Although the tariff reductions implemented by Russia at the request of the World Trade Organization didn’t affect metal units this September, the strong internal lobby made its move to protect the local market. On September 1, the Ministry of Industry and Trade imposed a law restricting exports of ferrous metal scrap and waste (including stainless steel) by means of quotas assigned to exporters. Collectively, the amount of scrap permitted to be exported is now half of its initial volume. The quotas are valid until December 31 2019 and will be subject to review for 2020.
While metal traders are trying to adjust their operations to the new regulations, non-ferrous market participants are being cautious about what might come next. Even though non-ferrous metals have yet to face any quotas, rumour has it that the export of non-ferrous metal units might be moved to some sort of local commodity exchange.
Also, the weaker dollar is not making life any easier for exporters: at the time of writing, the ruble is 4% stronger in relation to the US currency than it was at the beginning of September. This is particularly affecting traditionally-exported metal units such as brass, aluminium and lead ingots.
Poland came up with a VAT payment procedure change on August 29, with the president signing a law that introduces a mandatory split-payment mechanism instead of a reverse tax on certain groups of commodities (including steel products, precious metals, non-ferrous metals, waste, scrap and recyclable materials). The mandatory split-payment mechanism with the necessity to freeze 23% of the tax will create significant pressure on cash flow and will become a major challenge for multi-nationals doing business in Poland, while at the same time pushing up metal export prices. In a bid to protect the metals industry, IGMNIR (the Economic Chamber of Non-Ferrous Metals and Recycling in Poland) has already prepared its negative response to a law that will slow the sector even more in what is already a complicated year for our industry.
TRM Group (BLR), Board Member of the BIR Non-Ferrous Metals Division