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Eastern Europe

Entering the third year of the pandemic, it still manages to take us by surprise at times. The Omicron strand has caused Russia to report its largest number of daily COVID infections since the start of the pandemic, with 74,600 cases. The same situation applies in Poland, Hungary, Ukraine and Slovakia.

Geopolitical tensions in the region are high on the agenda, with a lot of the resources in Russia drawn into supporting the military infrastructure. The weak Russian ruble, which has declined more than 9% since the previous report, and the Black Monday slump in major Russian companies’ stocks on January 24 have caused moderate panic in the market. However, oil, gas and palladium prices are well supported, in addition to aluminium, and these are likely to go higher still if the situation escalates.

Since January 1, Russian export tariffs on secondary brass and copper have been cancelled and exports have been under no restrictions; hopefully, this policy is here to stay. The government has promised not to add to the tax burden on exporters. For primary producers, the export tariff has been replaced by a mineral extraction tax. Demand for scrap is very strong and, coupled with lower winter collections and higher LME levels, this is pushing prices up for brass and copper. The absence of the export tariff on secondary aluminium ingots and the same lower collection activity have stimulated scrap prices, but AK5M2 ingot demand has weakened.

The Ukrainian market is seeing very strong demand for copper, although elevated energy prices are pushing treatment charges higher and making life difficult for cable producers. Rising production costs have also prompted several brass producers to stop their operations temporarily.

In Poland, DIN226 ingot prices have increased owing to higher LME levels and a shortage of scrap, and demand has started to pick up compared to December. And in the same country, a new waste regulation for imported scrap will come into force on February 22 whereby every incoming delivery will have to be pre-registered in the SENT system.