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Russian government considers minimum rebar trading requirement on exchange

The Federal Antimonopoly Service (FAS) proposed to sell 5% of the rebar produced in public auctions.

Russian government considers minimum rebar trading requirement on exchange

The FAS has submitted for approval by the Ministry of Industry and Trade and the Ministry of Construction an order to introduce a mandatory minimum for stock trading in rebar, setting a limit of at least 5 % of the monthly production of the largest producers.

The decision, if adopted, would affect major market players such as Promsort, Novostal-M, Mechel and EVRAZ. Suppliers, on the other hand, are proposing that they be allowed to set their own starting price for the start of trading, different from the price calculated by the exchange.

The FAS is pursuing its policy of exchange trading in industrial products, which it sees as an effective method to struggle against the dominance of large suppliers. Moreover, stock market indicators justify the FAS's use of anti-monopoly instruments.

According to experts, the domestic rebar market in Russia today is estimated at 8.5-8.6 million tonnes. This means that the exchange trading volume could reach 425-430 thousand tonnes. However, there are questions about the convenience of the location of the exchange warehouses and the risk of large metal traders buying up the entire volume, creating a price disproportion.
Experts also point out that prices on the exchange will be higher than factory prices in the first days of trading and will approach the prices of metal traders. Despite this, exchange trading will make it possible to take rebar pricing out of the uncertain zone, where the real price can only be learnt in a conversation with the particular trader.

The FAS initiative is not expected to have a significant impact on rebar prices, but it could become an important indicator for the market by creating conditions for more transparent and efficient pricing.

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SteelRadar Insight - Sayı 1 (Haziran 2024)

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