Metal Scrap Export Duty

UAE Introduces Metal Scrap Export Duty: A New Era for Global Trade

On January 19, 2024 – In a strategic move that’s set to reshape the global scrap metal trade, the United Arab Emirates (UAE) has introduced a metal waste exportation duty of AED 400 ($109) per ton. This new policy, effective 30 days after its official publication in the UAE’s Official Gazette on December 15, 2023, applies to ferrous scrap (HS codes 720450, 720449, 720441, 720430, 720429, 720421, and 720410) and copper scrap (HS code 74040000).

The introduction of the metal scrap export duty marks a significant shift in the UAE’s trade policy, balancing domestic industrial needs with global market dynamics. Here’s a closer look at what this means for the UAE, international buyers, and the global scrap industry.

Why the UAE Introduced a Metal scrap Export Duty

The UAE’s decision to impose a metal scrap export duty stems from two key objectives:

1. Supporting Domestic Industries: Ensuring local steel mills and smelters have access to affordable raw materials.
2. Regulating Global Trade: Creating a controlled environment for scrap exports while generating revenue for the UAE economy.

Previously, the UAE had enforced a complete ban on debris exports since May 2020 to prioritize domestic supply. However, growing international demand and pressure from traders prompted the government to replace the ban with a steel s export duty.
Key Details of the Metal waste Export Duty

• Duty Amount**: AED 400 ($109) per ton.
• Applicable Scrap Types: Ferrous and copper scrap.
• Effective Date: 30 days after the official announcement (mid-January 2024).
  Impact on International Buyers: Rising Import Costs
  While the UAE’s metal junk export duty is levied on exporters, the cost is often passed on to international buyers, effectively increasing their import costs. For countries that rely heavily on UAE scrap, this means:

1. Higher Prices: International buyers will face increased costs for UAE scrap, making it less competitive compared to alternative sources.
2. Supply Chain Adjustments: Importers may need to renegotiate contracts or seek scrap from other markets, such as the US, Europe, or Australia.
3. Market Shifts: Countries like India, Pakistan, Bangladesh, and others in the MENA region may explore new suppliers to avoid the added expense.

For these buyers, the UAE’s metal scrap export duty functions similarly to an import duty, as it directly impacts the total cost of acquiring scrap metal.

Affected Countries: Who Relies on UAE Scrap?
The UAE is a major supplier of scrap metal to several countries, particularly in South Asia and the MENA region. Key importers of UAE scrap include:

• India: A leading importer of ferrous and non-ferrous scrap for its booming steel and manufacturing industries.
• Pakistan: Heavily reliant on imported scrap for its steel production.
• Bangladesh: A growing market for scrap metal to support its infrastructure and construction sectors.
• Oman, Saudi Arabia, and Egypt: Key regional players that import scrap for their domestic industries.

These countries will now face higher import costs due to the UAE’s metal scrap export duty, potentially reshaping global trade flows.

Balancing Domestic Needs and Global Trade

The UAE’s new policy underscores its commitment to maintaining a delicate balance between domestic industrial needs and global trade opportunities. By imposing a metal scrap export duty, the UAE ensures that its local steel mills and smelters continue to have access to affordable raw materials while allowing exporters to capitalize on international demand.

This approach not only supports the UAE’s vision of becoming a global trade hub but also aligns with its broader economic diversification goals.
What’s Next for the Scrap Industry?
The UAE’s decision to introduce a metal scrap export duty is a strategic move that reflects the evolving dynamics of the global scrap trade. However, the long-term success of this policy will depend on how international buyers adapt to the new cost structure and whether they remain willing to pay the premium for UAE scrap.

For industry players, the coming months will be critical as they navigate this new landscape. Exporters must reassess their pricing strategies, while importers may need to explore alternative sources or absorb higher costs.
Conclusion: A New Era for UAE Scrap
The UAE’s introduction of a metal scrap export duty marks a significant shift in its trade policy, with far-reaching implications for both domestic and international markets. By striking a balance between local supply needs and global trade opportunities, the UAE is positioning itself as a key player in the global scrap industry.

As the world watches how this policy unfolds, one thing is clear: the UAE’s scrap industry is entering a new era of growth, challenges, and opportunities. Whether you’re a local manufacturer, an international buyer, or a scrap trader, now is the time to adapt and thrive in this dynamic environment.

Stay tuned as the UAE continues to shape the future of the global scrap trade