South Africa: Govt suspends ferrous scrap exports for two months

South African government has suspended scrap exports for two months to ensure an affordable supply of scrap to support the domestic industry, as per new circular released on 3 Jul'20. The temporary export ban is expected to impact buying patterns of South Asian markets, who were already adjusting to the UAE scrap export suspension from mid-May'20.

Reliable sources confided to SteelMint, that domestic steelmakers and other scrap buyers in South Africa had been requesting the government's attention on the shortage of quality scrap material's availability for the domestic industry's consumption, which had also pushed the scrap prices up. The new guidelines by the government come in the wake of these persistent requests by the domestic scrap consumers.

In the export control notice, the ministry stated under section 6 of the act, that ferrous and non-ferrous scrap may be export from hereto (from the date of publication), only if the export permits for the same, had been obtained or applied prior to the date, 3rd Jul'20. Hence, deals closed prior to 3rd July with required permits, will not be affected.

Although a price preference system for scrap trading was already in place since last 7-8 years, wherein, prior to exporting scrap, suppliers had to offer the material to domestic buyers at a lower price. However, in spite of such rules, domestic consumers were facing difficulty obtaining scrap at affordable levels, especially after covid-19 pandemic had aggravated the scrap supply shortage, SteelMint learned.

In June'20 the country exported a total of 20,404 t of ferrous scrap, declining significantly by 70% as compared to 68,427 t exported in May'20. While a total of 0.24 mnt of ferrous scrap exported from Jan'20 to Jun'20, in comparison to just 0.18 mn t during Jan-Jun 2019. South Asian markets, India, Pakistan and Bangladesh combined import 79% of the total scrap exported by South Africa in FY 20.

To download the govt notification click here