Wednesday, August 29, 2012

Lowering duties but imposing quotas for stainless steel imports to Russia

Aug 29, 2012

According to SpetsStal's appraisal, stainless steel imports to Russia in July 2012, compared with the previous month's result, rose 10.0% to 21,160 tons.

This increase was was in consequence of a rise in imports of stainless steel flat-rolled products and welded tubes by 24.% and 10.4% respectively. Supplies of other kinds of stainless steel products decreased by 7.4% to 29.0%.

It is worth reminding ourselves that on 16 July 2012 the Council of the Eurasian Economic Commission approved the unified commodity code listing and the unified customs tariff (ETT) of the Customs Union. The decision (#54) was put in effect on 17 August 2012.

According to the ETT, now the import duties on stainless steel products equate to: 5% for flat-rolled products, 5% for long products, 5% for slabs/ingots, 5% for wire products, 15% for seamless tubes and 15% for welded tubes. An exception is made for industrial assembly of motored transport vehicles and for the manufacture of aircraft engines.

But this is not the whole story. On 23 August 2012 the Board of the Eurasian Economic Commission adopted a decision (#143) on measures to protect economic interests of stainless steel tube producers within the Customs Union. According to this document, starting 23 September 2012 instead of earlier-imposed special import duty (9.9% but not less than 1500 USD/ton), there will be introduced import quotas for stainless steel tube imports to the territory of the Customs Union for the period until 1st November 2014.

According to the allotted quotas, already before the end of 2012 Russian importers will be capable to import up to 6,000 tons of stainless steel seamless and welded tubes without paying the special import duty. For the year of 2013 this quota will equate to 23,695 tons and for 2014 - 19,800 tons.

According to an expert estimate made by SpetsStal Association, in 2011 Russian companies imported 31,387 tons of stainless steel tubes, including 14,796 tons of seamless and 16,591 tons of welded ones.

It is still not clear how the quotas will be shared between seamless and welded tubes, but it has already become obvious that the imposition of the quotas will not help Russian domestic producers.

According to SpetsStal, Russia's domestic output of stainless steel seamless tubes in 2011 amounted to 13,494 tons while of welded ones - 9,701 tons. In 2013 the competition on the Russian stainless steel tubes market will become more intense due to imports of cheaper tubes from China, the Ukraine and the EU.

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