Clock Ticks Down on European Union UAN Dumping Probe; CF Weighs In
Concerns are building that the European Union (EU) will impose provisional anti-dumping measures on imports of UAN from producers in the U.S., Russia, and Trinidad and Tobago within the next few weeks. The European Commission (EC) on Aug. 13 initiated an investigation into whether shipments from the three countries are “being dumped, and whether the dumped imports have caused injury to the union industry” (GM Aug. 17, 2018).
The EC has a final deadline of April 13 to implement any provisional measures, i.e., eight months after the probe’s initiation, and is required to provide information “pre-disclosure” on any planned imposition of provisional duties three weeks before their implementation. Consequently, the latest pre-disclosure date would be March 22. Interested parties would have three working days to comment on the accuracy of the calculations. If imposed, these temporary anti-dumping measures have a maximum duration of six months.
An EC spokesperson declined to speculate on the likelihood that the ongoing investigation would allow it to conclude procedure earlier than these final deadlines. But in such an event, the investigation section of its website would be updated accordingly, she said.
Similarly, if the EC intends not to impose provisional duties, it will inform the interested parties three weeks before the expiry of the April 13 deadline.
If provisional anti-dumping measures were to be imposed, it potentially could lead to lower shipments to the EU from suppliers in the countries under investigation.
One major producer and supplier of UAN to the region declined to comment on whether it is continuing to plan normal shipment volumes to EU markets and what measures it is taking in the event provisional temporary measures are imposed. Another had not responded to Green Markets’ enquiries by press time.
CF Industries Holdings Inc., Deerfield, Ill., a major UAN exporter, however, did address the issue with analysts on Feb. 14. CF President and CEO Anthony Will said the company is cooperating actively with the Commission. “We are not dumping. It is a global price point for UAN, and our delivered price into France and Belgium is above what our netback price would be using the Jones Act vessel to hit the East Coast of the U.S. So those are very rational kind of moves for us to make.”
Will went on to say that it is not the Western European producers – Yara International, EuroChem, or OCI – that are bringing the action, but the Eastern European companies in Lithuania, Romania, and Poland that are running very inefficient, very high-cost, and logistically challenged plants. He added that the center of European consumption is Belgium and France, and the Eastern European companies also have a high transportation cost to get it there. He said if duties are imposed that the Commission is essentially telling French farmers that they have to subsidize the high cost of Eastern European production.
CF Senior Vice President Bert Frost reiterated CF’s desire to move tons to the highest netback, adding that the company is flexible in shifting production among its nitrogen capacities. He said CF is also looking at terminalling opportunities in the U.S. along the coast and working with domestic customers for additional tonnage to remain in the North American market.
Frost also noted that the South American UAN market – Argentina, Brazil, Chile, Colombia, and Mexico – has grown substantially in the past 5 years, and that CF has been at the forefront of that effort for very attractive margins.
Industry observers last week suggested that CF might be using a newly implemented UAN price decrease as a way to pump any UAN inventory build-ups into the market and deter any future imports into the U.S. market. U.S. UAN imports were up for the July-November 2018 period by 17 percent, to 872,301 st from 744,154 st, according to the U.S. Department of Commerce.
Frost noted that a decision from the Commission is expected in the next 4-6 weeks. He said a decision could lead to duties, no duties, or a continuation of the same duties, “which we pay today at 6.5 percent, while millions of tons come this way and pay no duty in the U.S.”
EU farming organizations are of the mind that the implementation of EU anti-dumping measures, such as increased import tariffs or duties, on product from the U.S., Russia, and Trinidad and Tobago, would lead to higher prices for UAN across the region, as they believe it would reduce competition and could lead to the bigger producers charging higher prices.
Product shortages could also occur, according to some trader sources, who believed that EU producers would not be able to cover the shortfall created by reduced imports.
The EC’s investigation was prompted by a June 29 complaint filed by Brussels-based Fertilizers Europe on behalf of 55 percent of the EU UAN solutions industry production using calendar year 2017 as the base reference. The complaint alleges that UAN volume and prices under investigation have had a negative impact on the prices charged and the market share held by the EU industry, resulting in substantial adverse effects on the overall performance and financial situation of the EU industry (GM Aug. 17, 2018).
According to Fertilizers Europe data, the U.S by 2017 had become the number one import supplier into the EU with a 12 percent market share of the region’s total UAN consumption in that year, having increased its share from just 2 percent in 2013. Similarly, Russian market share had reached 10 percent in 2017, down from 11 percent in 2016, but up from 4 percent four years earlier, while imports from Trinidad and Tobago accounted for 8 percent of EU consumption in 2017, up from 7 percent in 2013.
In the meantime, a sizeable number of U.S. UAN exports have continued to go to EU countries in the July 2018-November 2018 fertilizer-year-to-date, according to DOC statistics.
| U.S. Exports | July-Nov.-17 | July-Nov-18 | Nov.-17 | Nov.-18 |
| U.K. | 27,534 | 32,679 | ||
| Ireland | 346 | 446 | 346 | 236 |
| Netherlands | 10,083 | |||
| Belgium | 47,399 | 68,343 | 16,535 | |
| France | 211,691 | 335,707 | 62,305 | |
| World | 724,159 | 725,575 | 82,153 | 87,195 |
*000 st