Ukrainian metallurgists need to restrict the export of ferrous scrap

Ukrainian steel producers are asking the Ministry of Economic Development and Trade to implement restrictions on the export of ferrous metal scrap from the country, revising the volume of scrap export for the third half of 2015, due to a significant deficit in the Ukrainian market and the threat of shutdown of some mining and metallurgical companies. For this purpose, a letter was sent to the Minister of Economic Development and Trade Aivaras Abromavichus, reflecting the requirements of Ukrainian metallurgists.

The Metallurgprom Association expects steel production in 2015 to amount to 22.5 million tonnes. At the same time, the need for steelmakers in scrap metal should have been about 4 million tons. Consequently, the volume of export of ferrous scrap this year must not exceed 0.5-0.6 million tons, and the volume approved by the ministry is 1.250 million tons. This export volume is the largest in the last 10 years.

In the first half of 2015, the demand for scrap metal from steel producers was 2 million tons, but the volume of supplies was less than 1.6 million tons, which is 22 percent below the demand. As a result, Ukrainian metallurgists did not receive 436 thousand tons of scrap metal, and the main reason is the excessively high export of ferrous scrap, which reached 739 thousand tons in the first half of 2015. The export volume of scrap metal could satisfy the needs of Ukrainian steel producers, which would increase the steel output by 2 million tons. In turn, the economic effect from the export of this volume of steel would be much higher than from the sale of scrap metal.

The letter says that taking into account the actual export of 739 thousand tons of scrap metal in the first half of 2015, the remainder of the quota for the second half of the year should be zero. Ukrainian metallurgists ask Abromavichus to urgently amend the balance of creation and consumption of scrap metal in Ukraine for the second half of this year.

Scrap metal shortage is forcing Ukrainian steelmakers to resort to undesirable measures such as replacing scrap with more expensive and energy-intensive cast iron, reducing the volume of metal products or even stopping production. All this reduces the competitiveness of Ukrainian metallurgists in the foreign market. Ukraine, as a rule, produced 32 million tons of steel per year, but its production in 2014 fell by 17 percent, falling to 27 million tons.