The Government has published a draft resolution to restrict scrap exports

The Ministry of Economy proposes to license scrap exports with a zero quota for 2025

The Ministry of Economy of Ukraine has submitted for public discussion a draft resolution of the Cabinet of Ministers that proposes to introduce licensing and quotas for the export of ferrous scrap with a zero quota for 2025.

The relevant amendments should be made to Annex 1 of CMU Resolution No. 1481 of December 24, 2024, which defines the list of goods whose export and import are subject to licensing, as well as annual quotas.

This refers to ferrous scrap classified under HS code 7204. If the decision is approved, actual exports of scrap metal will be prohibited, as licenses will be issued only within the approved quota, which is zero.

This approach has been used in Ukraine before, particularly during periods of peak demand for raw materials for the domestic steel industry. The government’s new initiative is driven by its desire to ensure a stable supply of raw materials to the domestic market, including for companies that are ramping up production in the wartime.

In accordance with the Law “On the Principles of State Regulatory Policy in the Field of Economic Activity,” the draft resolution, explanatory note, and regulatory impact analysis are already available for public discussion. Suggestions and comments on the draft can be submitted in accordance with the established procedure.

Scrap exports from Ukraine increased by 60% y/y last year to 293.2 thousand tons. In 2023, shipments of raw materials abroad exceeded 182.5 thousand tons, up 3.4 times year-on-year, while in 2022 the figure was 54.1 thousand tons. Last year, the key consumers of raw materials were Poland (248.6 kt), Greece (34.2 kt), and Germany (6.5 kt).

According to GMK Center’s research, in the long term, scrap metal will gradually lose its status as an export commodity due to global trade barriers. Scrap is increasingly seen as a strategic resource for green metallurgy and decarbonization, so countries are seeking to preserve raw materials for their own needs. It cannot be produced in the required quantity in a timely manner, so an affordable price in the domestic market is becoming a key condition for the competitiveness of national steel producers.

Currently, 48 countries have already imposed restrictions on scrap exports, and more than a third of them have completely banned them. This trend will only intensify as global demand for scrap grows: in the EU due to decarbonization and the CBAM mechanism, and in other countries due to the transition to greener production technologies. In total, 77% of the world’s steel is produced in countries that have already imposed or plan to impose restrictions on scrap exports.

In such circumstances, it is more reasonable to export finished steel made from scrap rather than scrap itself, as steelmakers are among the largest taxpayers in Ukraine.