Starting from 2022, the rates of export customs duties on scrap and waste of ferrous metals will change in Russia. The decision was approved by the Chairman of the Government Mikhail Mishustin.
Export duty rates for scrap and waste of ferrous metals are set at 5%, but not less than 100 euros per 1 ton. They will be valid from January 1 for the next 180 days. Now the temporary rate for the removal of scrap is 5%, but not less than 70 euros per 1 ton.
This decision according to government authorities will help mitigate the impact of external conditions on the domestic market, adjust prices and provide domestic producers with raw materials.
Steel scrap prices in Russia have been growing throughout November 2021. The rise in prices particularly intensified in the second half of the month, when domestic scrap prices rose 1900 rubles per tonne, with the end of November A3 FCA Ural assessed at 29350 rubles per tonne, excluding VAT.
The increase in the price of steel scrap in the view of market participants has been caused by a shortage in the supply market due to a decrease in scrap collection during a pandemic and the struggle of large metallurgical enterprises-consumers for its volumes during the formation of winter stocks. Moreover, for recyclers, the cost of preparation of steel scrap has significantly increased due to the railcar shortage in Russia and oxygen deficiency.
The decision in the view of industry participants has come at the worst possible time as all indicators suggest steel prices to witness a downtrend next year, as the economic growth in China slows down, with the country facing headwinds of an oncoming financial crisis due to the slowdown in its real estate market. Analysts expect the Evergrande debacle is likely to have an impact on the entire financial system in China, the consequences of which will be felt for years to come.
Russian rolled metal producers and scrap recyclers are already observing the domino effect in the form of a growing decline in metal consumption and a decrease in demand for products from China.
With the new duties in place, market participants feel forthcoming trends in steel scrap pricing will be related to the situation in the markets for final products and the balance of supply and demand in the steel scrap market.