Ukraine VAT abolition creates scrap price doubts

As a result of the implementation of the law which cancels 20 percent VAT on scrap operations in Ukraine, effective as of January 1, 2007, all Ukrainian steel producers have lowered their procurement scrap prices. Thus, if scrap was quoted at the level of UAH 1,250-1,275/mt ($249), including VAT, at the end of December 2006, then the current price of scrap is around UAH 1,050/mt ($208), excluding VAT. However, as SteelOrbis has been informed, uncertainty persists in the Ukrainian domestic market about what to include in the procurement scrap prices. Although the price level is more or less the same all over Ukraine, different steel plants include various surcharges in it. The most common question is whether or not to include railways tariffs in the prices. Thus, according to the information received from a reliable Ukrainian industry source, some producers include railways tariffs in the above-mentioned price, while others do not. Consequently, the scrap prices are not settled yet in Ukraine.