The electrodes heat up from duties – Kommersant

The only Russian manufacturer of electrodes for metallurgy, El 6, co-owned by Viktor Vekselberg, proposes to extend anti-dumping duties on Indian graphite electrodes used in steel melting in arc furnaces. The duty, which has been in place since 2012, will expire in September. Metallurgists are in favor of zeroing the duty: despite the fact that El 6 has increased the production of electrodes, consumers have complaints about their quality.

The El 6 company, in which Viktor Vekselberg’s Renova Aktiv owns 42.3%, asks to extend the anti-dumping duty on Indian graphite electrodes used in metallurgy. This is stated in the notice on the website of the Eurasian Economic Commission. The fee of 16.04% for HEG Limited and 32.83% for Graphite India Limited expires on 24 September 2023. The duties have been in effect since 2012 and have been regularly extended. According to El 6, which is the only electrode manufacturer in the EAEU, the commission’s internal market protection department initiated a second anti-dumping investigation.

The commission’s notice states that if the duty is terminated, the price of Indian imports could be significantly lower than the price of Russian counterparts, and India has significant potential for exporting electrodes. For El 6, the sale of electrodes on the EAEU market in 2020 and 2022 was unprofitable. El 6 told Kommersant that they have the necessary production capacity to cover the demand for graphite electrodes in the Russian market and partners in the EAEU. They also added that now the entire production of graphite electrodes has been reoriented from export supplies to the domestic market.

Russian metallurgists are in favor of zeroing import duties on graphite electrodes. In a May letter from the industry association of metallurgists Russian Steel to the Ministry of Economy, it is said that until the spring of 2022, the El 6 company could not satisfy domestic demand for electrodes, and consumers were forced to import them. Now, according to the association, El 6 has increased its production capacity from 40 thousand tons to 60 thousand tons per year by stopping the export of carbon electrodes and increasing the production of graphite electrodes.

However, as emphasized in the letter, metallurgists do not have the opportunity to increase purchases of graphite electrodes from El 6, as consumers of the metal are making ever higher demands on the quality of steel. “It is for this reason that it is necessary to ensure the simultaneous operation in Russia of electrodes from various manufacturers from different countries, which will stimulate the development of new technological solutions to improve the quality of Russian electrodes,” Russkaya Stal writes. Metallurgists have systemic claims to the quality of El 6 products, which allegedly lead to an increase in equipment breakdowns and unit costs per ton of smelting. In addition, the preservation of duties will lead to an increase in prices for Russian electrodes.

The Ministry of Industry and Trade did not answer Kommersant about the position of the ministry on the extension of the duty. The Ministry of Economy, the largest metallurgical companies and Russian Steel declined to comment. A source close to them says that metallurgists are in favor of competition in the market, and now El 6 is in fact a monopolist and can dictate prices.

Independent expert Maxim Shaposhnikov says that prices for graphite electrodes in the world are declining. In China, they traded at $4.7-5 thousand per ton on a DDP basis, while in Russia they were at the level of $5-5.2 thousand. A similar situation is observed in the European market, where prices for electrodes are declining. “Indian suppliers offer a discount to the Chinese price, in this regard, there are risks for the Russian supplier, since potentially Indian material can cost 10–15% cheaper than Russian,” the expert says.

Evgeny Zainullin