Is Anti-dumping Ammonium Sulphate Only Pain for Mexico?

Seven years have passed, but Mexico’s domestic fertilizer production capacity has not made visible progress, and despite the government’s promises, fertilizer imports are still soaring.

In 2014, Agrogen, S.A. de C.V. and Metalúrgica Met-Mex Peñoles, S.A. de C.V. filed an appeal seeking an anti-dumping investigation into imports of this product from the United States and China. In 2015, the five-year countervailing duties included:

Provisional countervailing duty of $185.8/kg for imports from Honeywell Resins and Chemicals LLC and other US exporters. for imports from Wuzhoufeng Agricultural Technology Co., Ltd. and other exporters in China, the provisional countervailing duty is US$178.2 per kilogram.

Continue to support the final countervailing duty from October 10, 2020; the reason is to avoid dumping from happening again and harm to the domestic industry.

Imports of ammonium sulphate from the two countries were virtually zero after countervailing duties were imposed in 2015. Mexico will import 30,000 tons of chemical fertilizers in 2021, of which ammonium sulphate accounts for 1.9%. 50% of ammonium sulphate purchases come from Belgium, 35% from South Korea, and less than 1% from the United States and China.

From mid-2021, with the suspension of Chinese exports, the increase in sea freight costs, and the increase in natural gas prices, the market price of these two fertilizers has increased significantly; the situation has been exacerbated by the sanctions imposed on Russia after the Russo-Ukrainian war up.

The federal government has had to announce the implementation of the Inflation and Shortage Package, which removes import duties on fertilizer, which is expected to be imported at 2.5 million tons from the US and China.

Mexico’s pledge to be self-sufficient in fertilizer production is far from being realized, at least in the short term, as imports are still on the rise, up to 74%. Allowing middlemen or brokers to set prices on products increases reliance on imported fertilizers. In March 2023 alone, Mexico imported 407,000 tons of fertilizers, a 74% increase from the 234,000 tons imported in the previous month.

According to a report by the Agricultural Markets Consulting Group (GCMA), fertilizer imports in the first quarter of 2023 will increase by 30.6% compared to the same period in 2022. The import value of fertilizers has increased as well as the cost to producers in the country. The country will import fertilizers worth US$2.5 billion in 2022, compared to US$1.43 billion in 2021.

The opposition in Mexico’s Senate believes that the Moreno government’s inability to reduce imports of these products since 2021 has directly affected the country’s local producers. And the situation could worsen, as some Morena senators push an initiative to remove natural fertilizers from the market.

In March 2021, the head of Pemex announced an investment of US$300 million starting in 2022 for the rehabilitation of three fertilizer plants in order to make Mexico self-sufficient in fertilizer. But the task is not yet complete. These fertilizer factories will only be like “white elephants” in the future, unable to successfully break the dependence on fertilizer imports.

“The government has made efforts, but it is not enough. No matter how much investment is announced, it is a lie. Not only is there no actual investment in fertilizer, but now the rural finances have also been emptied.” Senator Botello accused.