Russia to introduce ferrous scrap export quota

Russia will restrict ferrous scrap exports outside the Eurasian Economic Union (EEU) by implementation of regional quotas for six months starting on 1 July, the country's government said today.

And it stated that from 1 January 2020, exports of ferrous scrap will be conducted exclusively by means of an exchange-based tender process. The government will draft a bill to support this proposal by 1 September.

Russian deputy prime minister Dmitry Kozak instructed the trade and industry ministry, economy ministry and federal anti-monopoly watchdog FAS to table the draft bill on quotas before 25 June.

The document will introduce quotas from 1 July until 31 December 2019, which will be distributed between exporters proportionally to tonnage they shipped in the period from 1 January 2016 until 31 December 2018 from all regions, with an adjustment coefficient applied for every region.

The lowest coefficients of 0.6 and 0.5 will be applied to Russia's far east and southern regions, respectively, which experience the most severe shortage of ferrous scrap, the government said.

The overall far east coefficient will apply to the main exporting centres in the region including Khabarovsk, Vladivostok and Nakhodka.

Some sparsely populated far east regions will receive higher coefficients. Sakhalin will get a 1.2 coefficient, while the farthest eastern regions of Kamchatka and Chukotka — as well as the west Siberian region of Krasnoyarsk — will receive a factor of 1.

Most northwest Russian regions, including St Petersburg, will receive a 0.8 coefficient, while a 1 coefficient will be settled for the Kaliningrad and Murmansk regions. The coefficient for Arkhangelsk will be set at 1.5, and at 0.75 for all other Russian territories.

The coefficients will be applied in order to increase or decrease tonnage meant for exports.

Most Russian exporters Argus contacted for feedback have so far refrained from comment at this time, citing a lack of understanding as to which mechanisms of the proposed restrictions will be eventually implemented.