Russia may raise export duty on ferrous metal scrap to 100 euros

MOSCOW, Nov 11 (PRIME) -- The Industry and Trade Ministry thinks it reasonable to raise the minimum duty on exports of ferrous metals scrap from Russia to 100 euros per tonne from 70 euros, the ministry said in a statement on Thursday quoting Deputy Minister Viktor Yevtukhov.

“The ministry has made several regulatory decisions to damper internal metals prices. We have raised the export duty on ferrous metal scrap twice this year, it stands at 70 euros now. It allowed us to reduce its exports and stabilize prices for the reinforcement bars this summer,” Yevtukhov said as quoted by the ministry.

The measure worked because the reinforcement bars are 65–75% made from metal scrap. The international metal scrap prices rose again making a hike of the duty to 100 euros per tonne reasonable, he said.

If the internal prices for local metals products continue rising, the ministry may even introduce export duties on some types of metal products other than ferrous metal and aluminum products, on which duties were slapped on August 1.

Yevtukhov said that they not only restricted the growth of domestic prices, but added 45 billion rubles to the budget, which the government would spend to support metal intensive industries with the housing construction being a priority.

The ministry registered a hike in prices for reinforcement bars in October, mainly due to the speculative policy of traders. When the prices for reinforcement bars fell in August, traders stopped purchases as they expect further contraction of prices. Metals companies then reduce production, and delayed demand then creates artificial deficit and a price jump. “It is obvious that we have to reduce this chain of the market and switch to long-term direct contracts to the maximum possible extent,” he said.

If the producers’ prices climb up without any reasons, then authorities will have to introduce several measures. The Federal Antimonopoly Service would inspect prices for metals products and slap huge fines if it discovers violations of the antimonopoly law, he said.

Yevtukhov also said that the ministry wanted to work with large real estate developers and draft a plan of their demand for reinforcement bars for up to five next years to solve the problem.

“An additional factor of price volatility for the reinforcement bars is connected to the fact that metals companies have no understanding of even short-term plans of developers. It prevents them from forecasting demand of developers in metals products and from adapting their production goals to them,” he said.

The five-year plan should ensure direct contracts between metals companies and developers and even discounts, he added.

(70.6950 rubles – U.S. $1)

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