Russia will introduce export duty on steel and scrap metal

The Federal Antimonopoly Service of Russia FAS proposes to impose duties on all exports of steel products, and not just scrap ferrous metals, as was adopted by the Ministry of Economic Development in early December.

FAS responds to the request of the Deputy Prime Minister for Construction and Development Marat Khusnullin in connection with the rise in prices for metal products in the domestic market. This followed a petition from representatives of the construction industry.

The ministry agreed to raise the existing export duty on ferrous scrap from 5% to 15%, and the minimum tax value to € 45 per tonne ($ 55) from € 15 per tonne over six months. This happened at the request of the Russian Pipe Industry Development Fund (FRTP), which represents the largest Russian steel producers. The price increase is aimed at ensuring sufficient supplies of raw materials at appropriate prices for Russian enterprises.

The FAS claims that the domestic steel industry is deeply rooted in the global steel market and is directly dependent on its trends. He describes the rise in steel prices on the Russian domestic market up to 30% in November and early December, while prices for rebar increased by 16% from late October to early December, and for flat products - by 20%.

Despite this, local prices do not exceed export prices, which have increased even more over the same period, while domestic scrap prices have also increased by 35% since the beginning of 2020.

As a result and a temporary differentiated regression measure for a six-month period of validity of the export duty on scrap, the FAS proposes export duties on steel billets of 13%, but not less than 73 US dollars per ton, and 12%, but not less than 78 US dollars per ton. fittings.

This is necessary to prevent a possible redistribution of income from scrap collecting companies to metallurgical enterprises. This will happen if an increase in export duty on scrap leads to a decrease in domestic scrap prices, while export prices for steel continue to rise or remain at current levels, he explains.

Market participants report that the decision to impose a duty on scrap metal and rebar has been made and will be applied from February. “Procurement issues will be discussed in January,” said a representative of a large manufacturer. All steel producers and traders noted that the export duty on scrap metal and rebar could indeed restrict exports and lower domestic prices, leading to increased export availability of billets. This may lead to the adoption of compensatory measures on the part of the regions-importers of procurement, since such an action can be interpreted as a subsidy.

“Ultimately, this is a long restriction on the export of scrap,