India world’s third-largest scrap importer after Turkey and South Korea witnessed second consecutive fall in its annual ferrous scrap import volumes in 2017. As per customs data, India imported 4.57 MnT ferrous scrap in 2017, which was recorded at 5.35 MnT in CY16. Thus, scrap imports registered 15% Y-o-Y fall as against the imports during last year.
In 2017, United States exported highest volumes (0.74 MnT, -27% Y-o-Y) of ferrous scrap to India occupying almost 16% share in total scrap imports. Followed by United Arab Emirates (0.66 MnT, -6% Y-o-Y) and United Kingdom (0.48 MnT, -47% Y-o-Y) remained second and third largest ferrous scrap exporters to India respectively in CY17.
Other prominent sources of ferrous scrap to India in 2017 were – South Africa (0.26 MnT), Australia (0.22 MnT), Hong Kong (0.19 MnT), Singapore (0.18 MnT), Malaysia (0.17 MnT), and China (0.16 MnT).
Global scrap prices remained high in 2017 – In 2017, the average price for USA origin Shredded scrap to India remained at USD 315/MT, CFR up by USD 75/MT against an average of USD 240/MT, CFR in CY16. Likewise, prices for HMS 1&2 from Middle East increased by 75/MT, from an average around USD 220/MT to USD 295/MT, CFR. The domestic prices for HMS scrap in CY17 averaged at INR 20,680/MT Ex. Mumbai as against INR 16,100/MT, during CY16.
Why did Indian scrap imports fall in CY17?
High global prices as compared to domestic scrap prices kept Indian mills away from importing scrap in large volumes. India remained among top three preferred markets in Shipbreaking in 2017 which was another reason for higher availability of domestic ship cutting scrap in India.
Ample availability of sponge iron in domestic market also lessened demand for imported scrap.
Despite high expectation from steel participants regarding scrapping off or reduction in import duty on imported scrap in Budget’2018, duty on scrap remains unchanged at 2.5%.
What may happen in 2018?
Demand for imported scrap in bulk vessels will remain strong from importers based at west coast in India. Increasing EAF output at global level will result in significant rise in scrap demand which may further keep prices for scrap at higher levels. However, good availability of DRI and domestic scrap at cheaper prices can restrict buyers from importing scrap in large volumes.
After the imposition of tariffs on steel imports in USA, domestic consumption of scrap has been rising in US which will result in low volumes of export from highest supplier USA to India. But demand for the high-grade US scrap likely to remain strong while market could observe increasing imports from other prominent sources like UK, South Africa and UAE in 2018.
Increasing auto-shredding plant and an optimism on Vehicle recycling policy will enhance scrap availability in Indian steel making in near terms.
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