June 20, 2012

EU removes extra imports duty on Ukraine's mineral fertilisers 

The additional duty on imports of ammonium nitrate from Ukraine, which was introduced at the initiative of local producers of fertilisers in 1996, has been cancelled by the EU on Monday (June 18), Infoindustria told UKRINFORM.

"The opening of the EU market now is favourable for Ukrainian exporters. Already in July, an excess of ammonium nitrate in the domestic market will exceed 100,000 tonnes. This product should be taken somewhere, and the Ukrainian market is not able to use it even on the season eve," Dmytro Hordiychuk, the company's chief analyst, indicated.

He said the current cost of ammonium nitrate in Western Europe is EUR260-280 (US$330-350) per tonne. For comparison, Ukrainian ammonium nitrate is sold at US$310 per tonne (FOB Black Sea) and US$330 per tonne (DAF border of Ukraine and the EU).

Ukrainian companies have repeatedly tried to ensure cancelation of the duties. For example, in 2006, Cherkasy's Azot even won a start of the investigation that could lead to a revision of the restrictions. But in 2007 they were extended. Only in 2008 the plant, together with the Russian Akron and Eurochem (their products were also subject to additional duties) received a quota on imports of ammonium nitrate in the EU in the volume of around 100,000 tonnes.

Now the Ukrainian products may be imported with a general import duty of 6.5% of customs value (about EUR16 or US$20 on the basis of prices on Ukrainian ammonium nitrate on FOB Black Sea terms). Until now, only one manufacturer, Cherkasy Azot, could export its products at this rate, and only under the quota of about 30,000 tonnes per year, and supplies of a greater amount, as well as those of other manufacturers, were subject to an additional duty of EUR29.26-33.25 (US$37-42) per tonne. For comparison, the capacity of the European market is about 10 million tonnes, or about EUR3 billion (US$3.8 billion) at the current prices.

But it is too early in the day for the Ukrainian producers to rejoice. Under the EU rules, anti-dumping restrictions may be extended at the request of the interested parties within two weeks. June 18, the European Fertiliser Manufacturers Association (EFMA) promised to file a relevant application and to win extension of the anti-dumping restrictions on Ukrainian products.