The Russian Ministry of Industry and Trade, the Ministry of Construction and the Ministry of Transport are preparing proposals for launching infrastructure projects in order to maintain domestic steel demand amid reduced exports, says the office of Russian President Vladimir Putin.

“On behalf of the Prime Minister, we held a meeting with metallurgists, as a result of which I can say that we have stopped the growth in prices for metallurgists’ products,” says Deputy Prime Minister Marat Khusnullin. “I want to say that the country consumes 42 million tonnes/year of ferrous metals in our domestic market, of which 29mt, or almost 70%, is consumed by the construction industry. Thus, by supporting the construction industry, we seriously support steelmakers.”

The government continues to work on monitoring other prices and drawing up price reduction mechanisms, Khusnullin notes. “For example, we have now worked out the possibility of reducing the mineral extraction tax (MET), which will reduce the cost of inert [materials], since we have a huge volume of road construction", the official adds.

"We are now facing difficult times, given the shrinkage of foreign markets and, for Russia, domestic demand will be the main market for the supply of metallurgical products,” observes industry minister Denis Manturov. “We plan to launch infrastructure construction projects, where a large amount of metal will be utilised in order to maintain the staff of metallurgical enterprises, so that blast furnaces continue to operate.”

Earlier this month, the European Council agreed to adopt the EU’s fourth round of sanctions against Russia, thereby banning imports from Russia of those steel products currently under safeguard measures (see Kallanish passim). The ban, covering mainly finished steel, is expected to impact some €3.3 billion ($3.63 billion) of steel exports from Russia.

Although Russian steelmakers are cleared to supply much of the world not adhering to Western sanctions, trade has been slowed significantly due to financing and logistical issues related to sanctions, as well as buyers being averse to risk taking.