Export prices for Russian ferrous metallurgy products began to decline due to the decrease of demand in the EU, while the same situation is also observed in the domestic market, according to recent statements, made by representatives of Russian producers and some local analysts in the field of metals and mining.
In August Russian hot-rolled steel fell in price by 6% and is now trading at a discount of $60 per ton to export prices in China. Spot market demand in the EU is slowing after a strong contraction in activity and stockpiling over several months.
As for Russian market, the local government imposed export duties on steel in response to the rise in construction costs. The duties consist of a base rate of 15% and an additional component depending on the type of metal, the depth of processing, etc. The minimum export rate for hot-rolled flat steel and rebar is $ 115, cold-rolled steel - $133, stainless steel and ferroalloys - $150 per ton. Russian analysts estimated the decrease in profits of metallurgists due to duties at 150-180 billion rubles.
The Ministry of Industry and Trade has already stated that they see no prerequisites for extending export duties next year, but their revision this year is also unlikely.
Analysts believe high steel prices are currently supported by high cost of raw materials - coal, ore and steel scrap, but with the tightening of monetary policy by regulators in the US and the EU, raw materials will also begin to decline. In this regard, the possibility of an extension of export duties in Russia in 2022 is low.
By: Eugen Gerden