Russian Industry and Trade Ministry, steelmakers agree to move away from peg to LME, calculate domestic prices in rubles

MOSCOW. March 22 (Interfax) - The Russian Industry and Trade Ministry and steelmakers have agreed to move away from pegging domestic prices to the London Metal Exchange (LME) and calculate them in rubles, Russian Industry and Trade Minister Denis Manturov told reporters.

He said that the use of the ruble component in calculation of domestic prices will be also taken into account when discussing tax base with the Finance Ministry.

"With our steelmaker colleagues, we have come to a common decision to detach ourselves from the prices on the London Metal Exchange and calculate the domestic market on the basis of the ruble component. This is the decision that will further shape the structure of domestic market prices. Among other things, this will go towards solutions with the Ministry of Finance on the effectiveness of taxes, fees, which, on the one hand, will not burden the company, allowing them to preserve their staff and the work of the primary production cycle," he said.

Last week, the Industry and Trade Ministry said that steelmakers should present consolidated pricing parameters for domestic consumers by the end of March.

"The mechanisms will work most effectively if the industry itself develops a solution without government involvement. When working out decisions on formation of prices, which must be affordable for the domestic consumer, steelmakers will be able to take into account more delicate adjustment and to balance prices for different items, reducing them for the primary ones. It's quite clear that the less desirable alternative to this scenario is the adoption of directives on prices for the primary lineup of goods at the government level," Manturov said earlier.

The government is also ready "to support demand on the domestic market by purchasing products in reserve and financing large infrastructure construction projects," the government said in a statement earlier. Furthermore, the Industry and Trade Ministry will work jointly with the Finance Ministry on the issue of restraining interest rates on existing loans for backbone enterprises, and the government will soon discuss the sharp increase in prices for railcar leasing by carriers.