Antidumping duties set to impact the global UAN market

LONDON (ICIS)–The antidumping complaint raised by Fertilizer Europe on behalf of various European urea ammonium nitrate (UAN) producers and its impact on the European market is a topic dominating nitrates market discussions, particularly now provisional antidumping duties (ADDs) have been published.

The provisional antidumping duties on UAN, published by the European Commission on 21 March, apply to Russia, the US and Trinidad and Tobago.

Trinidad has little or no requirement for UAN. Russia also has a limited domestic market and benefits from low gas costs, while the US has overcapacity.

Country	Company	Dumping margin (%)	Injury margin (%)	Provisional anti-dumping duty (%)
Russia	PJSC Acron	31.9	31.9	31.9
Russia	Novomoskovsky Azot JSC	39.3	39.3	39.3
Russia	Nevinnomyssky Azot JSC	39.3	39.3	39.3
Russia	All other companies	39.3	39.3	39.3
Trinidad and Tobago	Methanol Holdings (Trinidad) Limited	55.9	16.3	16.3
Trinidad and Tobago	All other companies	55.9	16.3	16.3
US	CF Industries Holdings, Inc	37.3	22.6	22.6
US	All other companies	37.3	22.6	22.6

The shale gas revolution in the US has resulted in a boost in US production, which has meant traditional imports seen from Russia and Trinidad and Tabago have been forced to find alternative homes. But both exporting hubs may now need to redirect their tonnes to the US.

Fertilizer Europe is acting on behalf of AB Achema, Azomures, Fertiberia S.A., Grupa Azoty S.A., Lovochemic a.s. and Nitrogenmuvek Rt, for a complaint originally raised on 29 June 2018 and based on “high rates of dumping”.

EU producers believe they are getting a double hit from Russia, not only because of cheaper UAN, but also because of the price of Russian gas.

European nitrates producers need to purchase Russian gas for nitrogen fertilizers, which make their production costs that much more than their Russian competitors.

The imposition of duties has come as a surprise to some buyers who said they are much higher than original thought. The duties are also quoted in percentage rather than a flat rate.

Commenting on the ADDs, a distributor said: “People are in shock. People did not think the duty would be so high. Nobody thought it would be as high – we are waiting to see what the players are going to do.”

The distributor said in the longer term it expected to see Russian and US material returning to the European arena, because international prices will eventually come down, due to oversupply for Russian and US producers.

While the ADD investigation was brought on by a group of European nitrates suppliers, not every producer has welcomed the high duties now imposed on UAN imports arriving into Europe.

“The ADD, it’s taking shape, but we are against it since this will effect the market,” said a major nitrates producer.

“This is protectionism of the market – this Trumpish attitude. It is the farmers who will need to pay more. This will not change the fact – it is counterproductive.”

As with any new legislation or directive imposed on a global commodity, the impact is not always immediate, but clearly the unexpected and high duties have already rattled the UAN market.

Prices have eased internationally, but for France, the largest importer of UAN in Europe, prices could start to firm sooner rather than later.

CF Industries, which is the largest US exporter of UAN to Europe, may consider flipping its UAN production to urea, but the US major is expected to continue to eye Europe as a home for its tonnes.

In France the new summer fill price, which is applicable from 1 June, has been agreed at €159/tonne FCA (free carrier alongside) Rouen, while any spot business is currently under discussion around €180-190/tonne FCA Rouen.

The value of UAN in the US is also moving lower.

New Orleans (Nola), which is the benchmark for UAN, has moved down by 23% since the beginning of the year.

In France UAN has also dipped by 26% since the first week of January.

Focus article by Julia Meehan