Ukraine’s Draft Law Proposes Steep Hike and Extension of Scrap Export Duty

SEATTLE (Scrap Monster): The Ukranian Parliament has submitted a draft law seeking notable hike in scrap export tariffs. The law also proposes extension of tariffs for a longer period. According to the terms of the draft law, the country intends to raise the scrap export tariffs to EUR 42 per ton from the current level of EUR 30 per ton. Furthermore, it calls for extension of tariffs up to September 2021.

The country, after being faced with acute shortage of scrap materials at domestic mills, had decided to triple the export duty on scrap metals from EUR 10 per ton to EUR 30 per ton in 2016. The move was intended to discourage exports out of the country, thereby ensuring adequate availability of scrap in domestic steel mills. Accordingly, the Parliament had adopted it as a law, initially for one-year period.

Later in July 2017, Ukranian President Petro Poroshenko signed a law extending the export duty from one year to two years. The law, which entered into force in August 2017, had fixed the scrap metal export duty at EUR 30 per ton until July 2018. Further, the law highlighted that scrap metal is the most important raw material for metallurgical enterprises, both strategically as well as in terms of energy savings.

Consequently, Ukraine had reported huge surge in government revenue, on account of the hiked export duty structure. Viktor Halasiuk , Head of the parliamentary Committee had stated that the state budget revenues had more than tripled from $4.1 million in 2016 to $12.6 million in 2017. Also, the deficit at Ukraine’s domestic mills dropped by almost 40% during the year of increased taxation.

Meantime, the latest customs statistics revealed by Ukraine’s State Fiscal Service suggests six-fold jump in scrap ferrous metal export during the first quarter of 2018. The exports during the period surged higher from 39,000 tonnes a year before to almost 140,000 tonnes during Jan-Mar ’18. The export values soared by nearly four times from $11,500 in Jan-Mar ’17 to $47,800 in Q1 this year.