NLMK secures permit to ship steel products to Egypt, expects export duties to be temporary
1 July

NLMK Group (MOEX: NLMK), one of Russia's largest steelmakers, has received a permit from Egypt to ship rebar to the country.

NLMK applied to the Egyptian authorities in 2016 to have its steel products registered, the Russian mission to the World Trade Organization, which received official confirmation from Egypt's Trade and Industry Ministry of the permit to export steel to the country, told Interfax. In 2016, NLMK estimated lost income from possible exports to Egypt at about $100 million per year.

In 2019, NLMK asked Russia's Economic Development Ministry to discuss the issue of exports to Egypt at the WTO and bilaterally. The issue was raised in June at a meeting between Economic Development Minister Maxim Reshetnikov and Egyptian International Cooperation Minister Rania Al-Mashat at the St. Petersburg International Economic Forum, the Russian ministry told Interfax.

"The case with NLMK was a systemic issue for us. The restrictions applied by Egypt cover a broad range of goods, including those that we ship to foreign markets. Their elimination for NLMK, we hope, is the first step on the way to a systemic resolution of the problem of access to the Egyptian market," the Economic Development Ministry's director of trade negotiations, Yekaterina Maiorova said.

Russia has managed to eliminate restrictive measures faced by Russian companies on foreign markets before through out-of-court settlement mechanisms at the WTO, she said. "Recent examples are the elimination of restrictions of oil product shipments to Croatia, automobiles to Vietnam, food products to Saudi Arabia, products with palm oil to Tajikistan," Maiorova said.

"Egypt's market is traditionally closed by duties, and securing a permit is an important step for us in the direction of developing international cooperation. The current export duties are temporary, down the road we're looking at the Egyptian market with interest," a spokesman for NLMK said. NLMK previously exported billets and flat products to Egypt, the company recalled.

The vice president of the Russian Union of Industrialists and Entrepreneurs (RSPP) in charge of international cooperation, Sergei Krasilnikov, commenting on Egypt's decision, said that "taking into account the [export] duties [that Russia imposed on a number of ferrous and nonferrous metals from August 1 to December 31], it probably won't be as lucrative for NLMK to export steel products to Egypt as it might have been before."

"But strategically, the company will get a new market and the opportunity to invest in development," Krasilnikov said. One can "congratulate regulatory bodies on a victory," but "at the same time the metals market is still in disarray," he said.

"The government's plans to impose export duties on metal products got a mixed reception from Russian metal companies. Their displeasure is understandable, no one wants to lose profit and trade niches on world markets. But no one has eliminated global geopolitics and competition either. And support for non-resource, non-energy exports remains an overriding priority," Krasilnikov said, commenting on the Russian government's move to impose export duties on metals.