Russian Industry and Trade Ministry considers deferral of excise tax payment insufficient to support steelmakers, expects drop in production by end of year

DUSHANBE. Oct 9 (Interfax) - A deferral on the payment of the steel excise tax until December 1 is an insufficient measure to support the metallurgical industry, Industry and Trade Minister Anton Alikhanov said.

The government has prepared a draft resolution according to which metallurgists are granted a deferral on the payment of the excise tax on liquid steel and the mineral extraction tax (MET) on iron ore until December 1 (from September to November inclusive), which will allow interested parties to free up funds to overcome the consequences of the current situation, Kommersant reported on Thursday, citing a copy of the draft corresponding resolution.

Answering a question from journalists about whether providing a deferral on the excise tax is enough to improve the situation in the industry or if additional measures are required, Alikhanov said: "It is not enough. From the point of view [that] there will still be a drop in production this year."

The gradual reduction of the key rate should have a positive impact on the Russian metallurgy market in the future, Alikhanov said. "A further reduction of the Central Bank's rate will definitely revive the housing market, among other things, and I hope we will return to growth in domestic demand," he said.

In addition to the deferral of tax payments, metal companies are asking the Finance Ministry and the Industry and Trade Ministry to postpone the deadlines for the payment of insurance premiums with the possibility of gradual payment in H1 2026. The savings on interest on attracted loans are estimated at 1.19 billion rubles.

The steel excise tax, which was initially considered a temporary measure, was introduced on January 1, 2022. According to the excise tax calculation formula for vertically integrated steel producers, the excise tax is zeroed provided that the value of the Tsslab indicator (the export price for slabs for a calendar month) multiplied by the average value of the U.S. dollar to ruble exchange rate for the calendar month is below 30,000 rubles. In 2024, according to the Russian Steel association, the cost of a slab even for the most efficient Russian metallurgical plants exceeded 40,000 rubles per tonne.