Ukraine’s scrap collection falls because of export duties

Ukrainian scrap collection volumes have fallen over the past year, dented by a decline in availability of obsolete scrap and a sharp fall in exports.

Total Ukrainian scrap collection fell by 7 percent on the year to 1.04 million metric tons from January to April, UAVtormet President Vladimir Boubley says. The trend continued in May amid extended holidays at the beginning of the month, reports Argus Media.

Ukrainian scrap collection stood at 3.67 million metric tons last year, a 1.3 percent year-on-year drop from 3.74 million metric tons in 2017, UAVtormet says.

Boubley says falling amounts of obsolete scrap is the main reason for the lower tonnage. Obsolete scrap accounts for 75 percent of Ukraine’s scrap generation, reports Argus Media.

The fall has also been caused by a duty on Ukrainian ferrous scrap exports that has resulted in export volumes plummeting.

Ukrainian steelmakers’ inflows of home-sourced scrap have increased but have not reached a level matching steelmakers’ requirements. Their ferrous scrap receipts totaled 1.36 million metric tons from January to May, up by 4.6 percent on the year but still 4 percent below demand, according to data from state-controlled metals association Ukrmetallurgprom.

In May, domestic supplies of ferrous scrap reached 350,000 metric tons, down by 5.7 percent on the month but up by 9.4 percent up on the year, Argus Media reports. This left steelmakers’ scrap stocks at 130,000 metric tons as of June 1, up by 30 percent on the year and by 18.2 percent on the month.

The rise in domestic supplies was largely underpinned by exports constantly falling since July 2018, when Ukraine raised its duty on ferrous scrap exports to €42 per metric ton ($47 per metric ton) from €30 per metric ton. The levy will stay at this level until September, when it will rise to €58 per metric ton until September 2021.

Ukraine exported about 36,500 metric tons of ferrous scrap from January to May, around seven times lower than in the same period of last year, according to data from the state fiscal service. The country shipped 8,086 metric tons in May, with dispatches standing at 8,791 metric tons in April, 8,246 metric tons in March, 8,242 metric tons in February and 3,140 metric tons in January.

Turkey remained the largest recipient of Ukrainian scrap from January to May, taking 88.8 percent of the total, followed by the Netherlands with 6.3 percent and Germany with 3.4 percent.

Ukraine’s revenue from scrap exports dropped sharply, to $9.98 million from January to May. A year earlier, it was at $83.48 million, which was additionally affected by pressure from lower scrap prices at export outlets.

Argus Media’s daily assessment for Ukrainian and Russian A3 grade scrap averaged $270.30 per metric ton FOB Black Sea from January to April, down by 11.6 percent on the year.