Posted on 31 Jul 2024
The Russian government has temporarily exempted certain products produced in the self-proclaimed Lugansk and Donetsk People's Republics from export duties, Kallanish notes from a government social media statement.
The decree, effective until 31 December, applies to 900,000 tonnes of iron or non-alloy steel semi-finished products, 16,000t of ferrosilicon and 200,000t of coke products.
Additionally, from 1 September to 31 December, zero export duty will apply to 80,000t of pig iron and 184,000t of wire rod produced in these regions.
According to the Russian government, this measure aims to enhance the competitiveness of suppliers from these regions, maintain company profitability, and provide opportunities for additional export revenue.
“Now, steel mills in Alchevsk, Donetsk, Enakievo and Makeevka will celebrate it! At least, their exports will not drop considerably,” a trader exclaims.
“They [mills from occupied territories] reportedly already sold billet at $505/tonne cfr [Turkey] for September shipment,” a Russian mill source says. ‘The wire rod quota of 184,000 tonnes over four months equates to 46,000 t/month, though they have not consistently shipped such volumes historically.”
Since 2014, Russian authorities have controlled parts of Donetsk and Luhansk Oblasts through proxies. On 24 February 2022, Russia invaded Ukraine, while on 5 October that year, President Vladimir Putin approved treaties for the annexation of Donetsk, Luhansk, Kherson, and Zaporizhzhya Oblasts following widely condemned referendums. Russian authorities have implemented Russian laws in these regions.
Despite these actions, Crimea and the four oblasts remain within Ukraine's international borders and de jure subject to its laws.
Earlier in July, Russia temporarily suspended export duties for shipments outside the Eurasian Economic Union, covering pig iron codes 7201 10 190 0, 7201 10 300 0, and 7201 10 900 0, as well as finished long product codes 7213 10 000 0, 7213 91 490 0, and 7227 90 100 0, retroactively from 1 June to 31 August.
The flexible export duties, ranging from 4% to 7% based on the exchange rate, have been in effect since October 2023 and will continue until the end of 2024. If the exchange rate is 80 roubles per dollar or lower, the duty is zero.
Some market participants expect the export duty will not be extended beyond 2024, as changes in the Russian tax system are anticipated. From 1 January 2025, there will be an increase in corporate income tax to 25% and an increase in the mineral extraction tax.
Russian industry sources blame the export duty for the country's decreased steel exports and, consequently, steel output.
Source:Kallanish
