As environmental norms get stricter and the decarbonisation drive gathers steam, ferrous scrap prices will move up globally as well as in India,” Alok Sahay, the newly-appointed Secretary General of the Indian Steel Association (ISA) told SteelMint in a recent interview.
“As environmental norms become more and more important, there will be lesser use of DRI (or sponge iron, as it is commonly known in India). This means that scrap usage will increase. Therefore, demand for scrap is only likely to go up,” Sahay stated underlining the rationale for gradual rise in scrap prices.
Scrap imports may drop
The decarbonisation drive has created the need for India to increase its domestic scrap collection and recycling volumes. “India imports around 5-7 mn t of scrap per annum. With the domestic scrappage policy taking shape, several scrapping yards are slated to come up. The excess demand will be initially taken care of domestically and then India’s scrap imports will moderate to less than 5 mn t,” Sahay contended.
As per SteelMint data, India’s imports of ferrous scrap fell to 4.33 mn t in 2020 from 5.73 mn t in 2019 due to the impact of the pandemic on the domestic steel industry in H1CY’20. Imports till August this year have been recorded at 2.88 mn t.
Green steel
Explaining the impact of de-carbonisation on the global steel industry, Sahay noted: “Green steel will take a long time to come. Even after it does, there will be two markets — green steel and non-green steel. The two markets will not compete with each other. The exports markets in the USA and Europe perhaps will be more of the former initially. Gradually, the market of non-green steel will shrink and the basket of green steel products will expand.”
“However, this will not be a major factor as China consumes 1 billion tonnes of steel per year and, may be only around 10% will turn green over the next few years,” he said.
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