Ukraine triples scrap export duty

The Ukrainian parliament (Rada) has more than tripled the tax on ferrous scrap exports as part of the 2022 state budget.

The tax will increase the current scrap export duty from €58/tonne to €180/tonne ($203.10/tonne) effective from December 3rd to September 2026. The Rada accelerated the increase by making a change in the country's legislation to overcome the deficit.

“The increase will help increase revenue to the state budget from overseas trade operations with scrap,” Rada said.

The amendment was rejected by the government on 10 November, following the Ukrainian economy ministry's proposal to raise the tax to €200/ta a month ago. Prior to that, the ministry pressed for a full ban on ferrous scrap exports until December 2022.

The increase reflected almost the same action taken by Russia at the end of last week . Like the Russian authorities, Ukrainian parliamentarians have largely ignored the arguments of the scrap industry, including a proposal by the industry association UAVtormet in September to hire a reputable international inspection company to assess the structure and resource potential of Ukraine's scrap reserves.

UAVtormet has repeatedly noted that increased demand from exporters and relatively high domestic prices have caused Ukrainian scrap collection to increase by 36.6 percent year on year to 3.78 nm tons in the January-November period.

Ukraine's ferrous scrap exports have increased sharply this year due to extremely limited shipments for several years. The rise in imported scrap prices in Turkey to several-year highs has allowed Ukrainian scrap exporters to recoup all the additional expenses above local scrap prices, including the €58/tonne export tax, shipping costs and port fees.

Argus Turkey scrap evaluation recorded by 68.9pc per year, with 80:20 HMS Jan-November average of $462.79/t cfr. As a result, Ukraine's January-November ferrous scrap exports increased to 547,500 tons from 33,000 tons in the same period last year.

However, domestic scrap deliveries are also higher on an annual basis. In the January-November period, it increased by 17.4 percent to 3.06 million tons, and domestic prices increased by 63 percent year on year to 8,098 hryvnia/tonne ($295.71). The scrap stocks of Ukrainian mills are estimated at 150,000–155,000 tons as of December 1.