The Hungarian government could restrict exports of "raw materials and products of strategic importance", including steel, according to a ministerial declaration signed by prime minister Viktor Orban.
Hungary will start a registration procedure for companies wishing to export the goods, meaning they will need government approval to sell outside of the country. Hungary's interior minister, Sandor Pinter, will determine whether export of the goods will "significantly impede or make impossible the critical establishment, operation, maintenance and development of infrastructures, thereby endangering public supply or risk to security of supply in the construction industry". If export is deemed to threaten the security of supply, the goods must stay within the country.
The decree was published yesterday and interested parties have seven days to respond. Shipments can be tracked using the country's electronic trade and transport control system EKAER and police and customs authorities will ensure exporters adhere to the legislation.
Any reduction to shipments outside of Hungary could have severe repercussions for the country's domestic steel producer, Dunaferr, which is already in crisis because of a lack of investment and constrained working capital. Dunaferr has a 2mn t/yr capacity — it is currently operating at around 30-40pc. according to market participants — and regularly exports to other parts of central Europe and Germany. While its capacity is comparatively small in the context of the wider European market, its relative absence has contributed to the supply tightness that has developed since the fourth quarter of last year.
UK producer Liberty Steel was looking to buy Dunaferr before the collapse of its lender Greensill Capital in March. Liberty chief executive Sanjeev Gupta met with Hungarian politicians to discuss the purchase.
Orban said earlier this month that the country would look to impose export restrictions on construction materials from October to help reduce inflation. "As of October we have decided to impose export restrictions," he said on 2 July, adding that the country would also look at introducing export notifications and approvals.
Hungary is not the only country looking to reduce commodity price inflation by securing domestic supply. Russia recently imposed a temporary export tax on steel, with a 15pc duty for hot-rolled coil, while China has been contemplating similar measures. Beijing has already reduced export rebates for key steel products to zero to try and increase domestic availability and constrain price increases.
