Russian authorities to decouple local steel industry from world prices

The Russian Ministry of Industry and Trade and steelmakers have agreed to no longer link domestic prices to world prices and denominate prices in rubles. The Ministry also intends to discuss the transition to domestic prices with the Miministry of 

Finance when calculating the tax base. In Russia, Mineral Exploitation Tax (MET) and Crude Steel Excise Tax are currently changing according to world prices.

The Russian Ministry of Industry and Trade announced that it had reached an agreement with steel companies to withdraw from global prices when calculating domestic steel prices. "My colleagues in the steel industry and I have reached a joint decision to untie LME prices and calculate domestic prices based on the ruble component," Russia's Interfax news agency quoted Denis Manturov, Industry and Trade Minister as saying. The ministry plans to consult with the Ministry of Finance on the transition to domestic prices when the tax base is formed.

In November 2021, Russia approved the linking of mineral extraction taxes to international quotations - iron ore and coking coal at 4.8% and 1.5% respectively of the average price of the corresponding indices on the Singapore Exchange. In addition, there is an excise tax on crude steel equivalent to 2.7% (in domestic currency) of the average monthly export slab price (USD/t FOB Black Sea).

It is reported that in the face of severe sanctions, the Russian authorities have reached an agreement with the steel group to formulate a comprehensive pricing policy for steel to prevent local prices from rising.