Reuters reported that Russia’s government has decided against slapping export duties on steel firms but has asked them to switch to long term contracts with consumers to prevent sharp price rises.

One government source told Reuters that “A decision has been taken not to introduce export duties as people are more inclined toward long-term contracts.”

The comments follow a meeting of major Russia steel companies with Mr Igor Sechin deputy prime minister after oil firms complained about sky high prices for steel products, including pipes needed for building new oil and gas pipelines.

Market analysts have said introduction of export duties would badly affect profitability of the steel industry. Analysts from Deutsche Bank said in written research that “If steel prices continue to increase, taxes for the sector may be raised.”

Analysts from Unicredit said the introduction of long-term contracts would not significantly affect the earnings of steel majors like MMK, NLMK and Severstal as they already have long term contracts with the main domestic consumers.

Unicredit said in a note that “In addition, steel makers will likely attempt to account for possible fluctuations in steel prices for the whole year when contract prices are set.”