Yusuf Guven: Russia’s scrap export duty cut will not affect its exports

Russia will reduce its duty on scrap exports to five percent from 15 percent over five years as part of its World Trade Organization (WTO) membership requirements. However, this is not expected to influence the country's scrap export volume or pricing.
 
Answering questions posed by SteelOrbis, Helveco Intertrade SA director Yusuf Guven stated that in the past seven to eight years Russia's scrap export volume has decreased gradually in line with the increase in its domestic consumption. Therefore, a reduction in scrap export duty will not increase the scrap volume allocated for the export markets and the country's scrap export volume will continue to decline, Mr. Guven said.
 
Taking a similar case, Mr. Guven recalled that Ukraine has been reducing its scrap export duty gradually over the past three years and said that this has not resulted in any increase in its scrap export volume, as Ukraine's domestic consumption is also on the rise. Ukraine became a WTO member in May 2008.
 
Regarding pricing for ex-Russia scrap, he said that, as scrap prices are set by Turkish mills, no change is likely in ex-Russia scrap prices due to the change in the tax regime.
 
Finally, the Helveco Intertrade official explained that in the past 1-1.5 years most ex-St. Petersburg scrap has been sold to Turkey, since Italian and Spanish buyers have cut their purchases in line with their reduced steel output due to the financial crisis affecting their economies. However, he said, this situation may change in the years to come, if alternative destinations are added to the market.
 
As SteelOrbis previously reported, in the January-July period of the current year Russian exports of scrap decreased by 3.2 percent year on year to 2.86 million mt, and included 1.12 million mt for Turkey, 700,000 mt for Belarus and 316,000 mt for South Korea.