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Kallanish Kallanish

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May, 27th 2020

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DEC 20
14:41

Russian competition authority investigates graphite electrodes producer

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Russia’s Federal Antimonopoly Service (FAS) has initiated an investigation into Energoprom on allegations the firm is withholding graphite electrodes from the market in order to raise prices.

Energoprom has failed to disclose to Russian steelmakers planned production and prices of electrodes for 2018, according to FAS. In the current environment of global concern over a shortage of electrodes and refusal by some foreign electrodes producers to supply steelmakers, such a move “…could be evidence of withholding product from circulation in order to increase its prices,” FAS says in a note seen by Kallanish.

The authority has therefore initiated a probe into the electrodes producer on the basis of violating Clause 2 Part 1 Article 10 of Russia’s Competition Law.

On 11 October Energoprom carried out a tender for the supply of electrodes in the first half of 2018, achieving a price of $25,000/tonne, 20% higher than Chinese prices, FAS says. Average electrodes prices have grown to $25,000/t from $2,500/t over the course of 2017, due largely to the closure of 30% of Chinese electrodes capacity this year. This has coincided with an increase in electric arc furnace-based steelmaking.

As a result, Russian steelmakers have had difficulties importing electrodes from foreign suppliers, who claim there is insufficient availability of material, according to FAS. Energoprom has four electrodes plants in Russia and is the only domestic producer. In 2017 the firm had a 50% share of the Russian market for RP, HP and SHP electrodes, and 35% share for UHP electrodes.

In August the firm promised to introduce a merchandising and pricing policy for 2018, but these policies “… have not been received by the regulator or steelmakers,” says FAS industry control department head Nelly Galimkhanova.

FAS deputy head Andrei Tsarikovsky adds: “These issues, in an environment of graphite electrode shortages, are of critical importance for the planning of steel production by steelmakers.”

Earlier this year, after a working meeting with FAS, Energoprom said it plans to invest into production capacity modernisation and expansion to address the shortage of graphite electrodes on the global market (see Kallanish 5 September).