In line with bullish international steel and ferrous scrap prices, Russian domestic steel prices also recorded a steep increase. Thus, in a bid to support the domestic industry, the Federal Anti-monopoly Service of Russia (FAS) suggested a levy of duties on exports of steel products (including rebar and billet) and raw material (ferrous scrap) to be implemented by the economic development ministry.
In mid-December, the Ministry of Economic Development of the Russian Federation had recommended establishing an export duty for ferrous scrap of 15pc, but no lower than €45/mt ($55/mt) for the next six months. The current export duty in Russia is 5pc or a minimum of €5/mt. The move was at the behest of the country’s Pipe Industry Development Foundation (FRTP) representing major Russian steelmakers. This decision could be enforced from February, believe participants.
FAS has proposed a 13pc or a minimum of $73/mt duty on billet exports and 12pc or $78/mt whichever is higher, on rebar exports. The period of duty is suggested as a six-month after enforcement. FAS also highlighted that driven by global trends, domestic steel prices in Russia rose on an average by 30pc in November and early December. Rebar prices increased by 16pc from October-end while that for flat products increased by 20pc.
With export duties on ferrous scrap in force, there could be a decline in domestic scrap prices, but steel export prices could continue to rise or stay at current levels. The export duty on steel could also prevent possible reallocation of income from scrap procurement companies to steelmakers. Once implemented, it will lower exports and result in higher billet availability aiding mills’ margins.
Russian mills are struggling to secure sufficient inventories of ferrous scrap as yards have diverted supplies to overseas buyers in Turkey and South Korea, willing to pay higher than the domestic mills.
According to FRTP, Domestic scrap prices in Russia gained around 35pc from the start of 2020, however, export prices almost doubled in the period.