Russia mulls ferrous scrap export ban
Russia's economy ministry will evaluate the possibility of a temporary ban on ferrous scrap exports following a complaint submitted by the country's steel pipemakers in late December.
The Russian Foundation for Development of Tube Industry (FRTP), which unites the country's largest pipemakers including TMK, OMK and Chelpipe, addressed a letter to economy minister Mikhail Oreshkin on 25 December asking for the prohibition of ferrous scrap exports for six months starting on 1 May. The ministry has agreed to examine the issue, but has not identified any timeframe in which a decision on the matter will be made.
Pipemakers blame exporters for a hike in ferrous scrap purchasing prices and a shortage of material over the past two years. But market participants doubt the measure will be implemented.
The FRTP said in its letter that about 20pc of annual Russian scrap collection was exported in recent years, causing tighter supply in the home market and preventing Russian steelmakers from increasing electric arc furnace (EAF)-based steel production.
Russian EAF steel production has steadily increased over the past four years to 21.4mn t last year from 18.75mn t in 2015. The 2018 utilisation rate of the country's 53 operational EAF's production was about 61pc.
FRTP insists that a ferrous scrap ban would allow EAF-based steel output to rise further to 23.4mn t in 2019, including 5.5mn t by pipemakers. If no ban is introduced, the organisation projects that output will be flat at 21.4mn t, including 5mn t by pipemakers.
But data analysis indicates that Russian ferrous scrap collection has increased over the past four years in line with the rise in EAF output, supported by higher apparent consumption that has also lifted imports. By contrast, export volumes have remained relatively stable over the past four years (see table).
"Collectors are inspired by reasonably high prices, not by prohibitions," one market participant said. "If pipemakers seek ways to reduce prices, they should seek agreements with scrap suppliers — on volumes of purchases, discounts for large-size deals or payment and delivery conditions."
Any export ban could potentially dent domestic scrap collection, which in turn would lead to tighter availability and even higher domestic ferrous scrap prices, which have already increased along with collection and consumption since 2015 (see chart).
The Argus weekly assessed price for A3 grade scrap delivered to central European Russian mills averaged 10,779.29 roubles/t ($163.32/t) fca in 2016, Rbs13,589.75/t fca in 2017 and Rbs16,614.17/t fca last year. In the Urals, averaged prices were respectively Rbs10,269.75/t, Rbs13,271.35/t and Rbs16,218.82/t. A3 prices rose by an average of 23pc on the year in 2018.
Average export prices provided by FRTP showed a very similar increase of 23.8pc over the 2017-18 period (see table). That is because Russian exporters' ferrous scrap dockside prices usually track domestic scrap price trends more closely than export markets, especially in the periods of lower overseas demand, Argus data indicate.
"If the ban is on, steel producers, including pipemakers, will obviously try to trim their scrap buying prices in the wake of no competition with exporters, which add balance to the market. But the effect will rather be to the contrary," a trader said, stating that lower prices might dampen scrap collection and shipments, causing availability to fall and domestic prices to move higher.
"This is quite obvious, so the ministry will be unlikely to recommend a ban on ferrous scrap exports in the short term," another trader said.
Any ban on Russian ferrous scrap exports would have an impact on imported prices in Turkey, which purchases significant deep-sea volumes from St Petersburg and short-sea volumes from Russian Black Sea suppliers. Russian ferrous scrap exports to Turkey totalled 2.3mn t in January-November 2018, accounting for 12pc of Turkey's total 19.03mn t of scrap imports over the same period.
Russian ferrous scrap market in 2015-18 | '000t | |||
2015 | 2016 | 2017 | 2018 | |
Collection | 24,165 | 24,973 | 25,527 | 25,950 |
Apparent consumption | 19,091 | 20,276 | 21,357 | 21,800 |
Exports | 5,370 | 5,224 | 5,143 | 5,100 |
Imports* | 296 | 527 | 973 | 950 |
Averaged price for domestic deliveries, cpt Rbs/t (exl. VAT)** | 11,171 | 12,110 | 14,910 | 17,727 |
Avreaged price for export shipments, Rbs/t ** | 12,667 | 13,834 | 15,830 | 19,600 |
*about 99pc of imports are from Kazakhstan | ||||
— economy ministry; **FRTP |
Related news posts
EU could launch 'other countries' HRC dumping probe
EU could launch 'other countries' HRC dumping probe
London, 25 July (Argus) — The European Commission soon could initiate a dumping investigation on some exporters selling into the 'other countries' quota for hot-rolled coil (HRC), according to multiple market sources. The 'other countries' quota in recent quarters has consistently filled rapidly upon resetting, and this pressure has been intensified by rising Chinese exports since August of last year. Some key 'other countries' sellers have seen the volumes they take from China balloon as a result. Vietnam bought more than 4.2mn t from China in the first six months of this year, compared with about 6mn t in the whole of 2023. China's increased exports has sparked talk that both India and Vietnam may start anti-dumping duty investigations. When announcing its 15pc cap on countries selling into the 'other countries' quota, the commission specifically alluded to the increase in Chinese exports affecting trade flows. Vietnam, Egypt, Japan and Taiwan are by far the largest sellers into the 'other countries' quota, and all of the countries initially exceeded their 141,849t cap quickly when the new quotas took force on 1 July. In April, before the cap was implemented, these four countries amounted for more than half of the 1.4mn t imported by the EU. The 'other countries' quota has essentially been reduced from 940,000 t/quarter to less than 600,000 t/quarter given the new cap. Sources suggested duties could be applied retroactively if the commission finds that material has been dumped. They also suggested it could be difficult to show dumping in some countries, such as Vietnam and Egypt, where domestic prices are often below export levels. A leading producer was gathering information on Egyptian cargoes arriving at EU ports in recent months, a trading firm said. The commission refused to comment on any potential investigation. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China raises EV, ICE vehicles trade-in subsidies
China raises EV, ICE vehicles trade-in subsidies
Beijing, 25 July (Argus) — The Chinese government has raised subsidies to boost trade-in of old internal combustion engine (ICE) vehicles with new energy vehicles (NEV). The subsidy for consumers who trade in an old NEV registered before 30 April 2018 or an ICE vehicle that meets or is below China's national 3 emission standard for a new NEV has doubled to 20,000 yuan from a previous subsidy announced in May . Electric vehicles cost anywhere between Yn50,000 to Yn1mn, with consumers mostly purchasing those in the Yn100,000-200,000 range, according to industry participants. The government is also offering a Yn15,000 subsidy for consumers who trade in an old NEV registered before 30 April 2018 or an ICE vehicle that meets or is below China's national 3 emission standard, and purchase a new ICE vehicle with the displacement below 2.0 litre. Beijing in early March announced a plan to promote the replacement of industrial equipment and consumer goods through large-scale trade-ins, with NEVs making up the main part of the scheme, as part of Beijing's efforts to meet its annual economic growth target of 5pc. China's ministry of finance announced on 3 June that it will allocate Yn6.44bn to local governments to pay the subsidies for vehicle trade-ins in 2024, including Yn107mn to Tianjin, Yn90.81mn to Shanghai, Yn74.61mn to Beijing and Yn66.49mn to Chongqing. The central government announced on 29 May that it will remove purchase restrictions for NEVs during 2024-25, with the capital city Beijing allocating 20,000 additional purchase quotas for NEVs to families without a car. China produced 1.003mn NEVs in June, up by 28pc from the previous year and by 6.7pc from May, with sales increasing by 30pc from a year earlier and by 9.8pc from the previous month to 1.049mn, partly driven by the country's supportive measures, especially the trade-in subsidies. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Bangladesh scrap activity slowly resumes after curfews
Bangladesh scrap activity slowly resumes after curfews
Pittsburgh, 24 July (Argus) — Industrial activity across Bangladesh has begun to slowly resume today following a slight easing in government curfews, but spotty communications networks remain a hurdle to the full resumption of business in the steel and ferrous scrap sector. The Bangladesh government began to relax curfews today following a near nationwide curfew, communications blackout and deployment of the national army on 19 July , as it attempted to quell demonstrations and violent clashes across the capital, Dhaka, and the broader country. More than 27,000 army personnel across 57 districts were deployed to stem clashes between protestors and police centering on quota reform for the allocation of government jobs, according to Bangladeshi state-controlled media. The government officially amended the quota allocation on Tuesday, according to an official gazette issued by the Ministry of Public Administration on 23 July. Curfews have been lifted in the Dhaka district to between 10am and 5pm and to 9am to 6pm in the Sylhet district on 24 and 25 July, according to the UK Foreign Office. Communications networks have also begun to slowly be restored, but market participants noted that for now networks and internet availability remain spotty which has hampered a return to normalcy. Broadband internet was restored to specific areas, including diplomatic and commercial zones, on Tuesday after five days of outage, but social media remain restricted, according to state-controlled media. Steelmaking operations were broadly not impacted by the escalation in events in recent days, one major regional steelmaker told Argus , noting that mills were able to run without interruption during this period. The largest and most direct impact was on sales and deliveries, but that impact is likely to be short lived as shipments have begun to gradually improve today with conditions expected to be much smoother next week, the mill added. Home minister Asaduzzaman Khan Kamal said today in state-controlled media that the situation will be under control in the next 3-4 days but did not offer details on when the curfew would fully be lifted, while the railway ministry secretary Humayun Kabir said the Bangladesh Railway would resume limited passenger train operations beginning tomorrow. The US State Department still advises against travel to the country and the UK Foreign Office advises against all but essential travel. Import/export clearing activities were temporarily halted at various port across the country because of the situation, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said in state-controlled media. Activity at the port of Chittagong has remained ongoing but slow, according to market participants. Dozens of vessels are still situated on the water outside the port of Chittagong, vessel tracking data shows. Three deep-sea ferrous scrap bulk vessels — Ken Ei, DL Lavender , and Liberty C — also remain outside the port. But DL Lavender , a vessel from the US, has repositioned itself outside the dock. The FBCCI has appealed to the government to waive any port or shipping charges for importers and exporters and has sought for charges not to be imposed until 15 days after operations at ports have normalized. By Brad MacAulay and Corey Aunger Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House passes waterways bill
US House passes waterways bill
Houston, 23 July (Argus) — The US House of Representatives overwhelmingly approved a bill on Monday authorizing the US Army Corps of Engineers (Corps) to tackle a dozen port, inland waterway and other water infrastructure projects. The Republican-led House voted 359-13 to pass the Waterways Resources Development Act (WRDA), which authorizes the Corps to proceed with plans to upgrade the Seagirt Loop Channel near Baltimore Harbor in Maryland. The bill also will enable the Corps to move forward with 160 feasibility studies, including a $314mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. Water project authorization bills typically are passed every two years and generally garner strong bipartisan support because they affect numerous congressional districts. The Senate Environment and Public Works Committee unanimously passed its own version of the bill on 22 May. That bill does not include an adjustment to the cost-sharing structure for lock and dam construction and other rehabilitation projects. The Senate's version is expected to reach the floor before 2 August, before lawmakers break for their August recess. The Senate is not scheduled to reconvene until 9 September. If the Senate does not pass an identical version of the bill, lawmakers will have to meet in a conference committee to work out the differences. WRDA is "our legislative commitment to investing in and protecting our communities from flooding and droughts, restoring our environment and ecosystems and keeping our nation's competitiveness by supporting out ports and harbors", representative Grace Napolitano (D-California) said. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more