Russia plans to impose temporary export taxes on ferrous and non-ferrous metals starting August as a means to compensate costlier steel products for state projects. Apart from the base 15% rate, there will be an individual component for every commodity.
On June 24, the Ministry of Economic Development of Russia proposed a temporary 15% export tax on ferrous and non-ferrous metals for a period from August 1 till December 31, 2021 for countries outside the Eurasian Customs Union.
Apart from this base rate, minimum taxes have been set depending on the price situation in specific markets in January-May 2021. Those are not less than $54/t for DRI/HBI; not less than $115/t for pig iron, steel semis (billet, slabs, round billet), HRC and rebars, wire rod, alloy steel; $133/t for CRC, coated steel, bars, profiles and wire; $150/t for stainless steel and ferroalloys. Taxes for non-ferrous metals will be calculated by each metal.
“I request immediate preparation of all documents necessary to make the decisions and filing them to the authorities without the least delay,” said prime minister Mikhail Mishustin as cited by Russia’s Vedomosti. The decision should be made before June 30 in order to take effect on August 1.
Russia’s Ministries of Industry and Finance also supported the proposal. The tax will offset a rise in domestic steel product cost. “The tax is aimed at creating a compensation source for the higher cost of state defenсe order, state capital investments, residential and road construction, as well as that of other construction programmes […]. It is part of the protection measures for the domestic market.
We must protect the local consumer from what is happening in the global markets,” Andrey Belousov, the first vice-prime minister of Russia, underlined during the government meeting. By the minister’s estimate, the tax will enable a budget revenue of RUB 114 billion ($1.57 billion) from ferrous metals and about RUB 50 billion ($0.68 billion) from non-ferrous metals. Belousov thinks this is equal to only 20-25% of the excess profit that iron and steel companies will make thanks to favourable market fundamentals, so they should continue to sign steel supply contracts at discounts for state projects.
The Russian market players are assessing the situation and impact on them, making no hasty comments. “They skipped discussions and are rushing the document approval… I think it will cripple the Russian iron and steel industry, much to the delight of our competitors,” one source told.
$1 = RUB 72.67
