Posted on 04 Mar 2019
Ukraine's parliament (Rada) has voted to approve legislation proposed in January to increase the current ferrous scrap export duty of €42/tonne ($47.8/t) to €58/t. It has also extended the validity term from three to five years, meaning that the duty will be applicable for two years from September 2019, when it was due to expire, Kallanish notes.
The country's industrial policy department head Victor Galasyuk says the amended and extended ferrous scrap export duty is a victory for Ukrainian steelmakers as it will save thousands of jobs in the sector. He also says the measure does not go against World Trade Organisation rules, due to its temporary nature and necessity as military action means higher requirements from the country's defence sector. He estimates an economic effect from the duty of around UAH 1 billion ($37.3 million) each year.
According to the country's metals association, Ukrmetallurgprom, Ukraine's ferrous exports totalled 810,000t during the two years when the duty was applicable, instead of the projected 2.4 million tonnes. This enabled a 19% increase in supply to domestic mills in the first year, and an additional 4% in the second year to 3.3mt.
As a result, the shortfall in domestic supply has decreased to just 2%, while exports continued to increase, despite the duty. October 2015 - September 2016 saw 355,000t of ferrous scrap exported, increasing to 362,000t and 448,000t in the two subsequent years, Metallurgprom says. Steel production increased in 2018, despite lower exports, amid higher domestic consumption.
