Putin addresses WTO principles and Russia’s metallurgical exports amid sanctions
Western politicians have effectively trampled the core tenets of the World Trade Organization, according to Russian President Vladimir Putin, who spoke during a briefing on conditions affecting the metallurgical sector. He framed ongoing restrictions on Russian manufacturers as a sign of unfair competition that harms global trade fairness.
Putin argued that the move to curtail the welfare and living standards of ordinary people, particularly in Europe, shows a disregard for WTO principles. He suggested that some Western officials not only overlook these rules but also avoid discussing them because it is uncomfortable to face the reality of the situation.
The president noted that limits placed on domestic metallurgists are a clear indicator of unfair competition. He asserted that such sanctions extend beyond metals, reflecting broader efforts by some Western partners to tilt world markets in their favor by pushing Russia toward a leading role in global metallurgy through selective restrictions.
Despite these challenges, Russia intends to remain a dependable supplier of metal products to foreign buyers and partners, regardless of political tensions. The aim is stable, profitable, and predictable commercial cooperation, with Russia presenting itself as a reliable partner even amid political turbulence.
At the same time, Putin underscored that Russia would not work against its own interests with nations that are openly hostile. In a BRICS context, he pointed to a broader trend where global trade disputes increasingly incorporate WTO principles. He highlighted the ripple effects, noting that Asia, Africa, Latin America, and the Middle East are feeling rising costs for essentials like food, energy, and commodities as the international monetary and financial system experiences stress. Production logistics and investment chains, he warned, are fragmenting.
Export dynamics under pressure
In July, the head of the Novolipetsk Iron and Steel Works (NMLK) described how sanctions have rendered Russia’s steel exports largely marginal, with the sector previously accounting for a substantial share of outbound shipments. He called out that a portion of exports remains secured for specific destinations in Asia, notably China, where logistics and freight costs have become more challenging due to an oversupply of steel production. In such markets, supply is often priced at or near production costs.
The executive observed that earlier, export volumes served as a source of volatility and weak pricing in the domestic market; now, the emphasis has shifted so export supply can restrain domestic price dynamics. This nuance underscores how sanctions reshape the country’s trade balance and the price environment for metallurgical goods at home.
A cautious forecast
Industry insiders anticipate a potential 15% reduction in steel production by the ferrous metallurgical sector by year end, with the steepest declines anticipated in the second half. Flat products are expected to bear a larger portion of the reduction, while slab production might fare comparatively better. These projections reflect the combined effects of sanctions, evolving demand, and logistics constraints on export channels.
Earlier, Worldsteel had forecast a pronounced drop in Russian steel consumption for 2022, suggesting a decline ranging from 20% to 35.1 million tons versus 43.9 million tons in 2021. The Ministry of Industry and Trade offered a more conservative view, anticipating a single-digit fall in consumption, signaling a debate between international industry groups and national authorities about the pace of demand adjustment in response to sanctions.
In response to rising metal prices tied to sanctions announced on May 20, Putin directed the government to pursue measures that would ease domestic price pressures. Preliminary steps include reviewing the tax framework for metallurgical and coal mining firms, and adjusting electricity and rail tariffs that affect production costs. Following a decree on May 28, tariff quotas were introduced for ferrous scrap and waste exports, aiming to balance supply and price dynamics within Russia’s metallurgical sector.
These moves illustrate how policy instruments can influence industrial costs, export competitiveness, and domestic affordability of metal products while the global market recalibrates to new sanctions realities. Attribution: official statements and sector briefings from Russian authorities and industry leadership. (Sources include Kremlin communications and industry reports.)