Russian steel companies have called for the Russian government to double export taxes on ferrous scrap metal, the press service of the Russian Steel consortium reported.
If this suggestion is accepted, the European steel industry will face a jump in expenditures due to an increase in foreign prices for scrap metal.
European scrap metal prices have already climbed 50 percent due to an advance of Ukrainian export taxes, which are about $32 per ton. This tax has been in place since the beginning of this year.
Russian exports of ferrous scrap amount to about 6 million tons per year. The current export tax, which amounts to around $16 per ton, was introduced in 1999 for restricting waste metal prices on the domestic market.
Russia may complicate its relations with the European Union by imposing higher export duties for scrap metal. The result could be the EU dropping metal export quotas for Russia.
Victor Makushin, president of the MAIR industrial group, said, "Such EU actions would be quite logical and fair. But lower quotas is not the only thing that EU may do about Russia. The EU is likely to choose even tougher measures."
An increase in scrap metal prices in Europe will be destructive for profits of metal smelters which "are far from being perfect now, Makushin added." It's still to early to speak about the period when these export duties will be raised. The chances are "50x50" here, the official stressed. However, the minimum period of time here would be one month. From the economic point of view, it would be better to raise them either now or in fall. In summer the scrap metal market is normally overstocked.
RBC