Since the beginning of the year, the export of scrap from Ukraine has grown 9 times

Due to the positive situation on the metallurgical market, key indicators of the domestic scrap market have grown significantly over 5 months. Scrap scrap increased by 35% – up to 1.57 million tons, scrap supplies to metallurgical plants – by 22.6%, up to 1.35 million tons.

Since the beginning of February, the difference between world scrap prices and domestic prices has been much higher than the level of export costs. They are $110 per ton – for payment of duties, transportation and port transshipment.

This opened up an opportunity for large-scale export of this metallurgical raw material. In May, external deliveries amounted to 59.3 thousand tons, which is almost twice as much as in the entire last year, when this figure was 36 thousand tons. In just 5 months of this year, exports increased 8.9 times – up to 146.3 thousand tons

In an attempt to slightly reduce the difference between world and domestic prices, local consumers in the second half of May raised purchase prices to UAH 8,000/mt. At the same time, for a significant part of May, world prices did not fall below $500/mt, which left a window of opportunity for export. What a part of the operators of the scrap collection business actively used.

Amid growing exports, representatives of the metallurgical business started talking about the need to introduce a temporary ban on the export of scrap metal. This is in addition to the extension of the export duty of 58 euros per tonne for another 5 years.

Metallurgists talk about a deficit of scrap metal. But it was not there in recent years, and it is not now. Monthly deliveries of scrap to metallurgical plants in April-May are 30-40 thousand tons lower than those in January-February. The May indicators of scrap collection and deliveries were approximately at the level of April, which indicates a balanced situation: what domestic consumers do not buy is exported.

Even with the growth of domestic steel production, steel mills have accumulated record stocks of scrap in their warehouses. At the beginning of June there were about 300 thousand tons of them, which is 3 times higher than the standard value. Metallurgical plants do not have time to consume the volumes of raw materials that they themselves purchase. It is difficult to understand how against this background one can speak of a shortage of scrap.

Further dynamics of the domestic scrap collection market depends on the situation on the global steel market, which will have a positive environment at least until the end of the year. It is expected that by the end of 2021, scrap procurement in Ukraine will amount to 3.35-3.45 million tons, scrap supplies to metallurgical plants – 3.2-3.25 million tons.