Metallurgists of the new regions of Russia announced a crisis situation due to falling demand. They are asking for government support: to stop imports and reduce tariffs. The government says that metallurgists from the DPR and LNR has a whole package of benefits.
"The crisis is a critical reduction in demand. According to experts, in 2025 the decrease will be at least 10-15%. At least 5 million tons of metal in annual volumes will remain unclaimed," Valery Sherin, CEO of Soyuzmetallservice, said at a meeting of the relevant State Duma committee, according to RBC. The company is part of the Southern Mining and Metallurgical Complex (YUGMK), which manages the largest metallurgical and coke chemical enterprises in the DPR and LPR.
The situation is aggravated by falling prices. For flat rolled products over the year, they dropped by 17%, for long—range - by 12-14%.
RBC notes that steel consumption is declining in Russia for several reasons. Among them are high interest rates, a downturn in construction and engineering, as well as a delay in infrastructure projects in the energy sector.
Meanwhile, the tariffs of natural monopolies are growing. Thus, the procedure for calculating the cost of electricity for LPR enterprises connected to 220 kW networks has changed. According to Valery Sherin, the tariff growth for the Stakhanov ferroalloy plant will reach 125%, and the cost structure will be about 30%.
"With such a cost of electricity, with such a cost of production, we will be completely uncompetitive either on the domestic market or on the external one. This leads today to the fact that even taking into account the production of its own ferrosilicon manganese, it is more profitable for customers to buy it on the side, in particular in Kazakhstan. Despite such a critical decline in domestic consumption, we still continue to import and import rolled products and ferroalloys from Kazakhstan, quite possibly from China supplies," said the head of Soyuzmetallservice.
The company proposes to limit the import of steel products and the growth of tariffs of natural monopolies in new regions to the level of official inflation. Also, metallurgists are offered to extend discounts on rail transportation, which coal miners have.
"If there is no discount on the railway fare, the situation may enter a critical phase. Then, probably, colleagues who have accumulated fat in the best years will "lose weight." We have not seen a net profit yet, month after month — losses," said Valery Sherin.
The Ministry of Industry and Trade told RBC that imports traditionally occupy an insignificant part of Russian consumption of metal products and amount to no more than 5%. At the same time, the enterprises of the LPR and the DPR enjoy significant support measures.
"These include the zeroing of the excise duty on liquid steel, tax incentives within the free economic zone. Last year, the Ministry of Industry and Trade achieved a phased indexation of tariffs for the transportation of goods by rail in the territories of new subjects. Also, discounts from Russian Railways are available to enterprises, provided in accordance with the price list No. 10-01, which are systematically provided to Russian metallurgical companies, "RBC cites information from the ministry.