Russian scrap export duty may rise further

The Russian government says it does not rule out another increase in ferrous scrap export duty in 2022, were new global scrap price increases to continue supporting scrap export sales.

According to deputy industry and trade minister Victor Yevtukhov, the government will be monitoring the situation after the minimal €100/tonne ($113/t) of the 5% export duty level comes into force on 1 January for 180 days. If prices and export volumes continue to rise, “we will propose another increase to the duty, as out task is to keep the essential feedstock in the country”, he says.

The 5% duty’s minimal level was hiked from the present €70/t to €100/t on the perceived shortage of the feedstock supplied to domestic mills, driven by petitioning from the steelmakers’ strong lobby and ignoring the position of recyclers.

Last weekend, the country’s scrap association, Ruslom, called on deputy economy minister Vladimir Ilyichev in a letter to prevent the rise, underlining the damage the preventative duty will have caused to the industry. It cited the lowest collection rates in the past decade after the minimal level of duty was increased to €70/t on 1 August.

At 9.7 million tonnes, scrap collection fell 11% on-year in August-November, despite firm prices, as exports fell sharply due to the duty rise, curbing liquidity. Russian scrap export volumes have already fallen 12% on-year in the first ten months of the year to 3.5mt, while Russian steel product export sales also declined amid new temporary duties, also from 1 August. These have curbed pricing flexibility and coincided with the descending dynamic in global demand and pricing (see Kallanish passim).

On 3 December, the Ukrainian government increased the scrap export duty to €180/t, which is more than three times the previous duty, after the country’s scrap exports rebounded to pre-duty levels during 2021. Most Russian and Ukrainian scrap is supplied to Turkey. At 1.5mt, Russian-origin scrap imports in January-October dropped 26% on-year. In January-November, Ukraine meanwhile supplied 550,000t to Turkey, 11 times up on-year.

Turkish scrap import prices peaked at $512.50/t cfr Turkey for premium HMS 1&2 80/20 on 24 May, and settled at $460/t cfr on Wednesday, according to Kallanish indices.

Katya Ourakova UK