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The Ukrainian government is preparing to ban the export of scrap metal - a bill has been prepared

Ukraine / Ferrous metallurgy

The draft resolution proposes to introduce a temporary (until December 31, 2022) ban on the export outside the customs territory of Ukraine in the customs regime, the export of ferrous scrap (scrap metal), which is classified according to the code according to UKT VED 7204.

The Ukrainian government is preparing to ban the export of scrap metal - a bill has been prepared

The Ministry of Economy of Ukraine published for discussion draft resolution of the Cabinet of Ministers" On the ban on the export of ferrous scrap (scrap metal) ". The document proposes to introduce a ban until December 31, 2022, inclusively, the export of ferrous scrap outside the customs territory of Ukraine.

The Ministry of Economy indicates that the provision of metallurgical enterprises with scrap, which was formed on the territory of Ukraine, acquires strategic importance for the uninterrupted production and supply of metal products for the needs of the military-industrial complex, mechanical engineering, and restoration of infrastructure.

“Each ton of recycled scrap metal saves 1.5 tonnes of CO2, 1.4 tonnes of iron ore and 740 kg of coal. Recycling scrap and steel requires only 1/3 of the energy required to produce steel from virgin raw materials. The recycling of raw materials is becoming one of the key directions in European production. It not only reduces production costs, but also has a long-term environmental effect, because it reduces the use of iron ore, the processing of which leads to significantly higher energy costs and CO2 emissions, ”the explanatory note to the document says.

The Ministry, citing data from the Ukrmetallurgprom Association of Enterprises, notes that the price of scrap metal has almost doubled over the year (from USD 265 per ton in May 2020 to USD 499 per ton in May 2021). This increase in prices led to a dynamic growth in the export of scrap metal from Ukraine during 2021. In January-August, according to customs statistics, Ukrainian enterprises exported scrap metal worth $ 157.14 million, with a volume of 410.43 thousand tons, which corresponds to an increase in the export of ferrous scrap by 29.5 times in value terms and 19.9 times in quantitative terms compared to the same period last year.

“Since the beginning of February 2021, the difference between global scrap prices and domestic prices exceeds the level of export costs. They are $ 110 per tonne - for payment of duties, transportation and port transshipment. This opened up the opportunity for large-scale export of this metallurgical raw material. According to the indicated dynamics (according to the estimates of expert organizations), the annual volume of export of scrap metal may exceed 1 million tons, which is more than half of the total supply of scrap metal to Ukrainian metallurgical enterprises in 2020, "the document says.

The lack of the necessary volumes of scrap metal from domestic consumers (metal plants) can lead to a deficit in the scrap metal market (by the end of 2021, the deficit may be more than 500 thousand tons), as well as to a decrease in steel production in Ukraine, and, as a result, to a decrease in steel production by 9.5%, a decrease in the GDP growth rate at the level of 0.4%, a loss of 25 thousand jobs.

At the same time, the implementation of the draft resolution will ensure an increase in gross output in Ukraine by 2.49% (in monetary terms, it is estimated at 65 billion hryvnia), gross value added - by 1.6% and total exports - by 5.7% , and will also increase the number of jobs by about 194 thousand, in particular, in industry - by 115.9 thousand (the wage fund of employees will increase by 1.49%, or 28.4 billion hryvnia). p>

It is also projected to increase steel production in Ukraine by about 5 million tons per year, which will increase revenues to the budgets of all levels by UAH 17.6 billion.

Earlier, the Association of Enterprises "Ukrmetallurgprom" appealed to the President of Ukraine Volodymyr Zelensky and Prime Minister of Ukraine Denis Shmyhal with a request to support the position of the mining and metallurgical complex and to consider the possibility of an early introduction of a temporary ban on the export of scrap metal from Ukraine until December 31, 2023. Ukrtruboprom made a similar appeal. The innovative electric steelmaking complex Interpipe Steel also asked Shmygal to consider the introduction of a temporary ban. ArcelorMittal Kryvyi Rih also supported the appeal.

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