Ms. Svyrydenko emphasized that scrap is a critical input for Ukraine’s metallurgical and foundry industries. Despite the export duty currently applied, scrap exports have continued to increase, often being shipped onward to third countries without generating added value for the Ukrainian economy. In contrast, domestic processing supports employment, generates tax revenues, and supplies materials essential for defense needs and post-war reconstruction. The use of scrap in steelmaking also helps reduce carbon emissions, a growing priority given the European Union’s climate-related requirements. According to the prime minister, maintaining restrictions on raw material exports strengthens domestic manufacturing, reduces environmental pressure, and enhances the energy security of local communities.

According to the MACC, illegal scrap exports have resulted in tax revenue losses of more than MYR 950 million ($224,33 million) over the past six years, undermining national fiscal stability and eroding market confidence. Emphasizing that scrap metal is essential for low-carbon steel production, MSA stated that the illegal outflow of this vital resource creates multiple risks for the domestic market including raw material shortages for steelmakers, increased input costs, reduced competitiveness, disrupted production volumes, and a negative impact on sustainable steel goals.

As far as metallurgical sector is concerned, the export tax will be applicable to the products like steel slab, billet, most of the long and flat products, pig iron, coal and coke, HBI and iron ore.

The size of duties for the mentioned products to be exported outside of Russia and Eurasian Economic Union are tied to the ruble exchange rate and are as follows:

Export duty rate according to USD/RUB exchange rate

• 0 in case the exchage rate is less than 80
• 4%  in case the exchage rate is 80-85
• 4.5% in case the exchage rate is 85-90
• 5.5 % in case the exchage rate is 90-95
• 7% in case the exchage rate is 95 and above

For the cargoes declared for exports after October 1, 2023, the exchange rate monitoring period is from August 26 till September 25, and the latest publication results of estimated average exchange rates should be no later than September 27.

As a result, 15 percent export duties from India on major longs and flat steel products, as well as pig iron, have been lowered to zero, while the export duty of 45 percent on pellets has also been scrapped. The export duty on iron ore lumps and fines with less than 58 per cent Fe content has been reduced to zero, while that on iron ore with Fe content more than 58 percent has been reduced to 30 percent from 50 percent earlier. High export duties were imposed six months ago to help redirected some needed volumes to the local Indian market, and this led to a significant reduction in exports and the lower competitiveness of Indian mills, at a time when more Asian suppliers wanted to increase their export market share.

In other changes to Indian tariffs, an import duty of 2.5 percent has been imposed on anthracite, PCI, coking coal and ferronickel used by the steel industry and five percent duty on imported coke and semi-coke, from zero earlier.

The Indian government reduced import duty on ferro-nickel, coking coal from 2.5 percent to nil and that on coke and semi-coke from 5 percent to nil to bring down cost of production of steel mills and thereby soften finished product prices.

On the other hand, the government hiked export duty on iron ore and concentrates to 50 percent and imposed a new export levy on pellets at 45 percent. New export duty of 15 percent has also been imposed on pig iron and spiegeleisen in pigs, blocks, or other primary formats; flat-rolled products of different kinds, including hot-rolled, cold-rolled, plated and coated; bars and rods; stainless steel.

The rate of export duty for billet in Iran has declined to 2 percent from 11 percent valid previously, as the current export prices for ex-Iran steel billet are higher by nine percentage points than levels fixed in December 2021,  which have been taken as the base price. Meanwhile, the export duties for reinforcing bar is temporarily absent. It is noteworthy that the rates of export duty are not fixed, however are in direct connection with the gap between the current prices and prices fixed in December 2021.

Overall, the global long steel products market still looks positive, supported by strong demand, even though business has become more difficult due to higher logistical costs and time delays in getting goods from one place to another. Exporters are all under pressure due to the increase in freight costs. Container shipments are also very problematic. The only steel moving long distances seems to be Turkish steel and Asian flat rolled and coated products, which are heading everywhere.

Strength of demand remains a major supporting factor as economies rebound

Some regions and countries continue to enjoy strong demand, in particular, Europe, the US, Canada, the UK and Israel. Mills in these locations remain sold out far into the future. Steel is only a small part of the demand shock caused by economies rebounding, unprecedented stimulus packages, and logistic and supply chain disruptions. The steel supply side is catching up at a slow pace and supply shortages still continue to be seen across the Western world, especially in the US. It looks like this extra demand may continue at least until the end of the current year.

EU safeguard measures and Russian export duty to provide huge support for prices

The extension of EU safeguard measures is another issue that will have an impact on prices, in addition to the export tax on Russian goods. Russia’s imposition of a 15 percent export tariff may further restrict supply to the international market. The impact of the new export tariff in Russia remains to be seen. Most Russian mills are booked out for the next couple of months, allowing them to be in no rush to sell, and so they are keeping their prices more or less steady. The market seems to absorb the thought that producers in Russia will absorb all of the new export duty. All these factors provide huge support for prices.

Global steel output continues to rise, China upbeat after July 1 CPC anniversary

Worldwide production, including China, rose by 15 percent in the first four months this year, which may put pressure on prices. After the Communist Party of China celebrated its 100th anniversary on July 1, China came back in a positive mood.

Rebar demand in Turkey hit by high interest rates and inflation

Turkey is still struggling with high interest rates and inflation, which have put pressure on rebar demand. Although Turkey’s export volumes in the first half were up by 16 percent, this was not enough to bring domestic producers into the comfort zone.

Demand hits record-high levels in Europe, but steel users left in dire straits

Demand in Europe is still very strong and prices for deformed bars, wire rods and mesh have been reaching all-time high levels. The unchanged extension of the EU safeguard measures for another three years was certainly unexpected.

The EU has followed the example of the US which still has its Section 232 restrictions in place. The downstream industry in Europe was not able to find much support in Brussels, which has decided that the threat of trade deflection is still too high for Europe. It is now hoped that once the US changes its legislation, the EU will follow as well.

On the other hand, not only are prices a huge problem for the industry, but also more and more the reliable availability of steel is a big issue. Demand is still high but users are still suffering from supply problems and the new quota for rebar imports into the EU was almost completely consumed within the first week of the new quota period.

Extremely high freight rates contribute to regionalization of trade

Freight rates are extremely high for all forms of transport, which makes long distances difficult for ferrous scrap as well. Strong intra-European demand for scrap and steel as well as historically high scrap-to-steel spreads has continued to regionalize trading. It has also driven up the price of shredded as compared to HMS in the international markets. Demand levels remain elevated into the autumn, which will likely mean a continuation of stronger consumption in Europe than normal. Ahead of August, we may even see a negative impact in Russia as exporters scramble to move material to ports.

Life getting back to normal in northern hemisphere, high consumption levels seen globally

Summer has begun in the northern hemisphere and life is getting back to normal. Inflationary pressures seems to have lost some momentum after a period of strong producer prices. All markets worldwide are running well on high consumption levels, and there is still not sufficient material available to complete restocking.

Spreads between scrap and steel remain very strong

Iron ore prices are in a trading range of $210-225/mt.  Ferrous obsolete scrap is abundant. New production material and shredded scrap remains in very high demand in Europe and the US, with strong spreads over obsolete scrap. There are unprecedented spreads between shredded scrap and HRC. Long product spreads are significantly less, but are still twice as high as what a normal market might enjoy. The good times continue for steel producers, while consumers continue to sit at the table and eat whatever is served to them.

Main competition between steel consumers, not producers

Competition on the supply side is very reasonable. Price competition is between Turkey, India, Vietnam and China. Nowadays, the competition is between steel consumers and not steel producers.

Market situation generally positive and likely to remain so next year also

The market seems to be quite stable with a very satisfactory outlook. Overall, the market situation still looks positive and it seems it will continue positively next year as well.

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The base export rate is 15 percent and each product will be subject to a specific duty component in US dollars per metric ton. This will be calculated depending on the product group and the metal type (for non-ferrous metals) or the extent of processing required for materials (for ferrous metals) and taking into account the dynamics of global prices within the first five months of 2021.

The specific duty component for HR flats, semis, and rebar will be no less than $115/mt, while for cold rolled flats and wire it will be not less than $133/mt, and for stainless steel and ferroalloys it will be not less than $150/mt.

The duties will be applicable to exports outside the Eurasia Economic Union (EEU) and Russia will hold negotiations with the EEU partners in order to minimize the re-export risks.

“This document extends the period of validity of the export duty rate of €58/mt for waste and scrap of ferrous metals for five years – until September 15, 2026. Such conditions have been created to prevent a shortage of ferrous scrap in Ukraine, which will contribute to the smooth operation of the domestic metallurgical industry, preserving jobs and increasing tax revenues to budgets of all levels” the official press release stated.

In addition, the extension of the duty is expected to reduce greenhouse gas emissions, which is in line with Ukraine’s intentions to join the European Green Deal. “Recycling of scrap into steel requires only one third of energy costs in comparison with the product,on of steel from primary raw materials” the release said.