In late June, Russian Prime Minister Mikhail Mishustin ordered to urgently prepare a project of a decision on introducing temporary export duties on ferrous and non-ferrous metal products.
The government's initiative suggests that the duties will be in force from 1 August to 31 December 2021 and will help compensate consumers in the domestic market for losses caused by a sharp rise in prices of steel products in the first half of this year, due to the corresponding situation in foreign markets.
The duties will apply to a wide range of goods (about 340 commodity categories) and will consist of a basic rate (15%) and a specific - a fixed amount calculated separately for each category of goods:
Iron ore concentrate – $54 per tonne
Flat hot-rolled steel and rebar – $115 per tonne
Cold-rolled mill products and wire – $133 per tonne
Stainless steel and ferroalloys – $150 per tonne
Aluminium – $254 per tonne
Copper – $1,226 per tonne
Nickel – $2,321 per tonne
The duties will not be applied to Russia’s exports to countries within the Eurasian Economic Union (Armenia, Belarus, Kazakhstan and Kyrgyzstan).
The introduction of duties will undoubtedly affect the costs of imports of ferroalloys and metals produced in Russia by EU countries. According to UN Comtrade, in 2020 Russia was one of the key suppliers of ferrotitanium to Europe (about 3 thousand tonnes or 20% of total imports) as well as ferrotungsten (1.2 thousand tonnes or over 50%), nickel (44.5 thousand tonnes or 34%) and aluminium (842 thousand tonnes or 16%).
In addition, Russia covers about 30% of Japan's total imports of ferrosilicon (109.5 thousand tonnes per year) and about 40% of US alloy imports (60 thousand tonnes).
According to the Russian newspaper Vedomosti, the government denies that the proposed duties are "punishment for metallurgists". At the same time, according to the estimates of the country's minister of economic development, the profits of Russia's leading metallurgical companies increased 3.5 times in the first quarter of 2021 as compared to the same period of the previous years. The official assumes that taking advantage of the favourable price trend on the export markets, metallurgists increased the price of their products on the domestic sales which, in particular, negatively affected the cost of construction and the social sector.
According to the same Vedomosti, shares of Russia's largest metallurgical companies plummeted amid the news about the planned introduction of trade barriers: Rusal dropped 6.51% in relation to the previous trading session. Severstal shares fell by 5.66%, Nornickel by 4.06%, NLMK by 4.9% and MMK by 3.57%.
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Written by Alex Andreev firstname.lastname@example.org