The Ukrainian Metal Scrap Association (UAVtormet) has said that it has been informed about the intentions of some domestic steel producing companies to unilaterally reduce, as of January 1, 2011, their purchase prices for scrap by 20 percent (about UAH 600/mt or $75.4/mt), which roughly corresponds to the margins of the cut in scrap taxation due to the cancellation of VAT on ferrous and non-ferrous scrap transactions.
UAVtormet has noted that the unreasonable sharp decline in scrap purchase prices will lead to a decrease in scrap supplies in January, considering past experience and the consequences of similar events in previous years (2007 and 2008), when VAT was temporarily abolished. Since raw material from the November-December scrap collection period, which is unprofitable for scrap processing companies, will be supplied in January, it is expected that at the end of January and in February steelmakers may remain without supplies, UAVtormet said.
Meanwhile, an increase in scrap supplies is not anticipated until March, because the process of collection, processing and delivery of scrap is slow, UAVtormet underlined.