INSIGHT: Global UAN market unfazed by EU anti-dumping duties

Author: Julia Meehan

2019/11/11

LONDON (ICIS)--Since the provisional implementation of the EU's anti-dumping duties (ADDs) on ammonium nitrate (UAN) from three key markets the landscape of the global market has not seen any significant changes.

In fact, the price of UAN has been on a gradual decline across most regions.

The European Commission published in March provisional ADDs for imports of UAN with a nitrogen content of 28-32% from Russia, Trinidad and Tobago, and the US.

In France there is no shortage of product on offer and prices have eased.

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There is a simple reason why the price of UAN has not increased following the ADD measures in Europe - producers have increased their production.

In addition to this, October is not a strong month for fertilizer demand since farmers are still harvesting root crops.

This year, in particular, the harvest has been delayed because of heavy rains. Not only does this delay drilling, it also means that fields are in a pretty bad state.

There is some hope that demand will start to emerge in November for spring; if it does, the impact of the ADDs might be felt but buyers are convinced there is sufficient production in Europe to compliment potential demand.

The continued decline in the value of nitrates and the wider fertilizer complex has pushed buyers to the side.

As basic economics dictate, customers do not typically buy in a falling market.

LOGISTICAL NIGHTMARE
“There is no price because there is no demand. The ports are full and there are lots of cargoes," said a European supplier.

“We won’t see any buying in this market until March/April. I can’t understand why the market is so quiet, but when the farmers come, and if they come at the same time, it will be logistical nightmare.”

The impact on the UAN market could be worse felt in the US, where an estimated additional 1m tonnes of imported product may be directed from Europe by sellers originating from Russia and Trinidad and Tobago.

The US market has seen a particular expansion, with production increasing by close to 1.5m tonnes in 2018, year on year.

According to the International Fertilizer Association (IFA), total year-on-year growth globally was 5%, having reached 23.8m tonnes in 2018.

Close to 70% of the UAN produced in the US was consumed domestically, with the balanced traded internationally.

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A major shift in the US could be a switch from UAN to urea, which could prove more profitable to the major producers.

Sources have also also suggested that US producers, who typically import UAN to Europe, will adjust production and export more urea instead of UAN.

The current market situation for the US UAN market is already rather downbeat.

The onset of winter in the US, especially within the northern tier states, has delayed harvesting further, impacting poor demand for UAN.

The weather challenges, combined with the ongoing sag in urea values, which has captured most of the domestic market’s attention in November, is leaving very little interest in UAN volumes.

The European Commission initiated the investigation following a complaint lodged by industry association Fertilizers Europe on behalf of producers, including Poland’s Grupa Azoty Zaklady Azotowe Pulawy, who represent more than half the UAN production in the region.

The complaint contended high rates of dumping haven taken taking place, causing damage to UAN producers in the EU.

This was in addition to the anti-dumping continuing as natural gas prices in Russia were likely to continue to decline owing to production expansion.

Natural gas is used to produce ammonia, this is then used in the production of urea and ammonium nitrate which constitutes 35% and 45% respectively in the production of UAN 32 solutions.

On 9 October, definitive measures were published. All of the official documents relating to CaseAD649 can be found here.

The ADDs were fixed amount per tonne of UAN produced by the following companies:

Origin Company Fixed amount of duty (€/tonne)
Russia Acron 42.47
Russia Azot & Nevinnomyssky Azot 27.77
Russia All other companies 42.47
Trinidad and Tobago Methanol Holdings (Trinidad) Ltd & all other companies 22.24
US CF Industries and all other companies 29.48

By Julia Meehan