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. Last Updated: 07/27/2016

Sechin Says Steel Deal to Cut Costs for Carmakers

MTThe Russian-made Chevrolet Niva on display at a Moscow car show Thursday.
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.

The cuts, which Sechin said could extend to 15 percent, suggest that a state-sponsored drive to push down raw material prices and aid economic and infrastructure development is spreading quickly to other industries.

New York-listed Mechel, the largest supplier of coal to the Russian steel industry, was previously ordered by anti-monopoly authorities to cut prices by 15 percent from Monday 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 steelmakers: a promise to lower auto sheet prices by a minimum 5 percent in their contracts with car manufacturers," Sechin told reporters at the Moscow auto show Thursday. "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 and Severstal.

Russia, battling inflation running at an annualized 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 carmaker AvtoVAZ, which is majority owned by state corporation Russian Technologies. French carmaker Renault owns a one-quarter stake in AvtoVAZ.