Ukrainian government imposes export quota on steel scrap in 2012

Ukraine’s Cabinet of Ministers approved an export quota on steel scrap of 0.9 mmt in 2012, Interfax reported yesterday. According to the latest official data, Ukraine increased sales of scrap abroad by 87% yoy to 90 kt in 2M12.

Roman Topolyuk: While the size of the quota more than covers current annualized export volumes, it creates hedges for steel makers against a surge in scrap export, and it is a signal for scrap suppliers that the government is ready for further export limitations. The premium on domestic steel scrap to export prices fell from USD 30/t in February to USD 20/t now, on the decline in domestic demand and may fall further following the new regulation. This decrease in the premium will benefit main domestic consumers like Metinvest (METINV).