Posted on 05 Jul 2024
Russian market participants expect a temporary export duty exemption for pig iron and coiled long steel to be imposed retroactively from 1 June, and to run through 31 August. An official document confirming the move should be published soon, they inform Kallanish.
This temporary suspension of export duty is anticipated to cover pig iron codes 7201101900, 7201103000 and 7201109000, and finished long products codes 7213100000, 7213914900 and 7227901000.
"There is news, but no official published resolution," a source from a mill says.
"We don’t have official documents yet, but we know about the abolition of duties retroactively from 1 June, and that this is for a short period, temporary, too. We just don’t know exactly which product codes yet," another pig iron producer notes.
"[The document] was signed yesterday [Wednesday] and comes into force from 10 July," a third mill source says, also adding that the document is yet to be published.
The exemption is expected to have minimal impact on pig iron export prices. It is aimed at supporting mills' profitability as current export duties make exports unprofitable due to limited domestic trading opportunities, according to market sources.
The export duties, ranging from 4-7% for exports outside the EAEU, apply if the exchange rate is above RUB 80 per dollar. This duty was implemented in October 2023 and initially set to last until end-2024. The duty is 4% if the average exchange rate is over RUB 80 but less than RUB 85 per USD, and 4.5% for RUB 85-90 per USD. If the exchange rate exceeds RUB 90 but is less than RUB 95 per USD, the duty is 5.5%. It rises to 7% if the rate reaches or exceeds RUB 95 per USD.
Currently, the exchange rate is 89.23, down from 90.92 a week earlier. The rouble has been highly volatile and mainly depreciating following US sanctions imposed on Russia's financial system on 12 June, which aim to restrict investments into its defence industry and acquisition of goods needed for its war in Ukraine. These sanctions have made obtaining real-time exchange rate quotes challenging and less accurate, complicating matters for exporters and importers, especially during volatile exchange rate fluctuation.
Source:Kallanish
