Morocco’s OCP SA and Russia’s PhosAgro and EuroChem challenged the U.S. Department of Commerce’s countervailing duties (CVD) on phosphates from Morocco and Russia in complaints officially filed on June 4 in the U.S. Court of International Trade.
OCP listed multiple factors, focusing on the U.S. market, while PhosAgro mainly attacked DOC’s calculation of Russian natural gas costs and consumption. EuroChem said the DOC decision was not supported by substantial evidence and otherwise not in accordance with law.
DOC calculated subsidy margins and corresponding duty rates of 47.05 percent on EuroChem and 9.19 percent on PhosAgro and 17.2 percent for other Russian producers. DOC imposed a rate of 19.97 on phosphates from Morocco’s OCP.
OCP honed in on two factors, saying DOC misattributed any injury to import volumes rather than the domestic industry’s strategic decisions, wholly unrelated to import volumes and prices, to close facilities, thus pulling imports into the market, as well as the effects of a historic run of wet weather spanning three seasons that depressed demand and adversely affected the entire U.S. market, not just domestic producers.
It said DOC faulted imports for overshooting the domestic supply gap and failing to adjust instantaneously to the weather-related downturn in demand, even though purchasers place phosphate fertilizer orders months in advance based on demand forecasts to ensure that adequate inventories are available in farmers’ narrow seasonal application windows.
OCP said DOC effectively found that the mere existence of subject import inventories in a region with unexpectedly low demand was evidence of volume injury by reason of subject imports, rather than injury by reason of the weather. It said DOC made this finding without explanation, and despite evidence that it was not feasible to reallocate inland inventories.
OCP said DOC also gave no weight to evidence that domestic producers became unreliable and refused to supply and/or reduced availability to U.S. purchasers.
OCP said that DOC could not make a decision based on significant underselling as there was none on the record, but that it relied on Mosaic’s submissions of trade press reports and email correspondence to find that low prices from imports depressed prices. OCP said DOC gave more weight to anecdotal, unverified, and self-serving allegations supplied by Mosaic than its own price data gathered from questionnaires and importer/purchase submissions given under oath, which showed predominant overselling by importers and the chronic unavailability of reliable domestic supply.
OCP also said that the weather-related challenges faced by the domestic industry in 2019 had vanished by the time the petition was filed on June 26, 2020 (GM June 26, 2020), and that the temporary misalignment of supply and demand had corrected itself once the extreme weather conditions had passed. It also said U.S. prices were rising before the petition was filed, driven by global fundamentals, and would have continued to rise with or without the petition.
OCP added that during the period of inquiry, the domestic industry had excess capacity available, but that in late 2020, after subject imports were shut out of the U.S. market by the petition, Mosaic chose to import fertilizer from nonsubject sources rather than utilize its claimed excess domestic capacity.
PhosAgro said while it submitted a confidential benchmark study that included natural gas prices from independent Russian natural gas producers, the DOC instead relied on The Mosaic Co.’s benchmark data for the Organization for Economic Co-operation and Development (OECD) and European Union countries sourced from the International Energy Agency (IEA), along with certain information from Gazprom, Russia’s largest gas supplier.
PhosAgro said its benchmark was reflective of the Russian market because it was based on supply and demand and actual transactions in Russia. However, it said DOC would not use its data, because it claimed the Russian natural gas market is distorted by the Government of Russia.
Mosaic also filed suit in the U.S. Court of International Trade arguing that the CVD duties were not high enough (GM May 14, p. 1).