November 5, 2021 – The Russian government lifted the 15% export tax on aluminium alloys – billets and slabs – at the end of October with 30 days’ notice. The EU raw materials strategy is showing more and more critical problems. The next crisis is already in the kitchen. Opportunities and risks with scrap and a possible EU export ban on steel scrap.

Stainless Espresso: Russia lifts aluminium alloys export tax
Stainless Espresso: Russia lifts aluminium alloys export tax

Aluminium Alloys: Russia lifts export tax at the end of November 2021

The Russian government lifted the 15% export tax on aluminium alloys – billets and slabs – at the end of October with 30 days’ notice.

Export tax on metal products ends on 31 December 2021

Based on this announcement, it is highly likely that the export tax on other aluminium products, which officially ends on 31 December 2021, will not be extended either. The market has reacted accordingly and started to price the coming higher availability of aluminium into the Asian and European aluminium futures on the LME and SHFE.

EU watch out: The next commodity crisis is already in the kitchen

While one commodity crisis in the European Union may be easing slightly, the next one is already in the kitchen.

Fertilisers are becoming scarce

The EU banned nearly 2 million tonnes of fertiliser exports from Belarus at the beginning of 2021. Now Russia has announced that it will stop fertiliser exports for at least six months. According to government sources, this will affect about 5 to 6 million tonnes of nitrogen-based fertilisers. The aim is to secure domestic food production. With these 7 to 8 million tonnes less, the EU could lose about 40% of its annual fertiliser imports.

China has already restricted fertiliser exports

China has also significantly reduced exports of urea, sulphate and phosphate-based fertilisers. And in the European Union, fertiliser manufacturers have had to reduce or stop production altogether due to sharp increases in energy costs. In the United States, nitrogen is also in very short supply.

EU commodity strategy critically vulnerable

Overall, the Russian announcement shows once again how vulnerable the European raw materials strategy is as a whole. Looking further east, for example, comes the next major exporter of a critical EU commodity: Kazakhstan. More than 70% of the EU’s phosphorus needs are imported from there.

Europe must rethink its diplomacy

Already in the case of raw materials for steel and aluminium, siliocon and magnesium or natural gas and other energy products, the EU has shown in the recent past that it is directly dependent on other states and will very likely have to change its diplomatic approaches. Especially when the crisis reaches the dinner plates of European citizens.

Scrap metal as an option

Metal scrap is in high demand. Especially in steel and aluminium production it is a popular raw material to reduce production costs, but also to reduce CO2 emissions in the future.

Scrap metal contributes directly to CO2 reduction

Every year, around 630 million tonnes of steel scrap are recycled worldwide, avoiding almost 950 million tonnes of CO2 emissions and making a decisive contribution to climate protection.

Scrap quality must be improved

The biggest challenge in scrap recycling is quality. Scrap is often difficult to separate by grade and thus means a loss in purity and a loss of quality in production.

Scrap significantly increases steelmakers’ margins

For US steelmakers, who rely largely on electric arc furnaces, the use of scrap is one of the biggest margin advantages.

Is the export ban on steel scrap coming?

The EU is one of the world’s largest exporters of scrap. And exports up to 17 million tonnes of ferrous scrap per year. In view of the revision of the European Waste Shipment Regulation, it is not surprising that lobbyists are working hard to ban EU scrap exports.

Steel scrap ban could have severe consequences

The ban on EU steel scrap exports feared by the recycling industry could not only limit the possibility of a global CO2 reduction, but also lead to other raw materials becoming scarce as a result – be it through a shift in purchasing behaviour or countermeasures by other countries.

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