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The Russian Ministry of Industry and Trade and steel producers have agreed to move away from pegging domestic prices to the London Metal Exchange (LME) and calculate them in roubles.

The use of the rouble component in the calculation of domestic prices will also be taken into account when discussing the tax base with the Ministry of Finance.

According to Denis Manturov, Russia’s Minister of Industry and Trade, “With our steel-producing colleagues, we have come to the joint decision to break away from the London Metal Exchange prices and calculate the domestic market on the basis of the ruble component. This is the decision that will further shape the price structure of the domestic market. Among other things, this will go towards solutions with the Ministry of Finance on the effectiveness of taxes, taxes, which, on the one hand, will not burden society, allowing them to preserve their staff and the work of the primary production cycle”.

The mechanisms will work more effectively if the industry itself develops a solution without government involvement. When making pricing decisions, which must be accessible to the national consumer, the mills will be able to consider a more delicate adjustment and balance the prices of the different items, reducing them for the primary ones. It is quite clear that the least desirable alternative to this scenario is the adoption of price directives for the primary line of goods at government level.

The government is also prepared “to support demand in the domestic market by purchasing spare products and financing large infrastructure construction projects. In addition, the Ministry of Industry and Trade will work together with the Ministry of Finance on the issue of limiting interest rates on existing business loans.