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Russia's ministry of economic development
is proposing cuts to its export duties on ferro-alloys, just over a month after
they were imposed on a variety of metals to help support domestic industry.
The ministry's subcommittee on customs
tariff and non-tariff regulation is proposing that the ferro-alloy export
duties — which were set at a base rate of 15pc from 1 August-31 December — now
be reduced or removed altogether, citing requests from Russian manufacturers
and "market fluctuations that have occurred in recent months".
"For example, the main raw material for ferro-chrome is chromium
concentrate imported into the Russian Federation, for which world prices have
increased significantly, while the alloy itself is mainly
export-oriented," the subcommittee said.
Its proposal recommends that the duty on
high-carbon ferro-chrome be lowered to 5pc or no less than $57/t, and for
low-carbon ferro-chrome duty to be cut to 5pc or no less than $134/t and $109/t
for 0.05pc carbon and 0.05-5pc carbon, respectively. It advises that no duties
be levied on certain noble alloys including ferro-tungsten, ferro-molybdenum,
ferro-titanium and ferro-niobium, as well as iron powder.
Markets remain muted
The government's announcement of the
tariffs back in June jolted several markets, sending prices of several
ferro-alloys higher. But the subcommittee's latest proposal has so far received
a mixed reaction from market participants, and prices have not reacted given no
decision has been finalised.
One producer welcomed the cuts, saying the
tax is making them uncompetitive in its current form. "When you calculate
the numbers, it is a 10-15¢ difference compared to other sources. There is no
way to include it for current contracts, so we have to eat those costs and it
takes a big chunk of our profit margin," the producer said. When it came
to the spot market "we have to price higher and people are not willing to
pay that much," they added.
Others echoed this view. "Everyone is
worried about next year," one ferro-chrome trader said. "People may
lose market share if they keep it [duties] because prices are not sustainable
at current levels."
European prices for some ferro-alloys rose
significantly as the tariffs were first announced and then imposed — not just
because of the tariffs, with China's ferro-chrome export tax also having a
major impact on tightening European supply, but they have certainly played a
part. Prices for min 65pc Cr low-carbon ferro-chrome were assessed at
$2.80-2.95/lb ddp Europe works on 2 September, up from $1.85-1.95/lb ddp on 30
June. Russian grade ferro-titanium followed a similar trend, currently at
$6.90-7.40/kg du Rotterdam from $5.25-6/kg on 28 June.
Meanwhile, European noble alloy buyers said
Russian sellers might be more aggressive in long-term contract negotiations for
the year ahead, as the removal of tariffs on products such as ferro-tungsten
would allow Russian sellers to be more competitive again.
But for now, shipping constraints remain a
major concern for Russian ferro-alloy suppliers, which could dampen the impact
of any tax reductions or removals, market participants warned. "Even if
there is a large tonnage of lower-priced Russian ferro-titanium out there, it
will take time to bring it over. It takes us ages to find transport and then to
ship over. Sometimes up to a month and a half, when it used to take 10
days," one trader said.