U.S. trade regulators are investigating whether fertilizer manufacturers in Russia and Trinidad are “dumping” urea ammonium nitrate fertilizer, or UAN, onto the domestic market at less-than fair value.
The U.S. International Trade Commission has launched the investigation at the behest of CF Industries, a major U.S. nitrogen manufacturer, which claims it’s being hurt by subsidized UAN imports that depress domestic prices.
Fertilizer producers in Russia and Trinidad have “targeted the U.S. market” with increased shipments of UAN because the European Union has restricted imports due to dumping concerns, according to the company’s petition.
“These increased volumes of subject imports oversupplied the U.S. market, swelled U.S. inventories, and forced U.S. producers to lower their prices to remain competitive,” the petition said.
Based on the subsidies to foreign manufacturers, duties of nearly 400% on UAN from Russia and 160% from Trinidad may be justified, the petition said.
The demand for tariffs on imported UAN has sparked fears that farmers will be forced to pay more for the product at a time fertilizer prices are already rising.
CF Industries claims Russia and Trinidad provide manufacturers with natural gas, a major input that accounts for one-third of UAN’s cost, at below-market prices, in addition to tax incentives.
Imports of UAN from Russia and Trinidad grew from about 2 million short tons in 2018 to 2.65 million short tons in 2019 before dropping to 2.2 million short tons in 2020, the petition said.
The domestic industry was able to “recapture” market share last year “but only by dropping prices in order to remain competitive,” according to CF Industries.
Domestic UAN manufacturers should be able to realize higher prices because domestic consumption of the fertilizer rose 5% in 2019 and 3% in 2020, the petition said.
The U.S. industry cannot interrupt UAN production because idling factories is expensive, the petition said. “The result was that domestic production, capacity utilization and employment remained essentially flat, while income, profitability, returns on assets and capital expenditures fell dramatically.”
Fertilizer distributors have come out against new tariffs on UAN, claiming that higher prices would have “a devastating impact on U.S. farmers.”
CF Industries, the petitioner, is the “clear price leader” and the “dominant supplier in the U.S. market” whose own expansion has caused larger domestic UAN supplies — especially after European antidumping restrictions on the company limited exports to that continent, according to the Gavilon agribusiness firm.
CF Industries is an “unreliable supplier” that purposely undersells UAN in certain markets to avoid logistics and transportation costs, which forces distributors to rely on imports, said Brent Hardlander, Gavilon’s president, in submitted testimony.
The company “gets away” with missed deliveries and “leaving customers in the lurch because of its outsized market power,” he said.
International Raw Materials, another distributor, also claimed that CF Industries has prioritized UAN exports to foreign countries rather than supplying the Western U.S.
However, due to European antidumping duties, the company has “dumped” UAN onto the U.S. market, according to IRM’s testimony.
“Not content to cause injury in the EU market, CF has decided to redirect its dumped imports to the U.S., hurting itself in the process,” IRM said. “Now, with prices recovering well before the filing of the petition, CF wants everyone else, including farmers, to pay for its mistakes.”