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AvtoVAZ Says Severstal, Magnitogorsk Increase Steel Prices 25%

May 24 (Bloomberg) -- OAO AvtoVAZ, Russia’s largest carmaker, said steelmakers OAO Severstal and OAO Magnitogorsk Iron & Steel will raise prices 25 percent from June while they continue negotiations over longer-term charges.

“After Severstal stopped shipments, we had metal stockpiles sufficient for several days only and had to temporarily agree on higher steel prices while negotiations are taking place,” AvtoVAZ spokesman Igor Burenkov said by phone. “The steelmakers demanded a 25 percent increase from June 1 to the year-end, declining to sign supply agreements otherwise.”

Severstal is still negotiating terms with local carmakers including AvtoVAZ, the steelmaker’s spokesman Oleg Bykov said. Evgeny Kovtunov, a spokesman for Magnitogorsk, wasn’t immediately available for comment. Magnitogorsk planned to raise prices for carmakers 10 percent to 15 percent, Interfax reported on May 18, citing the company’s Chairman Viktor Rashnikov.

Prime Minister Vladimir Putin criticized steelmakers today at a meeting with Igor Artemyev, the head of Russia’s antitrust watchdog, for seeking to raise prices.

“It’s clear that the costs may rise and economic situation changes,” Putin said, according to the government’s website. “But this is not a reason to justify sharp price hikes.”

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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