FAS ruled out amicable agreement with metallurgists on prices for rolled metal products

The Federal Antimonopoly Service (FAS) considers it wrong to enter into an amicable agreement with metallurgical companies – NLMK, MMK and Severstal – because of high prices for rolled metal, said the head of the FAS, Maxim Shaskolsky.

“The work is going on, but now the prices are quite high, and against the backdrop of such high prices, we consider it wrong to conclude an amicable agreement. Therefore, we are working to ensure that prices are reduced. Colleagues are in discussion with us,” said Mr. Shaskolsky (quoted from “Interfax”).

In April 2021 FAS excited three separate cases against Severstal, MMK and NLMK on the grounds of establishing and maintaining a monopoly high price for hot-rolled steel on the domestic market. According to the agency, producer prices for rolled products in the first half of 2021 increased by more than 50%. The steelworkers attributed the rise in prices on the domestic market to the world market conditions.

In January 2023 FAS confirmed the possibility of concluding a settlement agreement with metallurgical companies against the backdrop of a significant deterioration in their financial position due to sanctions.

In March, the department, as part of negotiations on a peace agreement suggested limit the profitability of Russian metallurgists to the level of 2019. NLMK believes that directive pricing will lead to a drop in production and tax payments. According to experts, with such regulation of marginality, metallurgists will abandon the least profitable types of rolled products, which will lead to an increase in the production of hot-rolled products, overstocking the market and a drop in profitability.

In April, the Russian government so far refused to resort to capping domestic steel prices or regulating the profitability of steel companies. Following the meeting with First Deputy Prime Minister Andrei Belousov, it was decided to continue monitoring prices, and an instruction was given to develop a model of price risks for steel producers and consumers.

Read more about the government’s reaction to the FAS initiative – “The authorities will follow the prices of steel”.

Erdni Kagaltynov