Russian authorities mull revising steel excise with floating rate, indexation for inflation - source
MOSCOW. March 12 (Interfax) - Russia's Economic Development Ministry and Industry and Trade Ministry worked out a proposal in February to support steelmakers, who are facing a steep drop in demand amid the cooling of the economy, by adjusting the steel excise tax and switching to a floating rate for calculating it, a source familiar with the proposal told Interfax.
For vertically integrated steelmakers, the ministries propose to maintain the actual formula, according to which the excise is calculated based on the average monthly price for slabs and what is currently a fixed excise rate, set at 2.7% (the excise is not charged if the price for slabs falls below 30,000 rubles per tonne).
But now they are considering the option of a floating rate, depending on the spread: the slab price in rubles less production cost (calculated as the sum of the cost of iron ore (Russia, FCA) X 1.488 (average iron ore use per tonne); the cost of steel scrap (Russia, CPT railway Ural Federal District) X 0.183 (average scrap use per tonne); the cost of coking coal (Zh rank, FCA) X 0.591 (average coal use per tonne); and fixed expenses (utilities and payroll)), indexed for inflation.
If the spread is less than 1,000 rubles, the excise would not be paid, if it is between 1,000 rubles and 5,500 rubles, the excise rate would be the current 2.7%, and if it is over 5,500 rubles, the rate would be 4.35%. The calculation of the spread would be updated quarterly.
The ministries have not yet responded to questions from Interfax.
The Economic Development Ministry's position on eliminating the steel excise for the electrometallurgy industry is that there should be a case-by-case approach, with consideration given to the financial and economic condition of individual companies and investment projects, the source said.
Electric furnace steel is currently subject to a rate of 0.3 of the difference between the average export price for steel billets on FOB terms in ports in the Southern Federal District and the sale price of steel scrap in the Ural Federal District, as well as half the cost of buying ferroalloys and alloying elements used to make steel products. The spread between the price of billets and scrap at which the excise is in effect is 12,500 rubles.
The Industry Ministry has periodically called for revising the steel excise. Industry and Trade Minister Anton Alikhanov said last year there were plans to introduce a new threshold value for calculating it as of January 2026. However, the Finance Ministry did not support the proposals of steelmakers and the ministry.
Steelmakers also did not get support from First Deputy Prime Minister Denis Manturov at a meeting last week on the development of the iron and steel industry. He said additional anti-crisis measures to support steel companies should be discussed on an individual basis, taking into account a detailed analysis of the financial situation of specific projects and their socioeconomic importance.
