Possible scrap export tax rise by Russia upsets EU
Russian mills are not happy with the tight supply of
scrap in the local market. This situation leads to increasing prices as well, which is not very welcomed by the Russian mills. It is seen pretty likely to experience further hikes in the prices within the forthcoming months.
There is certain amount of increase in the Russian local demand for
scrap as well. Yet the supply levels are even lower than last year. When compared to that of last year, a decrease of 5% and that of the previous year 10% can be seen. This situation causes a tight market where some traders can even take the prices at very high levels, taking advantage of the situation. It is not difficult to prefer the stronger international market for the suppliers, under such circumstances.
Due to the facts stated above, the Russian mills are in expectations from Moscow to bring the existing 15%
scrap export duty to higher levels, in order to provide some relief of
scrap availability for the local market.
Where these developments exist on one hand, EU on the other hand states that it is ready to take action against
Russia if any increase in the export duty rates of
scrap is implemented.
Under the framework of the bilateral steel trade agreement of EU and
Russia to be valid between the years of 2002-2004, EU quotas for Russian finished steel products are raised by 28% for the year 2002, an additional 2.5% for the year 2003 and another 2.1% for 2004.
The agreement leaves the 15% Russian duty on ferrous exports unresolved but offers an additional 12% increase of Russian quotas if
Russia agrees to cancel the export duties on steel
scrap. In view of this clause of agreement, Moscow's possible raise of the existing
scrap duties would leave both parties in a deadlock, as it would mean jeopardizing the terms and consequently might result in EU taking action against same.