The United Arab Emirates Ministry of Economy has announced a ban on exports of ferrous scrap and the Abu Dhabi Department of Economic Development (ADDED) has recently issued a circular saying “Prohibiting all concerned and registered facilities in Abu Dhabi from exporting iron scrap and waste paper scrap and cardboard scrap”. This UAE ban is for a period of 4 months starting May 15 and can be extended later.
UAE’s Ban on Ferrous Scrap
UAE has decided to stop all the ferrous scrap export for four months which can be renewed later. The export ban is intentionally reinforced to help the raw material supply which is required by the economic stakeholders for their manufacturing industry.
The Ferrous scrap and Recovered paper are traded under the following harmonized tariff codes
Ferrous Scrap (7204.10, 7204.21, 7204.29, 7204.30, 7204.41, 720449, 7204.50)
Recovered Paper (4707.10, 4707.20, 4707.30, 4707.90)
Why the UAE has issued this ban on Ferrous Export?
The three major crude steel makers in UAE are Emirates Steel and Arabian Gulf Industries, both located in Abu Dhabi, and Shattaf Steel located in Sharjah-based. These mills have announced a decreased outline in the production out for the month of April as there is a slowdown in the economic activity of UAE. The UK headquartered Kallanish commodities, a business media has discovered that there is a domestic scrap shortage in UAE arising from the ongoing COVID 19 lockdown. In response to that UAE has declared this ban on ferrous scrap.
Abu Dhabi’s Export Ban on Iron Scrap, waste paper, and cardboard
Rashed Abdul Karim Al Balooshi, under-secretary of ADDED has quoted that this resolution has taken to help the small and medium-sized enterprises whose importing capabilities on raw materials had been affected by the ongoing COVID 19 crisis.
In the industrial sector, Iron Scrap, waste paper, and cardboard Scrap play a major role as raw materials. To make sure that the country is self-sufficient to supply the raw materials for its local manufacturing facilities, ADDED has implemented this ban. This supports the nation to uplift the nation’s economic crisis.
UAE’s Excessive Export on the Iron and Paper Waste Scrap
The ADDED has declared this ban also to secure the nation’s economy. Abu Dhabi’s customs have revealed a report saying that emirates export on iron scrap was 6,163 tonnes when compared to the export on 2018 which was 1590 tonnes. On the other hand, 29,530 tonnes of paper waste scrap were exported in 2019 which is again a big figure when compared to 2,230 tonnes in 2018.
Impacts of UAE’s Export Ban on South Asian Countries.
UAE is one of the largest ferrous scrap sources in South Asian countries. The export ban on materials which are quoted under the HS codes very nearly encompass all the ferrous scrap and stainless steel scrap. The Export ban largely hits India and Pakistan who solely depends on UAE for its ferrous scrap requirement. UAE supplies one-fifth of the ferrous scrap import of India. For the moment, the impact might be less noticeable as the nation going under less demand on the scrap purchase due to the pandemic lockdown. The second-largest ferrous scrap supply for Pakistan was from UAE in the year 2019, exporting 656,000 tones.
The Rise in International Scrap Price
In a commercial scrap exchange environment, the sudden ban or the absence of UAE’s Ferrous scrap resource would drive a remarkable increase in ferrous scrap import prices in South Asian markets.
This can also affect the Global scrap price where the suppliers from the UK, US, and Europe would divert the volumes to containerized sales to gain more benefit on South Asian Scrap prices.
Meanwhile, UAE’s export ban can be offset soon due to the reduced demand from the South Asian countries India in particular caused by the COVID 19 pandemic.
UAE’s Local Industrial Sectors shore up during the Pandemic
This Decision of ADDED helps the local manufacturing plants to maintain the continuity in their production and to promote domestic products by ensuring they have access to raw materials supplies for their manufacturing operations. Al Balooshi explained that this move largely helps the local manufacturing industries by providing the essential raw materials from their local market which serves as the primary input for the production units.
The Nation has decided to secure the raw materials resources such as iron, aluminum, copper and paper waste which are considered as the wealth of industrial sector.