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EU may lower steel tariff on Russia's Novolipetsk after VIZ buy

The European Union may lower a tariff on Russia's OAO Novolipetsk Steel after the company acquired VÍZ Stal, which faces no similar EU duty.

The EU in August 2005 imposed an 11.5% levy on Novolipetsk's silicon-electrical steel to protect Germany's ThyssenKrupp AG from cheaper imports. The bloc exempts Novolipetsk on the condition it sells the product - used by power-transformer makers such as France's Areva SA - at higher prices. The arrangement is meant to prevent Novolipetsk from selling silicon-electrical steel in the EU below prices in Russia or below the production cost, a practice known as „dumping.” The EU today began a review that will last as long as 15 months to take account of Novolipetsk's $550 million takeover last year of VIZ, Russia's second-largest electrical-steel producer.

„The dumping margin under the new corporate structure would change significantly,” the European Commission, the 27-nation EU's regulatory arm in Brussels, said in the Official Journal. „The investigation will assess the need for the continuation, removal or amendment of the existing measures.” The five-year levy against Novolipetsk coincides with EU anti-dumping duties of as much as 37.8% on US makers of silicon-electrical steel. EU producers, which also include Corus Group Plc of the UK, suffered declines in sales and market share as a result of a more than threefold increase in imports from the US and Russia between 2000 and 2003, the EU said. The US had 10% of the European silicon-electrical steel market and Russia had 3% during the 12-month period through March 2004, the EU said when deciding to impose the anti- dumping duties. (Bloomberg)