Ferrous scrap export economy rebounds in August despite uncertainties

Brazilian exports of ferrous scrap, an input used in the composition of steel, reached the figure of 30,864 tonnes in August this year, a substantial rebound from July when export levels did not top 5,614 tonnes. However, compared to August 2021, with 47,012 tonnes, foreign sales fell by 34.3%.

Year-to-date exports from January to August are pretty much in line, with a total of 267,978 tonnes in 2021 and 272,789 tonnes in the first eight months of 2021, according to data released by the Ministry of Economy.

According to Clineu Alvarenga, president of the National Recycling Institute (Inesfa), an organization that represents over 5,600 recyclable iron and steel processors, among other branches of the recycling economy, the market took action in August, “despite the situation abroad, the war in Ukraine, the stoppage of ports, and increases in freight.” Steel mills, he says, have been driving down prices in Brazil.

See below the track record of the volume of ferrous scrap (HS 7204) exported by Brazil from January 2021 to July 2022. The data is from DataLiner.

Brazilian Ferrous Scrap Exports | Jan 2021 – Jul 2022 | WTMT

Source: DataLiner (click here to request a demo)

According to S&P Global Platts, an American agency specialized in providing reference prices and benchmarks for the commodity markets, the Brazilian ferrous scrap market “went through the last week of August practically at a standstill, with few ongoing deals and conflicted with varied perspectives on price trends for the coming weeks.”

The S&P study shows that the general outlook for September is still pessimistic, and uncertainty will linger in the coming months. “This time of the year is characterized by a large amount of scrap available and little interest from mills, with price gaps that do not cover operating costs,” a recycler commented. Another recycling company states, “August was difficult, and September should be stable, with no drop in sales prices at foundries.” Because of the elections, there is also uncertainty about buyer behavior until the end of the year.

Federal tax exemption

Inesfa, according to Alvarenga, expects the Brazilian Congress to exempt the sale of recyclable inputs to the manufacturing industry from the federal social security taxes PIS and Cofins. The Recyclers Parliamentary Caucus is pushing for the approval of Bill 4035, which exempts taxes in the sale of recyclable inputs. The group has gathered support from 2010 congresspeople and has held meetings with parliamentarians from different states to try to pass the bill.

Last year, the Federal Supreme Court (STF) ruled to resume the incidence of PIS and Cofins on the sale of recyclable materials, overturning the incentive known as the Lei do Bem (11.196/2005), which existed for 15 years. This decision, which is still being questioned in court, is today the biggest concern of recyclers. Alvarenga says the measure “is a great disincentive to the activity, which could suffer a huge blow if the tax is collected again.”

In addition to iron and steel, Inesfa represents recyclers of glass, paper, and electronics, among others. These activities involve more than 5 million people who make a living from the collection and proper disposal of recyclables. Despite global uncertainties, ferrous scrap exports rebounded in August and reached 30,864 tonnes.

Source: Capital do Pantanal

To read the full original article, please go to: https://www.capitaldopantanal.com.br/geral/exportacao-de-sucata-ferrosa-se-recupera-em-agosto-e-atinge-30864/547736/

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