On July 24, during his meeting with Russia's main steel producers hosted by Magnitogorsk Iron and Steel Works, Russian Prime Minister Vladimir Putin promised to help the domestic steel industry by taking steps to offset protectionism in other countries. Mr. Putin also stated that he would seek to stimulate demand by requesting Russia's natural resource monopolies and state corporations to buy domestic steel products.
In addition, Mr. Putin pledged state support for the implementation of the steelmakers' investments programs, in particular by extending state guarantees for loans from state banks VTB and Vneshekonombank (VEB), and also pledged state support for high technology imports by extending the lists of steel processing equipment imported with zero percent duty.
Moreover, MMK CEO Viktor Rashnikov requested a quicker return of value-added tax payments to steel exporters. In response, Deputy Finance Minister Alexander Novak said that the Ministry of Finance has prepared a bill that would speed up the refunds to within 20 days from the current 90. The return period will be reduced for exporters with bank guarantees, while the largest exporters would not be required to present the guarantee, Mr. Novak said.
On the other hand, Russian pipe producer TMK and steelmaker Severstal complained about the increase of protectionist measures in foreign markets such as China and India, and requested the government to maintain import duties on some pipes and steel products.
Meanwhile, regarding the request made by steelmakers to Russian Railways (RZhD) to lower the transportation tariffs on steel scrap, RZhD chief Vladimir Yakunin stated that if the suggestion was implemented, RZhD would lose Ruble 4.5 billion under this year's prices, while the steelmakers' profit would be minimal, just about 0.8 percent in costs.
In addition, Mr. Putin backed the idea of modernizing the country's ports, so they could service the deep-sea vessels required to export metal, and said that the government would consider possible cuts in railroad tariffs. The government will earmark Ruble 50 billion of budget funds to help RZhD next year, he said.
On the other hand, the steelmakers were asked by Mr. Putin to modernize their production facilities so as to increase the quality of their products, and also to increase their workforce and pay their taxes in a timely manner.
According to Industry and Trade Minister Viktor Khristenko, the Russian steelmakers would be able to reach the output levels of 2008 only by 2012.