Posted on 08 Jul 2024
The Russian government has suspended export duties for shipments outside the Eurasian Economic Union for specific customs codes retroactively from 1 June and until 31 August, according to the issued Resolution No. 906, signed by Russian Prime Minister Mikhail Mishustin.
The temporary suspension of export duty covers pig iron codes 7201 10 190 0, 7201 10 300 0, 7201 10 900 0, and finished long products codes 7213 10 000 0, 7213 91 490 0, and 7227 90 100 0, Kallanish notes.
Russia previously imposed export duties linked to the rouble-dollar exchange rate from, on a wide range of goods.
On Friday, when the resolution was published, the exchange rate was 88.11, with the rouble showing high volatility last month, generally appreciating, ranging from 91.06 to 82.76, implying a duty rate of 4.5-5.5%.
Considering the current prices for pig iron at $410-420/tonne fob Black Sea, the savings for exporters from the duty suspension could amount to $20/t. In case of wire rod exports, the savings are estimated at around $25/t.
Ural Steel, Promsort – formerly Tula Steel – Kosaya Gora, Evraz, and Novostal-M – the Abinsk and Balakovo mills – were named by market participants among potential beneficiaries from the duty suspension.
Russia implemented export duties tied to the rouble-dollar exchange rate on various goods from 1 October until the end of 2024. At the same time, Russian authorities might consider eliminating exchange rate-based export duties in exchange for a "fair" increase in corporate profit tax rates starting in 2025, according to media reports.
The export duties, ranging from 4-7% for exports outside the EAEU, apply if the exchange rate is at above RUB 80 per dollar. The levy is at 4% if the average exchange rate is over RUB 80 but less than RUB 85 per dollar, and 4.5% for RUB 85-90 per dollar. If the exchange rate exceeds RUB 90 but is less than RUB 95 per dollar, the duty is 5.5%. It rises to 7% if the rate reaches or exceeds RUB 95 per dollar.
Notably, since the US imposed sanctions on Russia's financial system on 12 June, obtaining real-time exchange rate quotes has become more challenging and less accurate. This has complicated matters for exporters and importers, especially during periods of significant exchange rate fluctuation.
Source:Kallanish
