Ukraine’s Ministry of Economy has recently published a project of the initiative regarding the imposition of a complete ban on ferrous scrap exports.
The measure has been actively lobbied for by Ukrmetallurgprom, which stated that the global scrap price almost doubled from $265/mt in May 2020 to $499/mt in May this year. Such a situation led to the increased exports of scrap from Ukraine in 2021 even despite the currently valid €58/mt export tax. “In January-August 2021, Ukrainian companies exported 410,430 mt of scrap, up almost 20-fold compared to the same period of the past year,” the statement said. Ukrmetallurgprom said it expects that the deficit of scrap in the local market in Ukraine could exceed 500,000 mt by the end of 2021.
“Securing the scrap needs of local steel plants has been acquiring strategic meaning in order to back continuous production and steel supplies for the needs of the local military-industrial complex, machinery output and infrastructure restoration,” the ministry’s statement reads. The ministry also suggested that effective scrap usage decreases production costs and increases overall efficiency, since it leads to lower iron ore consumption and therefore results in lower energy usage and CO2 emissions.
However, not all of the market players favor the export ban initiative, thinking that such a measure will lead to a market imbalance and financial losses for all participants. According to the market data, Ukraine-based steel producers consumed around 3 million mt of scrap annually during the past six years. Despite the stability of the figures, the mills continue to exert pressure to tighten trade regulations. Moreover, the market players underline that the imposition of the export tax for scrap, which over the years has increased six-fold, has not led to an increase in local scrap consumption, but resulted in the decline of scrap collection volumes in Ukraine. Accordingly, the duty failed to redirect volumes from exports to the local market and the currently suggested export ban is considered by many as a measure to secure a monopoly of local scrap consumption. Another concern is that the export scrap ban imposition will lead to diminishing budget revenues from the currently valid export tax.
