CF Industries Holdings Inc., Deerfield, Ill., alleges that Russian and Trinidad producers are dumping UAN into the U.S. market at significant margins of up to 391.65 percent for Russia and up to 159 percent for Trinidad. CF filed the case on June 30 (GM July 2, p. 1).
CF said that starting in 2018, the European Union initiated UAN antidumping investigations against Russia, Trinidad, and the U.S., leading to the imposition of definitive antidumping duties in 2019 (GM Oct. 11, 2019). As a result, CF said Russian (Acron and EuroChem) and Trinidad producer Methanol Holdings Trinidad Ltd. (MHTL), a unit of the Swiss-based Proman Group, directed increased volumes of aggressively priced UAN to the U.S. market.
CF said Russian and Trinidad UAN exports to the U.S. surged by 34 percent, from 1.99 million st in 2018 to 2.65 million st in 2019. CF said price pressure, combined with a continued flow of subject imports in 2020, caused a collapse in the domestic industry’s U.S. prices and profitability in 2020.
| U.S. UAN Imports | 2018 | 2019 | 2020 |
| Russia/Trinidad Imports (000 st) | 1,997 | 2,649 | 2,182 |
| Value per st | $171 | $167 | $136 |
| Other Imports | 644,374 | 510,364 | 537,248 |
| Value per st | $203 | $212 | $196 |
| Total Imports | 2,641 | 3,160 | 2,720 |
| Value per st | $178 | $175 | $148 |
Russia is the world’s leading exporter of UAN.
Trinidad the second-largest, with a limited or non-existent domestic market. Russia and Trinidad imports accounted for 41.1 percent and 35.5 percent of total U.S. imports, respectively, over the past twelve months for which data are available.
| UAN (st) | May 2020-Apr. 2021 | Percentage of Imports |
| Russia | 1,085,549 | 41.1 |
| Trinidad | 938,367 | 35.5 |
| ROW | 619,795 | 23.4 |
| World | 2,643,711 | 100 |
Global UAN consumption is concentrated in the E.U. and the U.S., leaving Russia and Trinidad few other options. CF cited a recent Government of Trinidad and Tobago (GOTT) assessment that North America consumes 70 percent of the world’s UAN, while Western Europe takes 23 percent.
CF argued that based on available data, apparent domestic UAN consumption increased year-over-year from 2018-2020, by 5 percent from 2018-2019 and by 3 percent from 2019-2020. It said the increased demand was driven by unusually wet weather in late 2018 and in 2019 in the Cornbelt that prevented farmers from applying anhydrous ammonia.
CF said since there was increased demand in 2018-2020 prices should have been going up, but due to low-priced imports they went down. It said data indicates that the subject imports undersold CF’s prices for 32 percent solution to retail customers roughly 90 percent of the monthly comparisons from 2018 through March 2021.
CF lamented that the domestic industry was hit by high natural gas prices in first-quarter 2020, but added the industry was unable to pass those on to customers due to adverse pricing conditions created by large volumes of subject imports. As previously reported, CF’s UAN segment posted a first-quarter 2021 gross margin of only $2 million compared to the year-ago $42 million, and the segment was the only one of five to see a product price decrease (GM May 7, p. 32).
CF said the onslaught of imports gained UAN market share in 2018-2019 at the expense of domestic producers. CF gave the 2018 domestic market share as 89.3 percent and kept confidential the amount importers gained, though a table accompanying the filing suggested the domestic share dropped to 76.5 percent in 2019. CF said the domestic industry was able to recapture market share from 2019-2020, but only by dropping prices in order to remain competitive.
CF also highlighted aggressive sales tactics for some Russian product, saying that at least one producer sold UAN on consignment-like terms and guaranteed U.S. importers a profit on downstream sales by agreeing to price its tons at a specified discount when imported tons were sold to downstream customers in the future, regardless of the ultimate price.
It said this enormous assumption of risk by the Russian industry induced importers to commit to purchase from Russian suppliers, knowing they would obtain a satisfactory margin when those volumes were priced in the future, even if the market was already oversupplied and prices were very low. It also incentivized importers to continue selling into the market without regard to the effect of those sales on prices, because the importers were guaranteed their margins either way.
CF used previous DOC decisions regarding phosphates from Russia and melamine from Trinidad as precedent for its argument that those governments were providing subsidized gas to their UAN producers. It said natural gas accounts for one-third the cost of UAN.
CF cited the recently-decided Phosphate Fertilizers from the Russian Federation, in which DOC found that Russia’s domestic market for natural gas is distorted through the Government of Russia’s (GOR) predominant role in the market via majority-ownership of Gazprom and other interventions in the market. CF also noted that regional governments within Russia have given tax incentives and other benefits to the companies.
CF said Trinidad producer MHTL benefits from several counteravailable subsidies, including the provision of natural gas for less than adequate remuneration (LTAR), corporate tax exemptions, and import duty and VAT exemptions.
CF noted that in the case Melamine from Trinidad and Tobago, DOC found that MHTL received countervailable subsidies for its purchases of gas for LTAR in the amount of the discount to a purported “market-based gas price.” It said DOC found that this discount was not market-related because it did not reflect prevailing market conditions, but instead was an incentive for the production of downstream petrochemical products. CF said the state-owned National Gas Co. continued to provide gas to MTHL during the current period of investigation.
CF said its petition was being filed on behalf of the U.S. industry that produces UAN. CF noted that it is the largest U.S. producer of UAN, and that collectively domestic producers supporting its petition account for over 50 percent of total domestic production in 2020. CF said other domestic producers were also supportive, though a letter from LSB Industries Inc. was the only one available in the public version of the petition.
As of July 16, attorneys for several industry players were lining up to participate in the case, including Acron, EuroChem, MTHL, Gavilon Fertilizer LLC, Trademark Nitrogen Corp., Indagro USA Inc., International Raw Materials Ltd., J.R. Simplot Co., Yara North America Inc., and The Andersons Inc.