Scrap exports from Ukraine may be banned until the end of 2025 - Kalenkov

A zero quota could be implemented until the end of 2025 until a systemic solution to re-exporting raw materials is found

The Ukrainian Economy Ministry is considering the possibility of introducing a zero quota for the export of scrap metal. It is expected that such a decision may be taken in the near future.

Oleksandr Kalenkov, president of Ukrmetprom, told GMK Center in a commentary.

“The Verkhovna Rada Committee on Economic Policy held a meeting on March 28, which was attended by officials from the Ministry of Economy. There was proposed the option of introducing a temporary quota on scrap metal exports, at least until the end of 2025. We are talking about the introduction of a zero quota. Ukraine will only benefit from this, and I think that all our international partners will take it with understanding,” he said.

He reminded that scrap metal is a strategic raw material for steel industry in the process of “green transition”, and the European Union in The European Steel and Metals Action Plan has already provided certain points regulating the export of scrap metal. In its turn, the European Steel Association (EUROFER) also advocates that appropriate measures should be taken to limit the export of this type of raw material from the EU.

The reason for the need to introduce such a restrictive measure for Ukrainian scrap metal is that this strategic raw material is exported from Ukraine to the EU, but, in fact, it is re-exported to third countries, in particular, Turkey, which has a competitive advantage and provides various forms of preferences to its producers and protection of the domestic market. In turn, the Ukrainian economy and the state budget receive nothing from this form of export – neither foreign currency earnings and budget revenues, nor the development of steel industry and related industries.

“Part of scrap companies simply decided to bypass the previously established duty on scrap exports of €180 per ton and not to pay these funds to the state budget. If we take almost 300 thousand tons of scrap exported last year, we will get more than 2 billion UAH of lost revenues to the state budget. These are significant sums that the state loses in the conditions of war,” Kalenkov emphasized.

In his opinion, the form of limiting the export of this strategic resource should be extended for a longer period than until the end of this year.

“In my understanding, such a restriction on the export of scrap metal should exist, at least until the end of hostilities, and then at the stage of post-war reconstruction of Ukraine, no matter how long it takes. I think that such a restriction may last until Ukraine’s accession to the European Union, after which we will be subject to the EU rules,” added the head of Ukrmetallurgprom.

At the same time, according to Taras Kachka, Deputy Minister of Economy – Trade Representative of Ukraine, the zero quota may be introduced temporarily, until December 31, 2025, until a systematic solution is found for re-export of scrap, which passes from Ukraine in transit through the EU countries to Turkey and India.

In the first quarter of this year, export of ferrous scrap from Ukraine increased by 32% y/y – up to 80.9 thousand tons. In monetary terms, the export of raw materials for January-March increased by 25% – to $24.3 mln.

As previously reported, exports of scrap metal by the end of 2024 increased by 60.7% compared to 2023 – up to 293.2 thousand tons. In 2023, the volume of shipments of raw materials abroad exceeded 182.5 thousand tons, which is 3.4 times more than in the year, while in 2022 the indicator was at the level of 54.1 thousand tons.

Recall that the Cabinet of Ministers simplified the procedure for disposal of property for Ukrainian Railways (UZ), if its book value does not exceed UAH 500 million. This, among other things, will allow starting selling the accumulated scrap. It is expected that UZ will be able to sell more than 219,000 tons of ferrous scrap (worth UAH 1.6bn) and 3.8,000 tons of non-ferrous scrap and alloys (worth UAH 233m).