17 May 2022 12:56

FAS ready to consider exchange trading in metals, raw materials

MOSCOW. May 17 (Interfax) - The Russian Federal Anti-monopoly Service is prepared to consider trading metals and metallurgical feedstock on commodity exchanges and setting minimum sales volumes, the regulator's press office told Interfax.

The FAS is prepared to work on this issue in conjunction with all relevant federal agencies and market participants.

The Rosneft oil company came up with the idea of trading metals and feedstock on the St. Petersburg International Mercantile Exchange (SPIMEX) at the end of April as a means of stabilizing prices for inputs. It sent a letter containing the proposals to the government.

"The FAS backs the proposal to organize exchange trading in metallurgical raw materials and metal products as exchange trading ensures objective price indicators on which market pricing is based, including on the OTC market," the regulator said.

The FAS also recommends supplementing the current trade and marketing policies of steel companies with proposals to prioritize the supply of steel products and metallurgical raw materials to the domestic market and is "ready to consider proposals related to customs tariff and non-tariff regulation measures, as well as protective foreign trade measures if it receives the relevant materials".

The oil company's appeal to the government was prompted by information Rosneft had received from Kamaz that it would not be possible to carry out previously agreed deliveries of products and the withdrawal of a commercial offer, as well as from the United Machinery Group about price increases of more than 80% for its goods. Manufacturers of automotive and special-purpose equipment justified the price rises by an increase in the cost of raw materials used throughout the supply chain, chiefly metal products and products containing metals, as well as components; and increase in the cost of borrowing due to a higher Central Bank key rate.

Rosneft proposes by way of stabilizing prices for inputs to consider regulating prices for iron ore and certain types of metal products by signing agreements with the biggest producers of these products, specifying the volume of mandatory metal supply to the domestic market, and capping price growth at the target inflation rate of 4% per year, a source familiar with Rosneft's proposals told Interfax.

The company also proposes to limit exports of iron ore, steel and scrap to third countries by introducing export duties within the EAEU that are directly dependent on world prices and foreign exchange rates along similar lines to the mechanism that already exists in the oil and gas industry.

Rosneft also favors the abolition of anti-dumping import duties on tubular products and of the right to VAT refunds on the export of certain groups of metals and metal products.

Interfax was unable to obtain official comment from steel producers. A source at one steel company said there was no need to prescribe a mandatory volume of supplies to the domestic market, which is usually in surplus, especially in the current situation, when exports have dropped due to sanctions. The source also recalled that scrap export duties were already in effect, and imposing them on steel and ore would not affect domestic prices because there was no shortage in the domestic market.