The Russian Ministry of Economic Development has prepared a bill to extend current restrictions on the export of scrap ferrous metals, including the system of regional quotas and export duties, for another six months, from January 1 to June 30, 2024.
The bill published yesterday in generally expands the existing provisions set out in the government decree of early July, which sets the total quota of ferrous metal scrap allowed for export from Russia in the period from January 1 to June 30, 2024, at 600,000 tons. It is expected that it will be approved and finalized by the end of November.
According to the bill, exports within the allocated quotas for destinations outside the Eurasian Economic Union (EAEU) are subject to an export duty of 5%, but not less than 15 euros /T. Exports outside the quota will be subject to a higher duty of 5%, but not less than 290 euros/t, as it was charged during 2022.
The 80% segment - 480,000 tons - of the total quota should be allocated until December 22, 2023 among exporters based on previous activity, remaining proportional to the tonnage they shipped between January 1 and December 15, 2023 from all regions, with an adjustment factor applied for each region.
As before, coefficients will be applied to increase or decrease tonnage intended for export. Among key export destinations, the lowest coefficient of 0.9 is expected for some northwestern regions, including St. Petersburg, a traditional key market for ferrous scrap exports in Russia. But this is higher than the 0.38 that northwestern traders had in the second half of this year.
The northwestern regions - Murmansk and Kaliningrad - will be assigned higher coefficients - 1.6 and 1.5 respectively. The Far Eastern Primorsky Territory will receive a coefficient of 1.
The remaining 20% of the regional quota - 120 thousand tons - is proposed to be distributed among market participants who supplied scrap ferrous metals to important Russian industries or metallurgical companies in the period from July to December 2023. This part of the quota should be finalized around January 26, 2024.
According to estimates by the Russian scrap trade association Rusl, exports of Russian ferrous scrap outside the EAEU amounted to about 813,000 tons in the first three quarters of this year , which is 128% more than last year. This increase is entirely due to the abolition of the export duty of 100 euros per tonne from the beginning of 2023. The high duty, along with international sanctions against Russia, has reduced scrap exports to a minimum in 2022.
