As per latest updates received, the Russian government has announced to impose the ban on the exports of ferrous scrap (HS code 7204) which will be effective during July’2018 to January’2019 for the exports activities subjected to the far Eastern ports due to lack of infrastructure. According to customs data maintained with SteelMint, the country is fourth largest scrap exporter after Eu-28, US and Japan respectively and supplies around 5-6 MnT scrap annually.
Officials from the trade union of scrap collecting and scrap processing companies have sent enquires to the government. They are apprehensive that with the adoption of this resolution, about 15,000 people working in the scrap related industry may lose their jobs. Few of them believe that it is aimed at improving the situation of a large metallurgical enterprise which monopolizes the export of ferrous scrap majorly based in the Khabarovsk Territory of Russia, however, which contradicts the antimonopoly legislation of Russia affecting all ports based in Far East region. This is a serious damage to the entire metallurgical industry of the Far East both to industry and the employment of local people.
What would be the global impact of it?
Till July’18, the impact of this is hardly expected much on the global market and sources believe that they would continue both buying and supplying liquidities without hesitation with Russia. However, after its imposition exports of scrap will be discontinued from Far East ports which may extend till Apr’19 amid winters in Russia impacting the supply of ferrous scrap in the market. In 2017, Russia exported 4.98 MnT ferrous scrap out of which Turkey occupied largest (47%) followed by other major importers like Belarus (22%) South Korea (20%) and Spain (5%) respectively.
Earlier attempts to introduce a ban on scrap exports – Attempts to introduce a ban on the export of ferrous scrap have been made since 2002. Earlier to this, three attempts to impose the ban were announced in 2002, 2009 and 2012 respectively. In 2009, Russian government banned scrap exports for 18 months. According to sources, at that time over 50 Russian scrap suppliers located in the Far East region were bankrupted and the export infrastructure was lost in Russia. At that time the Federal Antimonopoly Service (FAS) took the side of scrapers and the ban was discontinued after around 18 months.
What would be the long-term impact of exports ban if it continued further?
National Self-Regulating Organization of Metal and Ferrous Metal Scrap and Waste Recyclers, have expressed that on the limited scrap exports, the collection volumes will fall by 30% in the first year (2018), by 2 times in the second year (2019) and it will be continued further, as a result, there will be an acute shortage of raw materials, and large enterprises like ‘Amurmetal’ for scrap exports in Russia will first suffer, then the price of scrap will increase, and by 2020, metallurgists will be forced to import scrap from large scrap generating countries like China for making the money.
It is also known that the customs service will strengthen the administrative measures towards enterprises that export ferrous scraps – thus, these export restrictions will also affect the exports of non-ferrous metals, which also carries certain risks.
-Inputs from REGNUM, Russian News Media
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