Exportação de sucata / scrap metal exports
Steel and Aluminium

Brazil ferrous scrap exports surge by 109% in August; yet sector hampered by tax evasion

Sep, 18, 2023 Posted by Gabriel Malheiros

Week 202338

According to figures from Brazil’s Ministry of Economy, ferrous scrap exports totaled 64,731 tonnes in August 2023, marking a 109.7% increase compared to the 30,864 tonnes exported in the same month in 2022. Over the first eight months, exports reached 476,493 tonnes, a 77.8% increase compared to the 267,978 tonnes from the same period last year.

“Companies always prioritize the domestic market and export more only when there is a slowdown in the domestic market,” says Clineu Alvarenga, president of the National Recycling Institute (Inesfa). “Industries are also increasing the vertical integration of production, using their own input in steel manufacturing, which discourages the use of recycled materials collected and sold by scavengers and recycling companies.”

The chart below displays shipments of ferrous scrap (HS 7204) from Brazil between January 2019 and July 2023, according to the DataLiner maritime intelligence service.

Ferrous scrap from Brazil | Jan 2019 – Jul 2023 | TEU

Source: DataLiner (click here to request a demo)

Inesfa believes that the increase in the import tariff for paper and other waste to 18% starting in August, as determined by the Ministry of Development, Industry, Trade, and Services (MDIC), will have little positive impact on the sector. “What has more impact, in fact, is the verticalization of the industry and the reduced use of recyclable inputs,” he says. It is predicted that there will be at least a 30% drop in domestic demand for scrap in 2023, while exports are expected to remain high until December. “The start of the interest rate reduction in the country, determined by the Central Bank in the Copom meeting, and the improvement in employment in recent months bring some hope for the second half, especially in construction, but we remain pessimistic about the reaction of our recyclable inputs sector, which is only expected to occur in 2024,” says Alvarenga.

For Inesfa’s president, more government incentives for recycling at the federal, state, and local levels are fundamental, as the activity is strategic for preserving the environment and developing the circular economy.

Another issue affecting the sector is tax evasion in at least 30% of ferrous scrap traded in Brazil. This illicit activity impacts market prices for materials being phased out, according to a survey by S&P Global Platts, an American agency specializing in providing benchmark prices for the commodities market. It is estimated that out of the total of 12.5 million tonnes traded last year, approximately 4 million tonnes of ferrous scrap alone were involved in fraud, according to Alvarenga. “The biggest losers are the state governments and society as a whole,” Alvarenga said. “And this is happening in all states of Brazil.”

In the last five years, tax evasion has grown by about 5% in the domestic trade of ferrous scrap to over 30% in a segment that is expected to total approximately 10 million tonnes this year, according to estimates from the Association of Recyclers of Brazil.

Source: Brasil 61

To read the original news report, see: https://brasil61.com/n/sucata-ferrosa-exportacoes-crescem-109-em-agosto-mas-sonegacao-prejudica-setor-mine230471     

Sharing is caring!

Leave a Reply

Your email address will not be published. Required fields are marked *