Following a certain period of active discussions, Russian authorities have taken a provisional decision to further increase the export duty for ferrous scrap, citing the necessity to protect the local market from the active high-priced exports and to balance out the supply to the domestic producers.
Today, November 16, Russia’s authorities have held a meeting regarding trade regulation and took a decision to increase the minimal value of the export tax for ferrous scrap from €70/mt to €100/mt, while the size of the tax remains at 15 percent. The regulation will require further approval by the government, although the market widely considers it as an imposed one. There is a possibility of correction according to the scrap price situation in the global market, therefore another meeting will be held, scheduled for mid-December 2021. “This decision will allow to significantly decrease scrap exports since the current €70/mt tax is not stimulating enough to keep the scrap inside the country for further processing. Industry representatives proposed to increase it to €120/mt but even this step will have an effect,” Vyacheslav Volodin, the parliament speaker, said. The increased export tax will be in force starting from January 1, 2022 until June 30, 2022.
It is worth mentioning, that the arguments of the scrap sellers’ side regarding the negative consequences of such a decision were not taken into consideration. In particular, RUSLOM believes the imposed duty would practically mean the ban of scrap exports from Russia in view of the increasing logistics costs and overall market situation.
Market players in Turkey, which is the key export destination for scrap exports from Russia, have been trying to estimate the effect of the abovementioned decision on their business activities. “Russia is an important source and it supplies both deep sea cargoes from the Baltic region and short sea ones from Rostov. Definitely these shipments will be more challenging now and the sellers will be much more careful in their pricing,” a trader said. Many believe that if scrap exports will not be profitable for the Russia-based suppliers in some periods, they would choose to decrease their collection volumes in order not to increase the supply in the local market, which would naturally lead to lower purchasing prices of the mills. Some sources do not expect a significant decrease in exports at least while the prices in the global market are high enough. “This decision [to increase the duty] is something expected by the market. They [exporters] will try to have more control on the collection side. But for sure it will be difficult to increase the availability from Russia,” a trading source told SteelOrbis.
In January-September this year Turkey imported 1.68 million mt of scrap from Russia, while the total figure for 2020 stood at 2.35 million mt, according to the customs statistics.