The Russian government is preparing to implement additional duties on steel and non-ferrous metals exports from 1 August for six months.

Russia’s economic development ministry has prepared a draft document in which it makes corrections to the HS code description of various metal goods, and adds a 15% export duty with an additional minimal fiscal value set at various levels.

According to the proposal, the minimal fiscal value of iron ore pellet export duty could be set at $54/tonne, for flat rolled products at $115/t, long products at $133/t and ferroalloys at $150/t. The duty will only be applicable on exports outside of the Eurasian Customs Union, but "the issue of re-export to avoid paying the duties should be thoroughly considered,” he adds.

The introduction of export duties for six months was proposed in spring, when Russian companies' financial results for the first quarter were being reported. Russian Deputy Prime Minister Andrey Belousov told a leading Russian business publication that fellow steelmakers have withheld from the government approximately RUB 100 billion ($1.4 billion) by enjoying buoyant export trade amid the global price rally. He said they are making super profits and charging similar prices in the domestic market. "We can reclaim some of these super-profits through appropriate taxation," he observed at the time.

The six-month duty period is expected to bring around RUB 110-115 billion from ferrous producers into the country's budget, but should not stop steelmakers from supplying domestic strategic industries such as the state construction and defence sectors. The agreement by Russian steelmakers to supply domestic state-backed industries at contrived, discounted prices was a compromise reached after tense talks in May.

Market observers, traders, and heads of some of the Russian steelmaking companies have unanimously expressed that the measures will lead to still higher prices.