UPDATE 1-Russian steel firms to cut prices for cars-Deputy PM
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By Anton Doroshev
MOSCOW, Aug 28 (Reuters) - Russian steel companies have agreed to cut prices for car manufacturers by a minimum 5 percent and could make further reductions in the near future, Deputy Prime Minister Igor Sechin said on Thursday.
The cuts, which Sechin said could extend to 15 percent, suggest a state-sponsored drive to push down raw material prices, and aid the development of Russia's economy and infrastructure, is spreading quickly to other industries.
New York-listed miner Mechel (MTL.N), the largest supplier of coal to Russia's steel industry, was previously ordered by anti-trust authorities to cut prices by 15 percent from Sept. 1 after being found guilty of abusing its dominant market position.
"I spoke today with some car manufacturers. They have already received the first reaction from steel makers: a promise to lower auto sheet prices by a minimum 5 percent in their contracts with car manufacturers," Sechin told reporters.
"I don't want to say that it's enough, but it's a positive trend," said Sechin, an influential deputy of Prime Minister Vladimir Putin.
Russia is the world's fourth-largest steel producer, with output led by companies such as Evraz Group (HK1q.L) and Severstal (CHMF.MM), which have consolidated and upgraded Soviet-era steel plants.
Russia, battling inflation running at an annualised rate of nearly 15 percent, has moved to rein in raw material suppliers who were making record profits selling their products to domestic buyers.
"The market is setting itself up properly and there is movement along the chain," Sechin said.
One of the beneficiaries of the latest price move will be AvtoVAZ (AVAZ.MM), Russia's largest car maker, which is majority owned by state conglomerate Russian Technologies. French car maker Renault (RENA.PA) owns a one-quarter stake.
Mechel lost a third of its market value in three trading days last month after Putin twice savaged the company's pricing policy and accused it of tax evasion. Sechin was also present at the steel sector meeting where Putin first criticised the company.
"The state never had any designs on Mechel. It was FAS (the Federal Anti-Monopoly Service) who had designs, not the state," Sechin said.
It also fined Mechel about 790 million roubles ($32.1 million), or 5 percent of its coking coal revenue last year. (Writing by Robin Paxton; Editing by David Holmes)
