Bank expects two-year continuation of EU tariff on Russia AN exports

30 January 2013 16:37  [Source: ICIS news]

LONDON (ICIS)--The European Union will probably take a couple of years to lower its tariff barrier against Russian exports of ammonium nitrate (AN), Raiffeisen Centrobank (RCB) said on Wednesday.

An anti-dumping duty of €47/tonne ($64/tonne) on AN exports to the EU from Russia is set to expire on 13 July unless the European Commission is persuaded by representations from European fertilizer producers that it should be renewed.

The renewal of the duty, which according to RCB amounted to nearly 15% of the current price of AN, must be considered in the context that Russia is now a member of the World Trade Organisation (WTO), said RCB analyst Dominik Niszcz.

“It is hard to say whether the EU will decide to lower the tariff as soon as this coming July,” Niszcz said.

“With Russia a member of the WTO, sooner or later we expect that the barrier will be reduced and maybe finally cancelled, but I would first expect that the prices of gas will have to be made more comparable in Russia and the EU, [so therefore reducing or cancelling the tariff will] probably take a couple of years,” he added.

Russian gas monopoly Gazprom sells gas on its domestic market with a discount of more than 50% compared to prices on the EU market, and gas is the main input cost for all nitrogen fertiliser market players, noted the analyst.

“Of course, the costs of transport factor and the higher effectiveness of ammonia installations, versus Russian plants, will support the position of the local EU producers and the impact of the Russian companies [if the tariff barrier is lowered] should not be overwhelming,” Niszcz said.

($1 = €0.74)

By: Will Conroy
+44 20 8652 3214

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