Following the special protective reinvestigation of imports of large diameter (LD) pipes, the Ministry of Industry and Trade of the Russian Federation has proposed to extend the eight percent import duty on imports of LD pipes of more than 508 mm outside diameter, regardless of the country of origin, for the period up to December 21, 2012.
As SteelOrbis previously reported, as a result of a special protective investigation, on December 21, 2006, Russia imposed an eight percent special duty on imports of LD pipes effective until December 21, 2009, which does not affect imports from developing countries which come under the scope of Russia's Generalized System of Preference. In May 2009, Russia added China to the list in question.
On September 4 2009, the Russian Federation's Ministry of Economic Development and Trade (MEDT) initiated the reinvestigation in accordance with federal law No.165-FZ entitled "On special protective, antidumping and countervailing measures on import of goods," dated December 2003, and following the request of the main domestic pipe producers, Chelyabinsk Tube Rolling Plant (ChTPZ), OMK's Vyksa Steel Works and TMK's Volzhsky Pipe Plant, which together hold about an 85 percent share of the domestic LD pipe market.
The reinvestigation affected LD pipes under the following HS Codes: 7304 11 900 2, 7304 11 900 9, 7304 19 900 2, 7304 19 900 9, 7304 31 800 0, 7304 39 990 0, 7304 59 990 0, 7305 11 000 1, 7305 11 000 2, 7305 11 000 3, 7305 11 000 8, 7305 12 000 1, 7305 12 000 9, 7305 19 000 0, 7305 31 000 0, 7305 39 000 0 and 7305 90 000 0.
The Russian Ministry of Industry and Trade has expressed its opinion that, in the event of the abolition of the import duty on LD pipes, deliveries from EU countries, Ukraine, Japan and China are likely to be resumed at the previous high levels, thus reducing the share of Russian LD pipe suppliers in the domestic market, which would be followed by a further deterioration of their financial and economic situation.
The ministry noted that in the first half of this year the situation of Russian LD pipe producers deteriorated compared to the same period last year - their production decreased by 8.9 percent, their sales in the domestic market went down by 26 percent, their capacity utilization level declined by 6.8 percent, while their profitability fell by 4.5 percent. The share of Russian origin pipes in the domestic market declined to 92.8 percent.
Meanwhile, the ministry's data allow it to consider a significant export potential of the major LD pipe exporting countries. The ministry notes that in the first half of 2009 the EU countries' share of total LD pipe imports into Russia increased to 81 percent (31,000 mt) from 16.9 percent (8,800 mt) in the corresponding period of the previous year, while Japan's share of total LD pipe imports into Russia in the first six months of this year rose to 4,800 mt from 200 mt imported in H1 2008.