriculture (‘DG AGRI’) and two questionnaires of the French farmers (whose data is sensitive and therefore, when used in the analysis below, is provided in ranges).

(355) The analysis of the Union interest covers essentially two aspects: (i) AN cost in the cost of farm, (ii) effect of the measures on the costs of farm in the period considered.

(356) Users’ associations claimed that: (i) the impact of trade barriers on farm economy should be assessed on arable crop farms, more specifically, cereal, oilseed and protein crop specialised farms (‘COP farms’) and not on the agricultural sector as a whole; (ii) COP farms are the most fertilizer intensive and therefore they are actual users of AN; (iii) they are also the biggest users of nitrogen fertilizers in the Union (110). These farms represent around 35 % of all farms in the Union (111).

(357) The impact of fertilisers as a whole, and of AN, in particular, on the farmers’ costs has been assessed based on data provided by the two French farmers that replied to the questionnaire. This analysis showed that the fertilizers (as a whole) used in these French farms represented around [36 – 45 %] of the specific crop cost (112) and around [16 – 21 %] of total farm cost (113) in the last financial year available (114). Considering that AN cost constituted around [39-44 %] of all fertilizers cost used in these French farms (115), AN cost represented around [15-20 %] of the specific crop cost and up to [3-5 %] of total farm cost in the same period.

(358) This information was crosschecked with the farm economy data for COP farms in France sourced from DG AGRI. Indeed, it confirmed that fertilizers (as a whole) used for these specialised COP farms in France represented around 42 % of the specific crop cost and around 14 % of total farm cost in the last financial year available (116). That said, assuming that AN cost constituted around [39-44 %] of all fertilizers cost used, AN cost therefore could have represented maximum 17 % of the specific crop cost and maximum 5,8 % of total farm cost in the same period in France.

(359) For the whole EU, based on the data sourced from DG AGRI, fertilizers used for these specialised COP farms in the EU represented around 43 % of the specific crop cost and around 13 % of total farm cost in the last financial year available (117). Again, assuming that AN cost constituted around [39-44 %] of all fertilizers cost used, AN cost therefore could have represented maximum 18 % of the specific crop cost and maximum 5,6 % of total COP farm cost in the EU during the same period. This would have been the proportion of AN cost in the total farm cost had the EU COP farms be as AN intensive as COP farms in France, which they were not, as confirmed by the users’ associations (118).

(360) Overall, it is important to note that fertilizers cost as a share of farms cost in the EU COP farms was constantly decreasing over time, e.g. when analysing the latest period from 2014 to 2018, in 2014 fertilizers represented 15 % of total crop farms cost, while in 2018 they decreased to 13 %. This demonstrate that the other cost elements (like seeds or wages, rent, interest paid (119)) were more burdensome for the EU COP farmers, which were the most intensive users of AN.

(361) The amount of AN used as a fertilizer depends on the type of crop farms grow, be it cereal (wheat, barley, oats, rye, triticale), oilseed rape, potatoes, sugar beet, or grassland. Many farms in the Union rely on several crops and the costs of AN for farmers varies from country to country. It is therefore difficult to assess a precise cost of AN for all farms. Nonetheless, a trend of decreasing share of fertilizers’ cost in terms of value of output of the agricultural industry was observed throughout the whole agricultural sector in the Union (120).

(362) Furthermore, based on the data sourced from DG AGRI, the Commission estimated that fertilizers used for all crop farms in the EU represented around 30 % of the specific crop cost and around 9 % of total crop farm cost in the last financial year available (121).

(363) That said, assuming as explained in recital (357) that AN cost constituted around [39-44 %] of all fertilizers cost used, the AN cost could have represented maximum 3,7 % of total farm cost for all crop farms in the EU. Again, this would have been the proportion of AN cost in the total farm cost had all the EU crop farms be as AN intensive as specialised COP farms in France, which they were not, as confirmed by the users’ associations (122).

(364) Based on the above, the Commission concluded that the cost of AN in the cost of specialised COP farms and all Union crop farms as a whole was below 5,6 % and 3,7 % respectively. Therefore, the AN cost share in the total cost can be materially significant only if there was a clear link between the price of AN and net margin of the farm, which is analysed further.

(365) In the current investigation, the users’ associations (123) argued the ‘effect of AD [anti-dumping] duty on domestic AN prices is evidenced by experience’. However, the extent by which duties were passed to farmers was not uniform and depended on a number of variables, in particular the actual level competition between the various sources (124). By way of illustration, the information submitted by the cooperating users’ associations could not demonstrate that the decreased anti-dumping duty (as also established in the last interim review (125)) had an effect on the price of AN. This was because the farmers typically buy from distributors who may or may not pass on any of the benefits. Therefore, if the measures were allowed to lapse, there is no demonstrated evidence that the users would benefit from lower AN prices.

(366) Based on the research of DG AGRI, farm incomes depend on variety of factors and can vary substantially over time. Cyclicality and uncertainties are inherent to farming and their margins. For example, COP farms faced the highest income variability year after year over the period 2007-2015; this sector suffered most from the financial crisis in 2009, when almost two out of three COP farmers (63 %) experienced an income loss above 30 % (126). Same source stated that a high share of farmers with strong income drops did not necessarily mean that the level of income reached was particularly low. The farm economy data (127) indicate an increase in French COP farm net income from 2016 to 2018, while the two French farmers that replied to the questionnaire reported losses in the last financial year (128). The same farm economy data indicate an increased in the Union COP farm net income and all farms net income from 2016 to 2018 by 67 % and 34 % respectively, thus contradicting at least for 2018 the data provided by the users’ associations.

(367) This investigation showed that there was no relation between the price of AN and the net margin of crop farms (129) (i.e. an increase in farmers’ income could not be linked to a decrease in AN prices or vice versa).

(368) The anti-dumping measures on imports of the product under review have been in force for many years without disproportionate costs to the farmers, which could have jeopardised their income and, consequently, their existence. Indeed, as explained in recital (365), there was an obvious lack of benefit transfer to the farmers observed after lowering of the anti-dumping measures following the last interim review. In any case, the need of the multiple and close-by sources of supply and, therefore, the viability of the Union fertilizers industry would be in their interests.

(369) On this basis, the Commission found that the continuation of measures would not have a significant negative impact on users and that there were therefore no compelling reasons to conclude that overall it was not in the Union interest to extend the existing measures.

(370) Users associations (130) claimed that the EU Trade policy was not coherent: Union farmers have to buy their major input, fertilizers, on a protected domestic market with a significant ‘market premium’, while they sell grain on an open market, where prices have been in parallel with the global price for the last 20 years.

(371) The Commission noted that the aim of the anti-dumping measure is to re-establish fair competition in the Union market. In any event, the Commission considers the effect of the measures on farmers in the context of the Union interest test. Thus, there is no contradiction in the policies applied by the Commission. This claim was therefore dismissed.

(372) A cooperating exporting producer claimed that the high cost of the fertilizers can lead to the erosion of farmers’ income.

(373) The Commission noted that the analysis of the cost of farms described in recitals (357) to (364) showed that the share of the cost of AN could not be considered as detrimental to farms income and their competitiveness in a global market. Furthermore, as stated in recital (367), this investigation showed that there was no relation between the price of AN and the net margin of crop farms (i.e. an increase in farmers’ income could not be linked to a decrease in AN prices or vice versa). This claim was therefore rejected.

(374) The same cooperating exporting producer claimed that the Union farmers face increased competition on global markets. The EU agricultural commodities producers faced increasing competition from foreign exports. In parallel to the surge in imports, EU agricultural products have been losing market shares on export markets.

(375) According the estimates of DG AGRI, the EU market for cereals was expected to grow (131), with further shifts between products and increasing demand for feed and industrial uses. Total EU cereal production could reach 319 million tonnes by 2030. More competition from other main producing regions, such as the Black Sea, will likely translate in a moderate increase of EU exports. World wheat trade is expected to continue to grow as global demand strengthens. The EU, thanks to high land productivity and close location to major importing markets, is expected to remain the third main exporting region (representing 14 % of the market shares in global wheat trade by 2030).

(376) Users’ associations (132) claimed that there was an urgent need to alleviate the cost burden on farmers. A number of factors affected farmers’ profitability. High AN costs would necessarily have an impact on the cost structure of farmers and was one of the key elements to consider when determining how the profitability of farmers might be enhanced. The higher the costs of farmers, the less they would be competitive against imports and on export markets. The Irish farmers association further submitted that the Irish farm family income (133) situation was aggravated by rising costs.

(377) The investigation demonstrated that AN constitutes approximately 17 % of the total Union consumption of all nitrogen-containing fertilisers (ammonium nitrate, calcium ammonium nitrate, urea, urea AN solution, NPK/NP/NK, etc.) (134). More importantly, AN is used in combination with the other nitrogen fertilizers (like urea). AN is considered a premium product due to the higher yields in comparison to the other nitrogen fertilizers and is therefore more expensive.

(378) Furthermore, the amount of AN used depends on the grown cereal (wheat, barley, oats, rye, triticale), oilseed rape, potatoes, sugar beet, or grassland. Many farms in the Union rely on several crops. Moreover, the costs of AN for farmers also varies from country to country. As demonstrated by the analysis in recitals (357) to (367), the share of the cost of AN cannot be considered as detrimental to farms’ income and competitiveness in a global market. More importantly, as detailed in recital (365), there was an obvious lack of benefit transfer to the farmers observed after lowering of the anti-dumping measures following the last interim review. This claim was therefore rejected.

(379) Users associations (135) also argued that the market premium for AN, ‘a distortion resulting from the market protection caused by the combined application of a MFN duty rate of 6,5 % and anti-dumping measures on Russian AN’, directly translated into extra cost for farmers. Over 5 years (the proposed period of possible extension of the anti-dumping measures), this would represent a total cost of 2,5 – 3,5 billion EUR for farmers in the Union (equally shared between AN and CAN purchases).

(380) First, the calculations of market premium were found erroneous, as described under recital (235). Second, the measures in place do not prevent Russian companies from exporting AN to the Union at a fair price. Third, likewise the measures in place do not prevent Russian (or other third countries) companies to produce and export CAN to the Union market. Fourth, as mentioned in recital (365), there was no substantial evidence demonstrating that anti-dumping duty on AN was transferred at 100 % to the price of AN fertilizer and that the farmers could benefit. Based on this, the Commission concluded that the claimed cost of the anti-dumping duties for farmers was unfounded.

(381) Users associations (136) also claimed that a short few-year period was not relevant for any economic assessment in agriculture as there was a high annual volatility of the main income drivers, namely prices and variable costs.

(382) This investigation demonstrated that shorter or longer period indicated similar, decreasing share of fertilizers cost in the specific crop cost and total farm cost in both, French and the EU specialised COP farms. Therefore, for the sake of evaluating the share of AN in the farm cost, the length of the period was not particularly relevant.

(383) Users associations further claimed that a long-term analysis demonstrates that there was downward trend in family farm income, regardless of possible fluctuations.

(384) As detailed in recital (366), based on the research of DG AGRI, farm incomes depend on variety of factors and can vary substantially over time, e.g. COP farms faced the highest income variability year after year over the period 2007-2015; this sector suffered most from the financial crisis in 2009, when almost two out of three COP farmers (63 %) experienced an income loss above 30 % (137). The same source found that a high share of farmers with strong income drops did not necessarily mean that the level of income reached was particularly low. However, as explained in recital (367), in this investigation, a decrease in farmers’ income could not be linked to an increase in AN prices. The claim of the party was therefore dismissed.

(385) Following the disclosure, users associations (138) claimed that, first, the Commission disregarded the evidence submitted by farmers on the effect of antidumping duties on farmers’ profitability and competitiveness, in particular as compared to other sectors of the economy. Second, they recalled that the two farmers that replied to the questionnaire were making losses, which was ignored by the Commission, as well as the testimonials of the farmers that were provided at the hearings with the Commission. Third, that it was not relevant whether there was a clear link between the price of AN and net margin of the farm, since AN prices were not the sole factor affecting farmers’ profitability, but the excessive AN prices were driving down farmers’ profitability. Therefore, given the low level of farmers’ profitability, it was necessary to alleviate their cost burden by terminating the anti-dumping measures on AN from Russia. Fourth, the ‘market premium’ was enough to show that duties were eventually passed to farmers.

(386) The aim of the anti-dumping measure is re-establish fair competition in the Union market. That said, the effect of the measures on farmers and their interest was considered under the Union interest test, which does not constitute putting in contrast the profitability and competitiveness of the farmers versus the other sectors, but assessing whether other interested parties in the Union would be disproportionately affected by measures.

(387) In this context, the data provided by the two farmers that replied to the questionnaire was extensively used in this analysis as described in the recitals (357) to (364) and therefore their profit margins not ignored by the Commission. The testimonials of the farmers were also taken into account as the context in which all the factual evidence on file was assessed. Furthermore, the analysis of the effect of the measures is not limited geographically to areas where AN is used more intensively than other nitrogen fertilizers and, as demonstrated in this investigation, the cost of AN in all Union crop farms, as a whole, was below 3,7 % of their total cost.

(388) When analysing the drivers of farmers cost affecting the profitability, as detailed in the recital (360), fertilizers cost as a share of farms cost in the EU COP farms was constantly decreasing over time, which demonstrated that the other cost elements, like seeds or wages, rent, interest paid, were more burdensome for the EU COP farmers (which were the most intensive users of AN). This suggests that costs other than nitrogen fertilizers represent the real cost burden for the farmers.

(389) Regarding the ‘market premium’ (the difference of the AN price in the Union versus the AN price Black Sea region, delivered to the EU), which allegedly was enough to show that duties were passed to farmers, as analysed in the recital (244), the comparative increase of AN price in the Union in RIP (only) was not permanent, nor substantial during the whole period considered. In any case, no evidence on how such comparative increase could demonstrate that the duties were passed to the farmers was provided. The claims of the parties was therefore rejected.

(390) The same users’ associations claimed that they had shown that removing or increasing anti-dumping duties on AN had an effect on prices (139). They stated that this evidence was disregarded without any valid reason.

(391) The evidence presented indicated the relation between the decrease in anti-dumping duty (following the last interim review) and the alleged price premium calculated by these parties. The calculation of the premium was addressed in recitals (240) to (245) and was dismissed as inaccurate. The effect on AN prices was not demonstrated in the submission, as claimed, which only mentioned that the price transmission was not perfect.

(392) The same users’ associations claimed that the Commission should have considered the cumulative effects of the anti-dumping measures in order to assess the Union interest.

(393) According to the case law referred to by the users’ association, when looking at cumulative impact of measures the Commission should consider various ways in which continuation or laps of measures could affect the users in the economic context prevailing at the time of the investigation. The Commission did that and reached the conclusion that continuation of the measures would not be against the interest of the Union. This claim was therefore rejected.

(394) One Russian exporting producer claimed that the conclusions in the recital (350) regarding the fact that a recurrent injury to AN production would immediately impact all upstream (ammonia, nitric acid), downstream (UAN) and related (CAN, A5, urea) production lines are misplaced, since the investigation concerns only AN and warrants analysis for AN solely. The Commission’s findings, which go beyond consequences for the AN market were a mere speculation, were not supported by facts and have not been part of the analysis.

(395) The Commission noted the parties did not challenge the finding in recital (350) that a recurrent injury to AN production would immediately impact all upstream (ammonia, nitric acid), downstream (UAN) and related (CAN, A5, urea) production lines. As this is part of a prospective analysis it is by definition speculative but based on the fact that these production lines are integrated and the production itself has high fixed costs. None of these findings were challenged by the exporting producer. The claim of was therefore dismissed.

(396) The same Russian exporting producer claimed that, following a decrease of the anti-dumping duties in 2018, no benefit was passed on to farmers due to the fact that the antidumping duty on Russian imports was still prohibitive and a decrease in 2018 did not allow Russian producers to import any additional volumes in the Union. Therefore it could not exert a positive effect on competition in the Union market.

(397) The claim of the party did not, however, provided any additional evidence that there would be a benefit passed to the farmers if the anti-dumping duties were terminated. As stated in recital (367) the fact remains that throughout this and previous investigations an increase in farmers’ income could not be linked to a decrease in AN prices. The claim was therefore dismissed.

(398) The same Russian exporting producer claimed that if the anti-dumping measures were terminated, farmers in the Union would continue purchasing from the Union producers. This was because they need a sable supply, especially in a high season, which Russian producers could not offer due to the overlapping seasons and commitments in their own home and third country markets.

(399) Contrary to this claim, farmers typically buy from distributors, where the origin of the material may be local or imported. Then, due to the attractiveness of the Union market addressed in the recitals (296) and (297), as well as recitals (340) and (341), the existing commitments of the Russian producers may change following the situation on the Union market.

(400) In view of the above, the Commission concluded that there were no compelling reasons of Union interest against the extension of the current anti-dumping measures on imports from Russia. On the contrary, there was no significant change in the situation of farmers and the Union industry as compared to previous investigations.

(401) On 25 September 2020, all interested parties were informed of the essential facts and considerations on the basis of which the Commission intended to maintain the anti-dumping measures in force. They were also granted a period within which they could submit comments subsequent to this disclosure. The submissions and comments were duly taken into consideration.

(402) The Union producers association, the Russian exporting producers, the Russian producers’ association, one user association and the Russian Government submitted comments on disclosure.

(403) Upon request, hearings were held with FE, RFPA as well as with the sampled exporting producers. The intervention of the Hearing Officer was requested by RFPA as well as by all the sampled exporting producers and the hearings with the Hearing Officer took place on 9 October and 15 October 2020 respectively.

(404) On 30 September, on 1 October, on 21 October and on 28 October 2020, the Commission provided additional general and/or company-specific disclosure taking into account certain claims received following final disclosure. Interested parties were also granted a period within which they could make representations subsequent to these additional disclosures. RFPA as well as all sampled exporting producers submitted comments on these additional disclosures.

(405) Following the disclosure, interested parties claimed that the inappropriate disclosures prevented them from meaningfully exercising their rights of defence as they were not in a position to effectively make known their views on the correctness and relevance of the facts and circumstances alleged.

(406) It is observed that all the essential facts and circumstances underlying the determinations made by the Commission in this Regulation have been disclosed to the interested parties, be it as part of the general or the company-specific disclosures. Furthermore, all requests for additional information by interested parties were adequately addressed, either by providing further clarifications, further access to documents, access to revised non-confidential versions of documents or by detailed explanations substantiating refusal of disclosure requests (see in this context also recitals (87) and (88), (115) to (117) and (284)) for specific arguments and the Commission rebuttals). Therefore, these claims have been rejected.

(407) It follows from the above considerations that, under Article 11(2) of the basic Regulation, the anti-dumping measures applicable to imports of ammonium nitrate originating in Russia applicable under Implementing Regulation (EU) 2018/1722 should be maintained.

(408) Following the disclosure a users’ association (140) proposed that, if the European Commission decided to extend the measures, the measures should be extended for one year only. This proposal was based on low natural gas prices, prevailing in the Union at that time, and low profitability of the farmers.

(409) The Commission noted that such a short duration of measures would be exceptional as measures usually cover a 5-year period. There not seem to be any particular situation in the present case justifying a shorter period. With regards to the natural gas prices, aside of them historically being volatile, as stated in recital (336), the World Bank’s forecasts predicted that natural gas price in the Union will reach the 2016 level (the beginning of the period considered) in 2023. With regards to the income of the farmers, as stated in Recital (366), farmer’s income is shaped by a variety of factors and. The investigation found no clear nexus between ammonium nitrate prices and farmer’s income, as explained in recital (367). This claim was therefore rejected.

(410) The individual company anti-dumping duty rates specified in this Regulation are solely applicable to imports of the product under review produced by these companies and thus by the specific legal entities mentioned. Imports of the product under review manufactured by any other company not specifically mentioned in the operative part of this Regulation with its name and address, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’. Any claim requesting the application of these individual anti-dumping duty rates (e.g. following a change in the name of the entity or following the setting up of new production or sales entities) should be addressed to the Commission (141) forthwith with all relevant information, in particular any modification in the company’s activities linked to production, domestic and export sales associated with, for instance, that name change or that change in the production and sales entities. If appropriate, the Regulation will then be amended accordingly by updating the list of companies benefiting from individual duty rates.

(411) In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (142), when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month.

(412) On 13 October 2020 Commission Implementing Regulation (EU) 2020/1317 (143) (‘new classification Regulation’) entered into force. The new classification Regulation has clarified that certain products, predominantly based on ammonium nitrate, fall under CN code 3602 00 00. The Commission has therefore updated the codes in this Regulation, with effect from 13 October 2020, in order to adapt to the correct classification clarified by the aforementioned Regulation. The Commission recalls that, in any event, the list of codes is provided for information only. The scope of the measures is defined by the definition of the product concerned. Its customs classification may change.

(413) The measures provided for in this Regulation are in accordance with the opinion of the Committee established by Article 15(1) of Regulation (EU) 2016/1036,

HAS ADOPTED THIS REGULATION:

Article 1

Article 2

For the following goods produced by all companies (TARIC additional codes A522 (144), A959 (145) and A999 (146)):

Article 3

Article 4

Article 5

This Regulation shall enter into force on the day following that of 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, 15 December 2020.

For the Commission The President Ursula VON DER LEYEN

(1) OJ L 176, 30.6.2016, p. 21.

(2) Council Regulation (EC) No 2022/95 of 16 August 1995 imposing definitive anti-dumping duty on imports of ammonium nitrate originating in Russia (OJ L 198, 23.8.1995, p. 1).

(3) Council Regulation (EC) No 663/98 of 23 March 1998 amending Regulation (EC) No 2022/95 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia (OJ L 93, 26.3.1998, p. 1).

(4) Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 2238/2000 (OJ L 257, 11.10.2000, p. 2).

(5) Council Regulation (EC) No 658/2002 of 15 April 2002 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia (OJ L 102, 18.4.2002, p. 1).