While an investigation has been initiated against Russia's largest coking coal producer Mechel's subsidiaries, and the company's shares have not yet fully recovered from the fall provoked by the criticisms made by Russian Prime Minister Vladimir Putin, the Russian Federal Antimonopoly Service (FAS) has also initiated legal proceedings against another Russian steel and coking coal producer, namely Evraz.
On 29 July, the FAS decided to initiate legal proceedings against Evraz Holding's coking coal producing subsidiary Raspadskiy Ugol on the basis of violation of article one of Russian federal antimonopoly law.
In its official statement on the issue, the FAS stated that the indications of violation of Russian antimonopoly law can be seen in the establishment and continuation of monopolistically high domestic prices for coking coal by Raspadskiy Ugol; in the economically irrational discrepancy between the company's international and domestic prices; and also in the establishment of discriminatory delivery conditions for domestic consumers.
The investigation has been initiated against all affiliates of Evraz operating in the coking coal business, starting from the mother company, ending with official trading houses.
The investigation has been initiated on the basis of price dynamics analyses conducted by the FAS. As a result of the concluded analyses, the FAS has determined that Raspadskiy Ugol's domestic price for coking coal was approximately doubled in the period from September 2007 to March-April 2008.
In comparison to Mechel's case, there is not much ground for the investigation into Evraz's domestic coking coal price policy, market players say. Whereas Mechel is the largest producer and supplier of coking coal to the open market, Evraz consumes most of its coking coal within the group.
Meanwhile, the appearance of a second company in the FAS's investigations into rising domestic coking coal prices gives the impression that the investigation will cover the whole industry and leads observers to believe that more companies may be included within the scope of the investigations.