Duty-free export of scrap metal poses a threat to Ukrainian metallurgists

Ukrainian exports of ferrous metal scrap fell to just 11392 tons in January-February, compared to 86.448t in the corresponding period of 2018. February exports amounted to only 3000 tons. Earlier, the Verkhovna Rada voted to extend the duty on the export of scrap metal. However, the decision to cancel this decision was registered in the parliament. According to experts, duty-free export of scrap metal threatens Ukrainians with the loss of 30 thousand jobs.

Exports continue to fall amid the introduction of an export duty of € 42 /t ($ 47.2 /t) in July 2018, which is expected to rise to € 58 /t and will be extended by two years in September when the current debt expires. The duty was applied to ensure sufficient supplies of scrap for Ukrainian enterprises.

Turkey remained the largest two-month buyer of Ukrainian scrap with a 90% share, followed by the Netherlands with 6% and Germany with 2.5%. Export revenues fell almost nine times to $ 3.2 million from $ 28 million in 2018, which caused serious concern among Ukrainian participants in the ferrous scrap market.

The country's Ferrous Scrap Association says export restrictions have not met their target and could further harm the industry. The report says that scrap production at Ukrainian factories fell by 16.8% over the same period last year to 475,000 tons. Domestic supplies of ferrous scrap to the mills also fell 21% below the mills' needs to 354,300 tons. This led to an increase in imports, which rose 38% in January-February to 5,325 tons.

The abolition of the duty on the export of scrap metal from Ukraine will have a number of negative consequences for the Ukrainian economy. A group of deputies and participants of the ferrous metal scrap market asked the parliament to reconsider the duty, citing the negative impact on the industry as a whole. Also mentioned were violations of the rules of international trade and the growing opacity in the pricing of Ukrainian steel caused by the duty.