On March 5, 2012, the media published information on hearings at the Ministry of Industry and Trade of the Russian Federation within the special safeguard investigations into graphitized electrodes.
Energoprom Group confirms that it initiated the special safeguard investigation. The purpose of the investigation is to facilitate the Russian coal-graphite industry as well as to address the decline in the market share of Russian manufacturers in the Customs Union of Russia, Belarus and Kazakhstan by raising import duties on graphite electrodes by 10%.
During the period from 2007 to 2010, as well as in the first half of 2011, there has been an increase in imports of foreign manufacturers into the markets of the Customs Union, this leading to a decline of the share of Russian manufacturers causing considerable damage to the industry: production and sales of products in the Customs Union market have been declining, the operating rate in the industry has been reducing.
Energoporm Group is Russia's only manufacturer of graphitized electrodes, developing the Russian coal-graphite industry virtually on its own. At this, the quality of products manufactured at plants belonging to the Group is comparable with that of its foreign counterparts. The quality of graphitized electrodes is determined by the characteristics of raw materials (petroleum or pitch needle coke) procured by the Russian manufacturers from the best suppliers around the world.
Energoprom Group is currently implementing an investment program aimed at further improvement of the product quality and upgrading production capacity. The current situation on the market of graphitized electrodes is jeopardizing this program. The requested special protective duty will create conditions for strengthening the positions of the Russian manufacturers in this market and will prevent dependence of the region's metal industry on the foreign suppliers.
Adoption of special protective measures will not lead to the monopolization of the market as Energoprom Group is not dominant in the region. The Group has the capacities necessary for increasing production, this allowing to avoid a deficit of products in the market. The requested duty will not be preventive as its rate is similar to that established for a similar product – small diameter graphite electrodes. Moreover, the special protective measure would not affect the cost of electrical furnace steel as graphitized electrodes account for only a small part (less than 1.5%) in its cost.
Thus, Energoprom Group's initiative will do no harm to enterprises of the Russian steel industry. Adoption of special protection measures will create favorable conditions for development of the Russian coal-graphite industry and will allow maintaining competitive production of graphitized electrodes in Russia and the Customs Union.