Man of steel

25 May 2010 By Jason Bush

Russia’s premier may have economic grounds for accusing metal producers of unfair pricing. But even if there is no collusion, leading steelmaker Evraz, which faces an investigation, should worry. Putin’s crackdown probably reflects the lobbying power of struggling steel buyers.

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On May 24, Russia's premier Vladimir Putin expressed dissatisfaction at a possible increase in the price of metal products. He spoke of "an incomprehensible desire in many sectors to sharply increase product costs", saying that higher costs were "no excuse for sharp price rises". Putin made the comments in a meeting with Igor Artemiev, the head of Russia's Federal Antimonopoly Service.

Artemiev responded by saying that the watchdog has launched a probe into steelmaker Evraz's prices. A statement appeared later on the watchdog's website confirming that the investigation was ongoing, and that it was also investigating Russian coking coal, iron ore and other prices in the metallurgical sector.

Local media reports have linked the investigations to a complaint made by Oleg Siyenko, the head of railway car and tank manufacturer Uralvagonzavod, to Russian Deputy Prime Minister Igor Sechin in April.

The investigation comes amid tensions between Russian steel producers and major customers in the car industry. Russian carmaker AvtoVAZ said on Monday that Severstal, the country's largest steelmaker, had halted shipments of rolled steel products to its plant in a disagreement over price.

In May, Russia's largest carmakers got letters from steelmakers telling them of a 1030 percent price increase from July, managers of several carmakers told Reuters. Putin and Sechin received a letter this weekend signed by the leaders of the largest Russian carmakers, containing a request to "regulate the unjust steelmakers' demands to raise prices", a source told Reuters.

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