Ukraine looks to raise scrap export duty again

Posted on 24 January 2019
 

Source: Kallanish

Ukraine's parliament (Rada) is working on legislation leading to another hike in the country's scrap export duty, Kallanish learns.

Rada's industrial policy committee has submitted a proposal to increase current duty of €42/tonne ($47.7/t) to €58/t and to extend it for another three years from September 2019. That is when the current duty, which has been chargeable from May 2018, having increased from €30/t first implemented in August 2017, is due to expire. 

The ascending scale of scrap export duty implementation mirrors the descending scale on which the duty had been slowly removed previously. It had become the only bone of contention in Ukraine's joining the World Trade Organization in spring 2008. At the time, the country agreed, after much deliberation, to scale down the then €30/t export duty on ferrous scrap mainly upon the insistence of the European Commission.

The subsequent global trade changes in the wake of the global economic crisis of 2008-2009 and unprecedented changes in the country's geo-political structure led to domestic steel mills being starved off scrap. Some mills claimed that they had to import scrap in order to continue operating, especially those mills working entirely with EAFs. The lobbying finally led to the re-introduction of export duty in 2017.  

Since then, the country's mills produced around 42 million tonnes of crude steel having consumed 6.5mt of ferrous scrap. The country's scrap exports meanwhile fell by a third year-on-year to 327,547t in 2018 generating revenue of $105.7m, itself -13.3% down y-o-y, despite higher global scrap prices. Ferrous scrap collection has also fallen, by -2%, to 3.7mt, about which some scrap companies have been warning while protesting the export duty re-introduction. 

Meanwhile, domestic scrap shipments to mills increased by 3% on-year to 3.3mt in 2018. This was still -1% below the mills' actual requirements, according to the country's steelmakers’ association Ukrmetallurgprom. Scrap exports meanwhile increased again, by 67.1% to 42,623t. 



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