According to the Russian Special Steel and Alloys Consumers and Suppliers Association (Spetsstal),
Mechel, one of the leading Russian mining and steel groups, decided in late December 2010 to discontinue shipments of
stainless steel products (
stainless steel sheets, hot rolled (HR) and forged
stainless steel long products,
stainless steel long products with special finishing, and
stainless steel round billets) to intermediaries (i.e., traders), and to increase direct sales to end-users.
According to Spetsstal,
Mechel's subsidiaries have a dominating position in the Russian market for
stainless steel flat and long products. The share of
Mechel's Chelyabinsk Metallurgical Plant in the
production of flat hot rolled
stainless steel in
Russia amounts to over 80 percent of the total output, while its share in cold rolled
stainless steel
production (including strip) amounts to more than 95 percent.
Mechel's enterprises produce more than 65 percent of
Russia's total
stainless steel long products.
"
Mechel has divided all buyers into approved buyers and excluded buyers. For a monopolist, such behavior appears logical. However, we wonder for whom the traders used to buy
stainless steel from
Mechel. Obviously, for the end-users, who are compelled to break their business ties with the traders and go cap in hand to
Mechel in its majesty. We doubt
Mechel's decision is consistent with the current antimonopolistic regulations in
Russia," Spetsstal commented.
Spetsstal also noted that more than 75 percent of
Russia's total sales of
stainless steel to end-users were via steel
trading companies. Traders were also the main customers for
Mechel's
stainless steel products. "By ordering, stocking and redistributing, traders were maintaining a supply and demand balance depending on market conditions," Spetsstal said.