A raise in rail road transportation tariffs has lead to Severstal spending half a million rubles more on transportation in January alone. The unification of tariffs, which steel-makers have been insisting on, hasn’t been done.

“As a result, Eastern Europe became one of the most far located region in terms of transportation logistics. It’s twice as expensive to transport goods there as it is to the South-East Asia. A number of Eastern European countries will enter the European Union soon. Naturally, the issue of raising quotas for Russia will be put forward shortly and will become a priority. Besides that, we should remember that Severstal ships high value added products to Europe. Losing this market will cause us to lose profits, and pay fewer taxes,” said Dmitry Goroshkov.

“We are nervous about galvanized steel. Cancellation of the temporary means in December and lack of permanent duties on Ukrainian galvanized steel completely undermines the market for us,” said Goroshkov.

“It’s not right to take so long to establish protective measures. Other countries don’t have a time gap between temporary measures cancellation and taking firm steps to protect some products. Meanwhile, the prices drop 10 dollars every 2-3 weeks. This leads to a big drop in demand, which causes problems with work load of section rolling equipment of Russian companies,” he said.

Besides that, Severstal, Novolipetsk and Magnitogorsk steel mills intend to apply to the state Duties Committee to make tighter control of imports of galvanized steel of the grades, which are not subject to duties. This has been approved by a commission on protective measures. Everybody expects that the government will quickly issue a decree, as it’s the only way to prevent illegal shipments of galvanized steel in violation of the existing system of codes for product duties.

10 January 2003