Russia's government has increased the country's duty on ferrous scrap exports, effective from the end of this month.
Prime minister Mikhail Mishustin signed the resolution approving the duty on 30 December. The document prescribes to settle the export duty for ferrous scrap at 5pc but no less than €45/t ($54.76/t) for 180 days starting from 29 January. This triples the minimal value threshold of the duty, which is currently at 5pc but not less than €15/t ($18.24/t).
The increase was indicated in the Russian ministry of economic development's draft bill that followed a request by the country's pipemakers.
The Argus daily fob Russia/Ukraine Black Sea assessment for short-sea A3 cargoes on 11 January was $447.50/t (€367.50/t) fob. Any cargo sold at this level would currently be subject to a tariff of €18.38/t. From the end of this month, the size of the duty for this price will increase to €45/t.
While scrap prices remain strong, the increased duty is unlikely to result in any complete drop-off in Russian scrap exports, as margins between dock prices and Turkish import prices are currently well in excess of $100/t, which is sufficient to absorb the higher tariff. But it is likely to make Russian exporters more cautious in their sales activity and they will be acutely sensitive to any drop in the market that could cause the €45/t duty to cut further into their margins.
"While the market is robust, the difference is most likely to be borne by end-buyers, demand from which was strong in the end of 2020 and is expected to remain firm during the first quarter of this year at least, maintained by bullish sentiment in the wider ferrous context and high global steel prices," one large exporter said.
News of the higher duty on Russian exports may bring additional support to imported scrap prices in Turkey, which is the key outlet for Russian ferrous scrap exporters. The Turkish scrap import price has continued to move higher this month, with the Argus daily HMS 1/2 80:20 cfr Turkey steel scrap assessment rising to $482/t yesterday.
Some scrap exporters in St Petersburg, and the southern ports of Rostov and Yeysk, are trying to implement customs clearance of the whole tonnage they have contracted for shipments in the first quarter in January before the new duty comes into force.
Other traders have preferred to adopt a wait-and-see stance, citing uncertainty in the market following Russia's extended new year holidays, which ended only yesterday.
