In a strategic move aimed at boosting the country's ferrous scrap industry, the Russian government has decided to raise the volume of scrap metal exports allowed outside the customs territory of the Eurasian Economic Union. This decision, which will increase the export quota by 100,000 metric tons, is seen as a response to the country's changing domestic market conditions. As of now, the new export quota will total 650,000 metric tons, and it is valid until December 31, 2024. This policy change provides Russian producers and traders with greater flexibility and access to international markets, particularly those outside the EAEU, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia itself.
The increase in the export quota comes at a time when there is a surplus of ferrous scrap in Russia, with domestic demand not fully absorbing the available supply. By allowing industry participants to sell more raw materials abroad, the government aims to prevent excess stockpiling within the country. The adjustment could help mitigate potential financial losses for scrap producers, who may have otherwise faced difficulty selling their products locally. With many global markets seeking ferrous scrap for steel production, Russia’s move to increase the export quota opens up opportunities for local scrap suppliers to capitalize on foreign demand.
While the volume of ferrous scrap exports has been increased, the duty rate for exports remains unchanged at 5%, but with a minimum of €15 per metric ton for quantities within the quota. Once the quota is exceeded, the duty rate continues at 5%, but with a higher minimum of €290 per metric ton. This system of tiered duty rates encourages exporters to work within the limits of the quota to benefit from the lower duty rates. It is designed to ensure that Russia maximizes the financial benefit of its scrap exports while maintaining a level of control over the flow of raw materials.
The Russian Ministry of Industry and Trade had initially proposed extending the quotas for ferrous scrap exports until December 31, 2025, signaling the government’s long-term commitment to support the sector. However, the decision to increase the quota for 2024 reflects an immediate need to manage surplus supplies and optimize export potential. By focusing on the 2024 deadline, the Russian government allows enough time for scrap metal exporters to adjust their operations and make strategic decisions about their international sales.
The timing of the quota expansion is crucial, as global demand for ferrous scrap has been fluctuating. Countries such as Turkey, India, and several European nations are major importers of ferrous scrap, using it to produce steel through electric arc furnaces. The increased quota provides Russian exporters with the opportunity to tap into these markets, where scrap metal is a key raw material for steel production. By ensuring that Russian exporters have greater access to these international markets, the government aims to bolster the competitiveness of Russian steelmakers and scrap producers on the global stage.
However, the increase in export quotas could have mixed implications for domestic industries within Russia. While some exporters will benefit from the ability to sell larger volumes abroad, there are concerns about the potential impact on local steel production. Ferrous scrap is a vital raw material for the Russian steel industry, which has historically relied on domestic sources of scrap for production. As the government opens up more export opportunities, it could create a situation where local steel manufacturers face higher prices or tighter supplies of raw materials, particularly if demand for Russian scrap increases significantly from international buyers.
Despite these challenges, the overall goal of the Russian government’s policy is to strike a balance between boosting exports and maintaining sufficient scrap availability for domestic steel production. By adjusting the quotas, the government can help scrap producers find lucrative foreign markets while still ensuring that Russian steel manufacturers have access to the raw materials they need.
Looking forward, the Russian government’s decision to extend the scrap export quota until December 2024 may be a sign of ongoing flexibility and responsiveness to market dynamics. As global steel markets continue to evolve and demand for raw materials fluctuates, Russia’s scrap metal industry will likely play a key role in meeting international needs. If the policy proves successful in balancing export growth with domestic supply, it could lay the groundwork for further quota expansions or adjustments in the future, helping Russia maintain its position as a significant player in the global scrap metal market.
