Russia’s anti-monopoly watchdog said on Monday that it was investigating Evraz, the London-listed steelmaker, on suspicion of price manipulation after Vladimir Putin, Russian prime minister, lashed out at the country’s metallurgical companies for price rises.
Igor Artemyev, the head of the anti-monopoly service, said the watchdog had launched an investigation into Evraz last week for allegedly inflating costs and selling products at up to a 30 per cent premium.
The announcement followed a meeting on Monday with Mr Putin in which the prime minister inquired about the “inexplicable” price jumps in the metallurgical industry, which he suggested had occurred by certain companies’ own “desire”.
“It’s understandable that prices may rise, but this is not the reason for the sharp jumps in pricing,” Mr Putin told Mr Artemyev, according to a transcript posted on the prime minister’s website.
In a statement, Evraz, part-owned by Russian billionaire Roman Abramovich, said it had not been notified of the anti-monopoly service’s inquiry, which it said had only been posted on the watchdog’s website late on Monday, following the meeting with Mr Putin.
Investors keep track of Mr Putin’s comments on industrial companies for signs he may be singling them out for attack.
Mr Putin’s threat in 2008 to “send the doctor” to see Igor Zyuzin, the owner of Mechel steel group, amid accusations of price-fixing, wiped more than two-thirds off the value of the US-traded stock due to fears it could be the start of a campaign to dismantle the company.
“Putin has always had this concern that companies were making too much money at the expense of the state. The economy right now is in recovery mode and his concern is that companies might make excessive profits and charge too much for their products and slow down economic growth,” said Chris Weafer, chief strategist at Uralsib Capital.
“The problem with that for investors is that the government is effectively saying that it’s going to put a cap on the amount of profits companies in certain parts of the economy can make.”
While the anti-monopoly service has so far singled out Evraz, the company is one of several metallurgical groups that are reported to have raised prices.
Magnitogorsk, Severstal and Novolipetsk have sent a notice to automakers warning of a 20 to 30 per cent increase in prices starting in July, Interfax, the Russian news agency, has recently reported.
Sergei Donskoy, metals analyst at Troika Dialog, said the price increases are broadly in line with global steel prices, which have risen up to $200 per tonne since the end of last year.
Get alerts on Basic resources when a new story is published