Disputes with steel-makers resolved, long-term contracts expected soon
MOSCOW. May 31 (Interfax) - Russian Prime Minister Vladimir Putin said there were no serious rounds for sudden growth in steel prices for domestic consumers, that recent disputes with steel producers over prices had been resolved and that long-term contracts ought to be signed with consumers soon.
"We couldn't have passed by the unseen plans by steel producers to raise their prices for domestic consumers. We think there are no serious grounds for such price increases," Putin said at a conference on pricing and tariffs.
"The biggest steel consumers and producers could revert to the practice of long-term contracts with a set price formula to rule out sudden price growth," Putin said.
The government has held intense consultations with steel makers and their customers, he said. "Mutual understanding has been reached and the disputes that have arisen have been resolved. I'm asking for those understandings to be written down soon," he said.
"Yes, global market prices are higher than half a year or a year ago, but even so, hiking prices 25%-30% for domestic consumers is beyond normal economic logic. And we can't afford such jumps right now as we focus only on the world market," he said.
"A subjective desire to claw back losses inflicted during the crisis must have been behind those steps," Putin said. "The government has a broader responsibility for the whole economy and you ought to understand us. To do that [a sudden hike in prices for domestic consumers] on one fell swoop, without thinking about the consequences for other participants in the national market like automobile makers, railways, oil, utilities and so on was dangerous and groundless," he said.
"Metal, iron ore and coke supplies to the domestic market ought to be treated as priority," he said.
Prices hikes for steel could also put federal and regional investment projects, some of them socially oriented, in jeopardy, Putin said.
"The price discord ought not to result in a unilateral halt in supplies or disrupt payments. Commercial contractual disputes should be resolved by negotiation or in extreme cases in court without putting partners up against the wall. Business conflicts cannot be allowed to bring enterprises to a standstill and deal a blow to the interests of employees," Putin said.
One example is Gazprom , which has not stopped supplying gas during the price dispute. "We need strong discipline where supplies and payments are concerned," Putin said.
Intermediaries "whose business is confined to marking up finished products in the metals and other base sectors" need to be removed from the market, he said.
The government will be asking federal agencies to calculate economically justified prices for metal and other base goods and services, Putin said.
"Of course those prices will be determined with natural monopoly tariffs taken into consideration," Putin said. The market situation would then be monitored, "so we get information about potential threats and problems on time, and we can react swiftly to deviations from set price indicators," he said.
Putin said curbing tariffs would work completely "only if private companies, too, take a responsible approach to pricing issues - this is in our common interests."
Average electricity prices for some steel makers, notably Severstal , have not only not risen, but they have fallen in the past year, he said.