Russian Antimonopoly Service proposes to impose export duties on billet, rebar

Tuesday, 29 December 2020 17:57:43 (GMT+3)   |   Istanbul

The Federal Antimonopoly Service of the Russian Federation has proposed to investigate and impose export duties on billet and rebar, aiming to support local customers who have been faced with sharp local price rises over the past month.

According to a letter from the Federal Antimonopoly Service of the Russian Federation to Russia’s Ministry of Industry and Trade, the proposed export duty for billet is 13 percent, but not less than $73/mt, while for rebar export the duty is proposed at 12 percent, but not less than $78/mt for six months.

The Federal Antimonopoly Service has also stated that the duties for exports should be for both scrap as the raw material and for downstream products like billet and rebar. The proposed duty for scrap exports is 15 percent, but not less than $49/mt.

The petition to the Federal Antimonopoly Service has been sent by Russian contractors who have faced sharp rises in rebar prices, driven by the scrap price surge and storage, as well as by the export prices hike. “Since the Russian metallurgical industry is export-oriented, producers, when setting prices, are considering not only the costs of production, but also the export prices for finished products as an alternative. In this regard, there are risks that the introduction of an export duty [only] on raw materials may not lead to the expected result - a decrease in prices for finished products [in the local market in Russia],” the Federal Antimonopoly Service said in the statement.

“The duty issue is not clear yet… the Russian authorities are already off,” one Russian exporter said, adding that local scrap and semis prices have surged too much over the past month, which drastically impacted sales in the domestic market. As SteelOrbis reported last week, mills in the Central region of Russia were targeting $624-658/mt (RUB 55,000-58,000/mt) CPT Moscow for rebar, while in the south offers were mainly at $658/mt (RUB 58,000/mt) ex-works. In mid-November, prices were not above $440/mt (RUB 41,000/mt). Local prices in RUB include 20 percent VAT, prices in US dollars do not.

“It is possible [that the duties for billet and rebar will be implemented], but it is too early to talk about it,” a large Russian exporter commented. As exports take up to 40-50 percent of total sales of steel products in Russia, the imposition of duties may hit the profitability of major mills hard, sources believe.

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