friendship of Peoples

On Friday, China introduced a 9.5% duty on the import of hot-rolled steel from Russia. The PRC customs administration explains this by saying that Russian suppliers have exceeded the annual quota allocated to them. The metallurgists themselves cite the lack of agreements among themselves on supplies to the Chinese market and the import accounting system in China as the reason for introducing the duty. In order to change it and revise the amount of duties, negotiations will begin in Beijing on November 10 between the Ministry of Economic Development of the Russian Federation and the Ministry of Trade of the People's Republic of China.
The main suppliers of metal to China are Magnitogorsk (MMK) and Novolipetsk (NLMK) metallurgical plants, Severstal. In May 2002, China introduced quotas for the supply of cold-rolled and hot-rolled steel from Russia to the country. According to them, in the current reporting year (it lasts from May 2003 to May 2004), Russian metallurgists could supply 380 thousand tons of hot-rolled steel and 804 thousand tons of cold-rolled steel to China duty-free. If the volume of quotas on the products of Russian metallurgists is exceeded, duties are introduced. By November 1, the annual quota for hot-rolled steel was fully filled, and for cold-rolled steel - 60%.
Unlike the EU market, where the overall Russian quota for the import of rolled products (1.2 million tons per year) is divided between suppliers (Severstal, Mechel, Magnitogorsk, NLMK, etc.), in China the Ministry of Trade does not use such a system. In addition, Russian importers have not agreed among themselves who will supply to China and how much. Therefore, deliveries to China, as Vasily Varenov, adviser to MMK’s deputy general director for foreign economic relations, told Kommersant, have been going on for a year and a half on the principle of “who can deliver how much.” As a result, Russian suppliers (primarily due to MMK being geographically close to China) choose the volume of annual quotas in four to five months. According to Severstal press secretary Olga Ezhova, Russian metallurgists are not going to stop supplying rolled steel to China because of duties. One of the reasons for this is high prices in China: the cost of hot-rolled steel is about $350 per ton, cold-rolled steel is $450 per ton. “Therefore, the market is profitable, and we will supply our products there one way or another,” Ms. Ezhova noted. In addition, Russian companies initiated negotiations between the Russian Ministry of Economic Development and the Chinese Ministry of Trade, which will be held on November 10 in Beijing. According to Mr. Varenov, Russia will propose to China to revise the import accounting system and introduce statistics on importers. “In this case, if the quota is exceeded, the duty will be imposed against an individual supplier, and not all Russian companies at once, and, in addition, we will be able to divide the quotas ourselves, which makes no sense to do now,” Mr. Varenov noted. In addition to this task, Russian negotiators will once again try to convince the Chinese to generally remove any restrictions on rentals from Russia.
DMITRY Kommersant-PONOMARIEV

Newspaper “Kommersant” No. 201/P dated 03.11.2003, page 15

China has restricted Russian metallurgists