During his visit to China, Mikhail Kasyanov will discuss many issues of the future of Russian-Chinese economic cooperation, including problems relating to exports of Russian-made steel to China. He is to reach an agreement on revoking restrictive measures set by the Chinese Government.

Following the US and the European Union, China has set temporary quotas for import of some types of steel products. On May 24, it began an antidumping investigation of nine types of imported steel products. For the duration of investigation (6 months) Chinese government has introduced quotas. The situation further has deteriorated with Chinese government also raising export duties by 20-30%. In spite of its treatment as a most-favored-nation, Russia was effected by quotas but didn't agree with them. At the end of July, Russian Ministry of Economic Development and Trade (RMEDT) forwarded a petition to Peking, where it explained that protective measures against Russian imports were not justified. According to Russian officials, these measures contradict not only WTO norms but also Chinese regulations on protective measures. RMEDT stated that Russian exports did not cause damage to the Chinese economy. During consultations on August 7-8 in Peking, RMEDT's arguments were not rejected. German Greff, who heads RMEDT, stands for introduction of special quotas for Russia, which should be set at the maximum level.

According to Dmitry Goroshkov, Severstal's sales director, upon closing of the US market, China became the second largest market for Severstal estimated at US $ 88 million a year. "If temporary protective measures become permanent, Severstal may have financial difficulties," said Goroshkov.

"If Mikhail Kasyanov's arguments do not lead to revoking of restrictive measures, it's appropriate to sign an agreement with China for 2003, limiting exports of the types of products on which parties disagree at conditions which have been already discussed with China - a 10% increase of the average volume of sales over the last three years," said Goroshkov.

During Kasyanov's visit of China, Severstal is visited by a delegation of Shanxi Yiwang Ferroalloy Plant located in the Chinese Province Shansi. The delegation is headed by Mr. Son, the plant's general director. During the visit, two parties will discuss cooperation in the 2003. Yiwang plant and Severstal has been working together since 2000. This plant is the main supplier of manganese, used in open hearth furnace, electric arc furnace and converter shops for alloying and deoxidization of metal. Over this time, the volumes of shipments of Yiwang to Severstal grew 2.5 times. Parties don't deny that if all goes well, the supplies may continue to grow. Severstal uses some other products supplied by China, such as ferromolybdenum, ferroboron, ferrosiliconmanganese, etc.