In July 2024, as part of my consultancy work with the Association of Scrap Metal Recyclers of the Baltic States, I highlighted developments in the Latvian scrap metal collection and recycling market. I observed that the market is showing signs of aggressive and potentially illegal competition, which threatens the existence of many market participants and could lead to significant tax losses for the state, says Jochen Klein, an advisor to the Association of Scrap Metal Processors of the Baltic States.
Specifically, this concerns the company Refona, which is part of a leading group of Lithuanian companies that appear to belong to the so-called Metruna Group. This group operates in the collection and processing of scrap metal, with subsidiaries in all three Baltic countries.
In our assessment, the available data provides sufficient grounds to initiate a comprehensive investigation or, at the very least, a market study on the situation in the scrap metal collection market in Latvia and Lithuania.
An interesting statement in this context comes from a business consultant who claimed on the portal Verslo Žinios that the Lithuanian capital company operates more efficiently and has lower costs. However, this claim appears questionable when considering the price offers of the Metruna Group in the Baltic countries. Regular spot checks indicate significant price variations within the group. The most recent spot check on January 21, 2025, showed that while the price offers of the Lithuanian and Estonian companies were nearly identical, the price offered in Latvia was €20 per ton higher.
Looking at the current export price to Turkey – the primary market for Baltic companies – it becomes evident that the difference between the purchase prices in Latvia and the possible selling price in Turkey is by no means sufficient to cover the costs of logistics, storage, handling, administration, and export shipment.
The outlook for the coming months also calls for caution. Experts predict a further decline in demand for crude steel in Turkey in 2025, following a 5.5% drop in 2024. According to a report by the World Steel Association, demand is expected to decrease by another 1.4% to 35.5 million tons in 2025. This development could lead to a decline in scrap metal prices, which should prompt a responsible company to set its purchasing prices cautiously and conservatively. Instead, the observed pricing strategy could indicate a deliberate attempt at predatory competition.
The Latvian Competition Authority appears to share these concerns and launched a market analysis in December 2024. The purpose of such analyses is to define the framework and rules of a market segment, providing market participants with clear competition guidelines. These guidelines help identify potential violations and, if necessary, enable legal action.
I strongly welcome this measure by the Competition Authority. It offers an opportunity to stabilize the market and establish legal certainty. This would not only strengthen the confidence of market participants but also create the conditions for investments in modern, more environmentally friendly technologies. Without clear rules, companies are forced to set aside reserves to protect themselves against potentially anti-competitive practices instead of using these funds for sustainable development.
I hope that the ongoing market analysis and definition will be completed swiftly. I consider the current pricing strategy of the Latvian subsidiary of the Metruna Group to be legally questionable from a competition law perspective. A rapid resolution is necessary to provide companies in the industry with planning security and fair competitive conditions.
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