Offset deals as a tool to improve export potential of steel pipes

Abstract

Implementation of the offset mechanism is analyzed in the current report as a potential instrument for increasing the demand for metallurgical products in government and government related procurements. The studied scheme can help to maintain the minimum level of capacity utilization and create favourable conditions for R&D investment programs with ensured market demand. Offset deals could be used as export stimulation instrument for Russian steel products. International experience and Russian legislative system were analyzed in the report. Export potential of the stainless steel tubes was examined on the example of the market for construction machinery exhaust systems imported under government procurement contracts. Besides, prospective sales under foreign infrastructure projects were analyzed. The total market of procurements legislated by Federal Law-44 and Federal Law-223 was analyzed. It is concluded that implementation of the offset mechanism could stimulate Russian tube products exports.