Oct 20, 2021
Russia may extend and raise scrap export duty
2022-07-04
The Russian government has instructed the industry and trade ministry to consider an extension and a rise of the ferrous scrap export duty, Argus has learned from the ministry's 19 October letter to a number of selected steelmaking companies.
The letter said that, following the protocol of the meeting with Russia's first deputy prime minister Andrei Belousov on 7 October, the ministry has to "prepare coherent proposals on mechanisms for normalising prices in the domestic ferrous scrap market" with interested federal executive bodies and industry organisations.
The ministry has requested those selected steelmakers to "present the company's position on the need to increase the rate of the ferrous scrap export duty, providing calculations, justification and feasibility for the estimated rate" by 21 October.
In addition, the ministry also requested those steelmakers to give information on the challenges during their current procurement campaign for winter stock, given limited availability of railcars for scrap transportation at present.
Those steelmakers that received the letter from the ministry included vertically integrated steelmakers NLMK, Metalloinvest, Severstal, MMK, Evraz, mining and metals group Industrial Metallurgical Holding (IMH), pipemakers OMK and TMK and the association of electrometallurgical enterprises, which was founded in May and consists of Abinsk steel mill and its long products mini-mill Balakovo, the Asha steel works and the Amurstal plant. No scrap recycling company was on the ministry's list.
Russia in late July announced export duties on ferrous and non-ferrous metals products exports outside the Eurasian Economic Union (EAEU). And it raised the export duty for ferrous scrap to the current 5pc, but no less than €70/t ($81.50/t), from the previous duty of 5pc, but no less than €45/t. Both measures are effective between 1 August and 31 December.
The higher export duty resulted in a slowdown of the country's ferrous scrap exports in August to just 197,700t, down by 74pc from July and 50pc on the year, Russian customs data show. And exports in September were even lower, market participants said.
Deputy industry and trade minister Viktor Yevtukhov said in late August that Russia is unlikely to extend the export duties on ferrous and non ferrous products once they expire. Moscow a month later approved a new excise tax on crude steel and an increase in mineral extraction tax (MET) from 2022, which market participants considered a replacement to the export duties.
"Now, it is the scrap industry's turn, whose destiny, however, is being determined in the absence of those concerned," a scrap trader said.
By Valery Zavyazkin
Source: Argus
