The Russian authorities have decided to extend the period of validity of their earlier imposed scrap export duty. Following the expiration of the previous term at the end of July, a new document has been published stating that the duty will be valid until the end of 2022.
The new measure defines the scrap export quota volume at 1.35 million mt for six months. For volumes exported as per the quota, a duty of five percent will be charged but not less than €100/mt. If the quota volume is exceeded, the duty will be five percent, but not less than €290/mt.
The latest decision is intended to secure the needs of local steel producers and to restrict excessive steel scrap exports to destinations not friendly to or not supportive of Putin’s regime. Moreover, the Russian authorities believe that the restriction will result in lower scrap prices in Russia and will consequently soften mills’ production costs and therefore the prices for steel products will decline. Lower finished steel product prices will support infrastructure projects.
In reality, the average capacity utilization rates in Russia have decreased by at least 20-30 percent in past months, due to declining domestic consumption. Moreover, in some regions, particularly the southern regions, scrap suppliers have preferred to decrease their collection levels, partly because they have been finding it difficult to get payments from several mills.