Mechel offers long-term friendship

The company is considering the possibility of concluding annual contracts for the supply of coal

The Mechel mining and metallurgical group, which was subjected to sharp criticism from Prime Minister Vladimir Putin and claims from the Federal Antimonopoly Service, is trying to find a way out of this situation. As a source in the company told Vremya Novostei, Mechel is considering the possibility of concluding longer-term contracts - from six months to a year - for the supply of coal on the domestic market with fixed volumes and the ability to revise prices quarterly. “Six-month contracts are already being concluded, annual contracts are being prepared for signing,” he noted. However, the newspaper’s interlocutor refused to name the companies included in the list of lucky winners, citing commercial secrets. Experts consider this decision to be correct, but they say that it will not significantly change the situation, because large metallurgical plants - consumers of Mechel's products - have already concluded contracts with it for the third and fourth quarters.

As you know, the FAS opened a case against Mechel for abuse of antimonopoly legislation. In mid-July, the service accused the company of “unreasonably stopping the supply of coal concentrate to the Novolipetsk Iron and Steel Works (NLMK)”, as well as “the refusal of Mechel Trade House and Yakutugol Holding Company to enter into an agreement for the supply of coal concentrate to the iron and steel plant.” On July 22, Mechel announced the start of signing quarterly contracts for the supply of coal on the domestic market with a fixed price.

But two days later, on July 24, Prime Minister Vladimir Putin joined the discussion of the issue. He sharply criticized the company's sales policy, noting that it sold raw materials abroad at prices four times lower than domestic ones, and recommended that not only the FAS, but also the Investigative Committee under the Prosecutor's Office should get involved in the analysis of the situation. A few more days later, the FAS announced that it had opened a case for violation of the competition law, but not only against Mechel, but also against the companies Russian Coal and Evrazholding. FAS accused all these companies of abusing their dominant position in the market of coking coal, used for the production of metal products. The head of the FAS, Igor Artemyev, emphasized that he does not intend to delay the consideration of the “coal case.” According to the latest data, the department intends to discuss the situation around Mechel in the next two weeks.

Experts interviewed by Vremya Novostei believe that when analyzing the situation, Mechel’s proposal to switch to long-term contracts will likely soften the blow of the punitive authorities, but is unlikely to be able to completely rid the company of penalties. None of them also believes that the company will offer significant discounts to its consumers. Most likely, Mechel will try to prove that prices for coking coal on the domestic market are completely tied to world prices, and therefore their adjustment is possible only after the situation on foreign markets changes.

Irina TSYRULEVA