Posted on 02 Aug 2022
Russian President Vladimir Putin says the focus of companies, regional and federal authorities should be to ensure domestic demand for steel.
“We are talking not only about stable supplies of these steel goods to our market, but also about increasing these supplies, about growing demand, primarily due to increasing the volume of housing construction, industrial and commercial facilities,” Putin said at a meeting on Monday concerning the development of the metallurgical complex in Russia.
Putin recalled that he earlier instructed officials to form a Strategy for the Development of the Domestic Metallurgy until 2030. "At the same time, I asked that special emphasis be placed on the active growth of metal consumption within the country, on ensuring affordable prices for these products for businesses and citizens, for large regional and federal projects,” he added.
Russian Minister of Industry and Trade Denis Manturov meanwhile proposed a system of reserve steel stocks. “We are talking about the formation of reserves, which can later be used for intervention in the domestic market amid rising prices, as well as in the event of a shortage of products from metallurgical plants,” he commented.
According to Manturov, in the second quarter, Russian steelmakers’ exports decreased by 20% on-year, Kallanish notes.
“At the current rouble exchange rate, exports for Russian metallurgists are unprofitable, and in some cases economically inexpedient,” he said during the meeting. “World steel prices are declining against the backdrop of a slowdown in the global economy. It is necessary to reduce the fiscal burden for ferrous metallurgy companies by adjusting the excise tax on liquid steel, as well as revising the mineral extraction tax on iron ore and coal.”
Russian authorities previously set the excise tax rate on liquid steel from 2022 at 2.7%, and introduced a new level of mineral extraction tax (MET) on iron ore at 4.8% and on coking coal at 1.5%.
Earlier, Russian deputy finance minister Alexei Sazanov said the cancellation of the excise tax on liquid steel is impossible for now (see Kallanish passim).
Manturov also said it is necessary to have individual formulas for calculating the MET for iron ore and coking coal taking into account each company’s specific situation. "Mining enterprises are now also under pressure. In particular, the Mikhailovsky GOK was left practically without sales markets and MMK is underloaded – Europe is closed, and it still produces pellets and concentrate."
Since the beginning of the year, steel prices in Russia have fallen by more than a third and rolled back to 2020 levels, the Russian Steel Association said earlier.
Source:Kallanish
