On July 8 this year, the Russian Federal Antimonopoly Service (FAS) announced that, as a result of its investigation conducted into the situation in the Russian domestic coking coal market in January-March 2010, it has decided to initiate legal proceedings against Evraz, Raspadskaya Coal Company and Severstal for abusing their dominant position in the coal market.
Accordingly, signs of breaches were noticed in the unreasonable setting of prices for contracts to supply hard and semi-hard coking coal of Zh, GZh grades to Russian and export markets during the period in question. FAS noted that the difference between the contract prices for coking coal concentrate of Zh and GZh grades did not depend on the volume of deliveries and transport costs. In addition, FAS suspects the companies in question of creating discriminatory conditions for Russian consumers, as compared with foreign consumers.
In respect to FAS's investigation, Evraz stated that it is not an exporter of these particular coal grades, and uses these types of coals mostly for consumption in its own coke batteries in Russia.
As SteelOrbis previously reported, in accordance with the government's request, FAS is currently investigating the formation of costs at all stages of steel production, starting from coking coal, iron ore and finishing with finished steel products.
In addition, on May 21, 2010, FAS started a probe into Evraz on the grounds of alleged abuse of its dominant position in the domestic rolled steel products market, and is carrying out a investigation into other domestic steelmaking companies, including Mechel, MMK, NLMK and Severstal.
According to Renaissance Capital, the domestic prices for Zh grade coal have increased during the last two weeks by 27.75 percent to an average of $193/mt, excluding VAT, because of a supply shortage in the Russian market. The last price increase in Russia (of 14-19 percent depending on the coal grade) was observed at the beginning of April, when companies were concluding supply contracts for Q2.
On Monday, the mining and steel company Mechel said it had begun importing coal from its US-based subsidiary Mechel Bluestone in order to supply Russian coke plants. In addition, another Russian steelmaker NLMK also said at the beginning of July that it had signed a two-year contract for US coking coal supplies because of the shortage of supplies in the Russian market.