Russia Considering Measures to Ease Domestic Steel Prices
Russia's government has widened the scope of its efforts to control record-high steel prices through direct political intervention. Several large steelmakers
Russia's government has widened the scope of its efforts to control record-high steel prices through direct political intervention. Several large steelmakers were invited to a meeting with Industry & Trade Minister Mr Denis Manturov for discussions focused on securing steel supply for state defence enterprises and construction products under long-term contracts at fixed or formula based prices with discounts. Steelmakers confirmed their readiness to provide discounts for such contracts. The ministry of industry and trade together with the ministry of construction will work on determining the beneficiaries of such contracts.
Also, Deputy Industry & Trade Minister Mr Viktor Yevtukhov last week did not rule out the possibility of the government introducing temporary 20-30% export duties. In May, the ministry drafted a list of products that could be subject to export duties. As of early last week, that list included semi-finished steel products, flat-rolled steel etc.
TASS also reported that Russia’s First Deputy Prime Minister Mr Andrei Belousov on the side lines of SPIEF 2021 told reporters that the tax solution is technologically the simplest in the situation with metallurgists, but if they find other instruments, the government is ready to discuss. He said “Theoretically, in addition to the severance tax, for example, Chinese options are possible, differentiation of VAT refunds on exports. Only, I say again, it does not follow from this that we are going to introduce this, because this is still a matter under discussion. There are more options, but now there are no decisions. A task has been given, it needs to be solved. If it can be solved through discounts, especially if all this is resolved not only within the framework of 2021, but some kind of mechanism is created, I will only welcome it, of course.”
According to him, a number of metallurgists, such as Evraz and Metalloinvest, are behaving very responsibly, not raising prices and offering discounts. He said “I can say that a number of companies are behaving very responsibly. I will cite as an example Evraz, which practically did not raise the price of rails, it is the main supplier of rails for Russian Railways. What I know fits into the parameters that were agreed upon earlier. I know that Metalloinvest is behaving quite responsibly and they have already provided a number of discounts.”
Incidentally, Russia’s Federal Antimonopoly Service had launched cases against MMK, NLMK and Severstal in April 2021because they have maintained monopolistically high prices on the flat-rolled steel market. This type of inquiry will prevent the rival companies from getting access to each other’s commercial information, and coordinating their positions and actions. The audit came on the heels of a statement that the service had received pointing to unreasonable price hikes for hot-rolled flat products, the statement said. According to the FAS, the price hikes surged faster than those of commodity costs. These producers may face turnover-based fines if the fact of a violation is established