New export quotas for ferrous scrap could reduce Russia’s collection and export significantly, according to Russian association Ruslom.com. However, the Russian Foundation for development of tube industry (FRTP) recently applied for restrictions again amid deficit of the material, Davis Index learnt.
Ferrous scrap exports from Russia totaled 4.1mn mt in 2018, 3.2mn mt in 2019, and may fall by 29pc to 2.3 mn mt in 2020 in case of new quotas, according to a letter sent by Ruslom.com to Russia’s Metallurgy and Material Department of the Ministry of Industry and Trade on May 15.
Demand for steel products could decrease this year, due to a slowdown in the global economy this year, Ruslom.com noted in its letter, resulting in a drop in steel production worldwide and a lower demand for scrap. As a result, scrap consumption in Russia could fall by 15-25pc. Exports of the material is expected to decline by 5pc even without restrictions, the association estimates.
Scrap collection has already decreased by up to 50pc in some Russian regions due to COVID-19 related measures, but new export quotas will hurt it more, according to Ruslom.com.
FRTP sent a letter to the Russian government on April 30 asking to consider issuing quotas for ferrous scrap export from July 1 or August 1, 2020 for six months, referring to the deficit of the material in the country. The organization asked for an export quota of 995,000mt, Davis Index learnt.
FRTP noted that quotas of around 1mn mt in September-December 2019 had a positive effect on steelmakers as export of the material from Russia dropped by 44pc during this period, and its shortage in the country eased by 2.5pc. Besides, Russian producers succeeded in keeping purchase prices for local scrap in the range of RUB13,000-15,000/mt, so there was no seasonal increase in prices for the first time in four years.