Russian pipemakers file complaints over steel strip price increases

Russian pipe producers CHTPZ and TMK have filed separate complaints regarding steel strip price increases with Russia's Federal Antimonopoly Service (FAS) against domestic steel producers Magnitogorsk Iron and Steel Works (MMK) and Severstal.
 
Accordingly, the pipemakers claim that the prices for steel strip have been increased by an total of 15 percent since the start of the year. In general, prices for different types of rolled steel products increased by 30-35 percent, but for steel sheet for example the price hike amounted to almost 43 percent, RBK newspaper reported citing the pipemakers' letter.
 
Depending on the type of pipe, the price of steel feedstock represents about 70-80 percent of the cost of pipe production, and so the pipemakers fear their profit margins will be squeezed. The pipemakers state that the higher prices they are being forced to pay for steel hurt both their export competitiveness and the profits to be earned from their domestic supply contracts, RBK said.
 
Under these circumstances, the Russian pipe producers favor long-term contract agreements with the steelmakers, which currently deliver their products to the pipemakers mainly based on monthly contracts and less often on quarterly agreements.
 
In the last few months MMK and Severstal have come under the scrutiny of the FAS, as at the end of 2010 local automakers filed complaints against automotive steel sheet prices increases.