Russia amends scrap trade restriction, squeezing exporters’ margins

Monday, 04 January 2021 14:12:25 (GMT+3)   |   Istanbul

At the very end of December, the Russian authorities approved the amendment to the existing export restrictions in the steel scrap segment. The export tax for ferrous scrap has remained at the five percent level, but the minimal equivalent has been increased from €5/mt to €45/mt. The renewed restriction will be valid for 180 days from the moment the official document comes into force. Some sources stated that the duty will be valid for export shipments starting from February 1.

The Russian government has supported the initiative to tighten the export scrap restriction, taking into account the very sharp increase in steel and raw material prices seen in the global market but also in Russia. The measure is aimed at securing the needs of local steel producers and at limiting the increase of prices for structural steel and products used in the automotive sector, among others.

Sources from the scrap-related business are now trying to evaluate the consequences of the new restriction for the market trends. Some of them foresee it will support higher prices for scrap internationally in the mid-term. Others do not expect the export volumes from Russia to decrease much as a result of higher export tax, but believe the local purchase scrap prices of exporters will decline as their margins would shrink. “Earlier it was €5/mt minimum, now it is €45/mt, so the exporters will target to pay less for scrap in order to preserve their margins. This will give the mills in Russia some room to compete for scrap with the exporters and to feel a bit more relaxed in terms of securing their needs. Let’s see,” a trader told SteelOrbis. Since early December the exporters’ purchase prices in the Baltic region of Russia have increased by $64-68/mt, as reported.

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