FAS PROPOSED THE PRINCIPLES OF THERMAL COAL REALISATION

The FAS has sent recommendations to the largest enterprises producing and selling thermal coal. In the letter the competition Authority pointed to compliance with the principles of responsible pricing for coal products.

Companies are recommended to take measures to prevent unjustified price increases for goods in domestic market, including by not using foreign price indicators in pricing, linking prices to foreign exchange rates.

Linking to netbacks increases the price of goods both for consumers who use raw materials in their production activities, and for citizens who are the final consumers of goods.

As an alternative to netback, the Authority suggests using Russian price indicators.

The FAS Russia proposes to establish a mandatory sales standard for companies on the stock exchange of at least 10% for the brands of coal D (long-flame) and DG (long-flame-gas). The establishment of the minimum share of sales of other brands of coal at exchange auctions will be worked out in the future during the joint work of the participants of the Exchange Committee of the FAS Russia.

Application of domestic exchange and over-the-counter indicators will make pricing transparent, build long-term contractual relations, guarantee price predictability and ensure saturation of the domestic market.

The recommendations apply throughout the product supply chain – from sales of raw materials to finished products.

The antimonopoly Authority also suggests changing the companies' trade policies. They should indicate the priority of supplies to the domestic market, prices and the order of their formation.

Compliance with the recommendations of the Authority will prevent unjustified price increases in such socially important industries as the metallurgical industry and housing and communal services.

Reference:

*Netback (export parity index) – the selling price minus the cost of delivery to the buyer.