Ukrainian enterprises in January-September this year increased exports of ferrous metal scrap by 27 times in monetary terms compared to the same period last year, to $175.59 million from $6.46 million.
According to statistics released by the State Customs Service, in September alone, exports of scrap metal totaled $18.44 million, while in September 2020 it was $1.13 million.
At the same time, in January-August of this year, the country increased imports of scrap metal in monetary terms by 2.05 times, to $31.81 million. In September, imports of scrap was worth $2.87 million.
The Verkhovna Rada adopted at the final reading bill on amendments to Section II Final and Transitional Provisions of the Law of Ukraine on amendments to certain laws of Ukraine concerning reducing the shortage of ferrous scrap on the domestic market, which is proposed to prolong the export duty in the amount of EUR 58 per tonne for another five years.
Some 291 MPs backed the bill at a parliamentary session on Tuesday.
One of the authors of bill No. 5175, Deputy Head of the Verkhovna Rada Committee for Economic Development Dmytro Kysylevsky, in his Facebook post, expressed his satisfaction with the adoption of the bill.
At the same time, he recalled that the duty was first introduced in 2016 to moderate the export of scarce raw materials from Ukraine. The metallurgical industry, which provides 10% of the national GDP, 35% of merchandise exports and 200,000 jobs, cannot work without it. After all, there is no technology that allows getting steel without using scrap metal.
“As the deputy head of the parliamentary committee for economic development, I understand that only the export of products with high added value will allow us to become a strong and rich country. In this case, 1 tonne of exported scrap gives Ukraine a little less than UAH 2,000 (this is the payment of the EUR 58 duty), while 1 tonne of the same scrap processed into finished steel products at Ukrainian steel plants brings about UAH 8,000 in taxes. That is, it is four times more profitable for the state to process scrap into metal and then into finished products than to export raw materials,” the parliamentarian said.
According to him, in this case there is no question of choice: to export raw materials or processed products with added value. At the same time, he said that if the initiative to extend the duty did not receive the necessary support from MPs, then 21,000 jobs and about UAH 1 billion of taxes per year would be lost for the Ukrainian state.
“And, of course, we need to think about the future. The EU Green Deal further increases the value of scrap as a raw material for metallurgy: its use in electric arc furnaces reduces CO2 emissions by up to 90% compared to conventional technologies of steel production in converters and open-hearth furnaces. And since Ukraine undertakes to reduce CO2 emissions, it is necessary to take care of the resources for this, as other countries are already doing,” Kysylevsky said, adding that the European metallurgical association Eurofer generally demands to ban the export of scrap metal from the EU, taking into account the EU Green Deal.
“At the same time, I want to reassure the skeptics: the bill does not contradict our international obligations. This is a temporary measure that is not discriminatory. It complies with the WTO law on security exceptions: we have a war, a chronic trade deficit, Crimea is annexed. International partners understand this. Therefore, no claims were made against Ukraine during the period of the duty since 2016. And now official Kyiv has a confident negotiating position in the WTO,” the MP said.
Ukrainian enterprises in 2019 decreased exports of ferrous scrap metal by 87.2% compared to 2018, to 42,182 tonnes.
According to customs statistics released by the State Fiscal Service of Ukraine, exports of scrap metal in monetary terms fell by 88.9%, to $11.781 million.
In 2019, the country increased imports of scrap metal in kind by 17.2% compared to 2018, to 49,934 tonnes. Imports in monetary terms decreased 6.4%, to $34.254 million.
Imports of scrap metal for the mentioned period arrived mainly from Turkey (62.55% of deliveries in monetary terms), Russia (28.45%), and the Netherlands (2.23%); and major exports were shipped to Turkey (85.88%), the Netherlands (6.27%) and Germany (5.37%).
Ukrainian metal companies in 2019 imported 2,502 tonnes of ferrous products obtained by direct reduction of iron ore (HS code 7203) – hot briquetted iron (HBI), which is a substitute for pig iron and scrap metal for $811,000. The HBI was imported from Russia for a total value of $810,000 and China for $1,000.
The Verkhovna Rada Committee on Industrial Policy and Entrepreneurship has supported the new “metallurgical law” initiated by the Radical Party of Oleh Liashko, which proposes raising the current export duty on scrap metal from EUR 42 per tonne to EUR 54 per tonne for three years. According to a press release of the parliamentary committee, citing its chairman Viktor Halasiuk, this bill, due to the increase in export duties, will eliminate the shortage of raw materials for steel mills and keep jobs for Ukrainians.
At the same time, it is noted that starting from 2016, thanks to the adopted laws on increasing and extending the export duty on scrap metal from EUR 10/tonne to EUR 30/tonne, and then to EUR 42/tonne, positive trends are observed in Ukraine in the provision of metallurgical plants with these raw materials. For the third year in a row, the volume of domestic scrap metal supplies has been growing, the scrap metal deficit decreased from 850,000 tonnes to 300,000 tonnes. Today, this resource provides 98% of the needs of the metallurgical industry.
