Global Steel Trade; Structural Problems and Future Solutions

Frank Markus, Successes and Failures in the Restructuring of the Central & East European Steel Industry in the
1990’s: A Review of Some lessons Learnt, paper presented to the Slovak Metallurgical Society, Metallurgical East-
West ‘99 Conference (Beddows and Company, November 1999), 8.
44. Andrew M. Kotas and Frank Markus, 3–4.
45. InfoMine-Russia, 68, 69; Magnitogorsk Iron and Steel Works First Deputy Director Andrei A. Morozov,
interviewed by Department of Commerce officials, February 14, 2000, Magnitogorsk .
46. Thane Gustafson, Capitalism Russian-Style (Cambridge: Cambridge University Press, 1999), 223.
47. PlanEcon, Inc., Review and Outlook for the Former Soviet Republics (Washington, D.C., October 1998) 24.
Cited in Gustafson, 223.
48. Gustafson, 223.
49. Kotas and Markus, section 5, Foreign Involvement.
50. Tarasenko interview; Shevelev interview.
51. European Bank for Reconstruction and Development, Transition Report 1999, 137, discusses how
companies with “soft budget constraints” (e.g., payment arrears and ineffective bankruptcy rules) “can persist in the
use inefficient use of resources, including excessive employment, and can sell products at below cost” emphasis
added.
52. Afonin.; 1993 Steel Development Plan, 21.
53. Organization for Economic Cooperation and Development, Note by the Government of the Russian
Federation for the Workshop on the Situation in the Steel Industry in the NIS “Financing the Restructuring of
Russian Ferrous Metallurgy,” OECD Document Number CCNM/NIS/DSTI(99)49 (Paris, October 25, 1999), 2.
54. L. N. Shevelev, “Ferrous Metallurgy News in Russia and Abroad,” Part 1, Ferrous Metallurgy, Release 1–2,
1999, 6.
55. Shevelev interview.
56. Magnitogorsk Iron and Steel Works First Deputy Director Andrei A. Morozov, interviewed by Department of
Commerce officials, February 14, 2000, Magnitogorsk .
57. Presidential decree “On Measures of Government Support for the Upgrading of the Equipment at the MMK”
(1996); Metal Bulletin Research Ltd. and Infomine-CIS, 26–27; Magnitogorsk Iron and Steel Works interview.
58. Leonid N. Shevelev, The Current Situation in the Russian Iron and Steel Industry and Outlook up to 2005,
presentation to the Steel Survival Strategies XIII conference (New York, June 23–24, 1998), Table 4.
59. Afonin.; 1993 Steel Development Plan, 17.
60. European Bank for Reconstruction and Development, Transition Report 1999, 259.
61. Gaddy and Ickes, “Stability and Disorder,” 4–5.
62. Gustafson, 220.
63. Seleznev interview.
64. National News Service Web site, March 31, 2000, 3:58 pm press release available from http://www.nns.ru/
chronicle; accessed April 2000, in Russian.
65. This is the name of a popular book in Russia by Yuriy Olesha and a movie, in which a fictitious city was ruled
by a trio of ruthless and fat dictators.
66. InfoMine-Russia, 28.
67. McKinsey, Steel section, 38, Exhibit 26. Given the abundance of energy resources in Russia, market energy
prices in Russia, in theory, would tend to be lower than world prices.
68. Alison Graham and Oleg Timchenko, United Financial Group, Russian Regional Energos: Not as Cheap as
They Seem (Moscow, February 15, 1999), 1, 25.
69. Interfax Metal and Mining Report for October 16, 1998, N42 (347); FBIS.
70. Konstantin Vorobyev, “The Exclusive Tariff Code: Several Narrow-Minded Questions to Several Departmental
Documents,” Moscow Rossiyskaya Gazeta, FBIS , February 18, 2000. Based on discussions with U.S. Embassy
officials in Moscow, Russian rail freight rates are based on a four-tier structure based on the value of the good
shipped. This may provide some advantages to Russian steel producers, particularly for low-value input shipments.
71. The World Bank Group, Russia—Coal Sector Restructuring…Implementation Assistance Project (IAP),
(May 17, 1996), 1. The Russian coal industry has undergone significant restructuring, including the closure of mines
and the laying-off of workers.
72. InfoMine-Russia, 28.
73. Marcus and Kirsis, “Russian Steel,” 32.
74. Organization for Economic Cooperation and Development, Cooperation between OECD and Russia and
Ukraine in the Steel Sector (Paris, December 21, 1998).
Notes 199