Ferrous scrap the new hard currency, UAE imposes export ban
Ferrous scrap the new hard currency, UAE imposes export ban

7 October 2022 – The United Arab Emirates has imposed an export ban on ferrous scrap. In South Korea, storm damage at one of the largest stainless steel producers is causing prices to rise dramatically, and availability is already limited. And EU imposes new sanctions on Russian steel products and restricts imports from third countries.

New hard currency: ferrous scrap

The fact that scrap, whether ferrous or not, is increasingly becoming the new oil or hard currency and a strategically important raw material should have come to the attention of most market participants by now. More and more governments are now addressing the issue and imposing export bans on scrap and other important recyclable raw materials, such as waste paper.

UAE imposes export ban on ferrous scrap

Now the United Arab Emirates have also imposed an export ban on ferrous scrap, as the customs authorities there have informed us. However, not only steel and iron scrap are affected by the export ban, but also stainless steel scrap and waste paper. The export ban is currently set to last at least 6 months.

Further shortage of scrap

What the further shortage of the raw material scrap is likely to have for the short-term steel price development is easy to deduce. But also in the medium to long term, the intensified global shift to production in Electric Arc Furnaces (EAF) is likely to lead to a run on steel and stainless steel scrap.

South Korean stainless steel prices rise significantly

According to market sources, South Korean steelmaker POSCO, which was badly hit by Typhoon Hinnamnor, will need at least another 6 months before production can be fully restarted. This has an impact on stainless steel prices there, which have risen by more than 33% within one month. The availability of South Korean stainless steel on the world markets is already limited.

New EU sanctions package against Russia

Yesterday, the European Union adopted the 8th sanctions package against Russia. Despite fierce opposition from European re-rollers, member states have sanctioned semi-finished steel products, such as steel slabs.

Further processing in third countries now also affected

It has now been decided, as we had already warned several times, that in future products from third countries containing steel products originating in Russia will also fall under the European sanctions and their import will be prohibited in future.

A few transitional periods apply here as well, but it should be more than sensible to start adjusting one’s own supply chains. Otherwise, there is a risk not only of severe penalties from European authorities, but also of delivery failures for urgently needed products.

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