Russia’s government has temporarily lifted the export duties for some steel products and raw materials for mills located in the Donetsk and Lugansk regions of Ukraine currently occupied by Russian troops.
The official statement reads that export duties for the mentioned regions will be not in force until December 31, 2024, while the measure affects 900,000 mt of steel semis, 16,000 mt of ferrosilicon and 200,000 mt of coke. In addition, from September 1 and until the end of the year, zero percent export tax will be in place for 80,000 mt of pig iron and 184,000 mt of wire rod.
The export duties on steel and some raw materials had been in place from October 1, 2023, and the rate varied depending on the exchange rate – 4.0 percent at $1 = RUB 80-85, 4.5 percent at $1 = 85-90 and 5.5 percent at $1 = RUB 90-95. The maximum rate of 7.0 percent is for the rate exceeding $1 = RUB 95. The current rate is $1 = RUB 86.
The market players generally do not expect any significant impact from the decision on duties for the steel market. The flow of steel billet from the Donbass region for export had already become limited lately and the market is currently driven by aggressive offers from China. No significant impact is expected in the pig iron segment either. “I don’t think that it will impact prices as now buyers are determining the market. Whatever will be more profitable, that will be exported [from Donbass]. But for now, hardly anything is profitable,” a trader said, adding that, even though this month a blast furnace was restarted at Yenakiieve, demand for pig iron is very weak.
The latest offers for pig iron from Russia have been at $410-420/mt FOB Black Sea, but buyers’ real price ideas have already fallen to $400/mt FOB and below. “I think, $400-405/mt FOB is the best price, but even that will hardly attract demand due to the summer,” another source said.
Yenakiieve Iron and Steel Works (3.3 million mt), Alchevsk Iron and Steel works (5 million mt), Donetsk Metallurgical Plant (1.8 million mt) and Donetsk Electrometallurgical Plant (1.05 million mt) are the largest assets in Ukraine located on the territories currently occupied by Russian troops, following the invasion which started in 2014. Ilyich Steel Works (4.3 million mt) and Azovstal (5.3 million mt) located in Mariupol, occupied by Russia since February 2024, are considered to be non-operational. “Azovstal was severely damaged due to heavy shelling and Ilyich, I think, may have been scrapped or at least idled,” a market source told SteelOrbis.