The Ministry of Industry and Trade again demanded to fix the markup on rental
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The Ministry of Industry and Trade again demands to limit the markup of metal traders on steel products, as it was already in March 2022. Deputy Minister Viktor Yevtukhov told Vedomosti about this.
According to Yevtukhov, last week (March 13-19, 2023 – Vedomosti) a meeting was held with metallurgists “to prevent price spikes”, at which it was decided to update the agreements between manufacturing plants and metal traders “on fixing the markup on resale metal products”. Metallurgists at the meeting were also “strongly recommended” to carefully consider each decision to change prices upwards, the deputy minister stressed.
As a representative of the Ministry of Industry and Trade explained to Vedomosti, fixing should affect prices for hot-rolled and cold-rolled steel, as well as for rebar.
According to the Ministry of Industry and Trade, from December 2022 to March 2023, prices for hot-rolled sheet increased by about 20%. “At the same time, metallurgists are already announcing the next increase in the price of these products,” Yevtukhov added. And the next increase in the price of rolled products, in his opinion, “has nothing to do with the objective difficulties in the industry.” At the same time, as Evtukhov explained, the growth in the cost of flat products began before the rise in prices for the main raw material base, that is, iron ore and coking coal (Vedomosti wrote about a possible rise in coal prices on March 20).
Now the Ministry of Industry and Trade is discussing additional measures to control prices for rolled metal products. In the coming days, the ministry, according to Yevtukhov, will hold a meeting with the participation of the Ministry of Energy, the Ministry of Construction and the Federal Antimonopoly Service. Vedomosti sent inquiries to these departments.
The representative of the Federal Antimonopoly Service confirmed to Vedomosti that the department received complaints about the rise in prices for metal products. “Metal producers have already received previously sent requests from the service about the reasons for the price increase. The information received will be analyzed in detail, after which, if signs of a violation of the antimonopoly law are found, response measures will be taken,” the FAS emphasized.
According to Yevtukhov, the meeting will discuss the cost of metal products, coal, as well as the conclusion of long-term contracts on the part of metal consumer companies. “The metallurgical community has always met the interests of the state, especially in the current situation of a multiple increase in the state defense order – and we always find a reasonable compromise,” the deputy minister added.
In March 2023, the Ministry of Construction complained to the FAS about the increase in rebar prices in the past few weeks (Vedomosti wrote about this on March 10). However, the rise in prices for rebar, according to Yevtukhov, is associated “with a seasonal increase in prices” for raw materials (scrap metal), as well as tariffs for transportation and electricity, so “it can be considered reasonable.”
The largest Russian steel producers agreed with traders to limit the margin on the initiative of the Ministry of Industry and Trade in the II quarter of 2022. RBC wrote that at that time it was about the maximum markup on the sale of steel products at the level of 12%. It was agreed during discussions between steel companies, traders and the Ministry of Industry and Trade.
Also widely publicized in the media was Yevtukhov’s meeting with industry representatives on March 10, 2022. Then the deputy minister demanded to reduce prices for hot-rolled steel, rebar and other metal products that they sell directly to end consumers. “Comrade producers! The prices that are currently set for the main types of metal products do not suit us. Prices should be lowered,” he said.
A week after that, the head of the Ministry of Industry and Trade, Denis Manturov, met with the owners and top managers of metallurgical companies. As a result of the meeting, Manturov recommended that they establish “transparent” metal prices along the entire chain of “raw materials – producer – distributor – consumer” so that the state does not regulate them.
The Ministry of Industry and Trade also reported that a decision was made to compile a list of accredited distributors, trading houses and metal service enterprises, for which the maximum allowable margin will be set by manufacturers. In case of non-compliance with the established markup parameters, companies should have been deprived of accreditation and the opportunity to interact directly with manufacturers, thus risking losing their place in the market.
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