Posted on 15 Mar 2022
Russia's economic development minister Maxim Reshetnikov says it is paramount for the country to maintain free market principles, to help it recover quicker from economic sanctions. This comes after industry and trade deputy minister Evgeniy Evtukhov instructed steel companies last week to prepare for a centralised pricing policy.
Reshetnikov's words reflect new developments in the EU, as it came to light that the Union is preparing to confirm a fourth round of economic sanctions, which will include a ban on imports of Russian steel and iron products. Although he does not refer to the EU plan, he notes that "it is important in the current situation, amid such fluctuations in global prices, and currency exchange rates, to maintain maximum flexibility of price formation. If we are going to dictate pricing terms to traders and producers etc, very soon we shall encounter shortages”.
Indeed, a prominent Russian trade source echoes the sentiment. "There is no need for such non-market measures,” Reshetnikov observes. “The meeting [between Evtukhov and steelmakers on 10 March] took place before the last round of EU sanctions limiting Russian steel imports was announced. Considering the fact that a prominent part of Russian steel exports is directed to Europe, prices in the domestic market will fall anyway, in accordance with free market principles. At the same time, such non-market mechanisms can be dangerous – they could lead to falling efficiency, as those with higher costs would have higher prices.”
Indeed, the question of efficiency and ongoing modernisation is high on producers' minds, along with redirecting export volumes back to domestic and alternative export markets. Major modernisation projects depend on supplies of European technology, with contracts signed, paid to various degrees and equipment delivered. Producers are looking elsewhere for replacements, but "these are still early days; we are working tirelessly on the situation," one major producer tells Kallanish.
The issue of exports redirection is also not straightforward. Many non-EU and non-US buyers are still not able to open letters of credit and provide guarantees, and new partnerships take time to establish.
A meeting between industry аnd trade minister Denis Manturov and metal industry shareholders is set to take place on 16 March.
Source:Kallanish
