- Total ferrous scrap imports till Aug touch 3 mnt
- Prices drop amid Turkey’s absence, lesser interest from South Asian buyers
- Bulk bookings increase, may touch 1 mnt by year-end
Morning Brief: India’s total ferrous scrap imports will possibly increase by 15-20% y-o-y in calendar 2022 to around 4.5 million tonnes (mnt) in which the share of bulk volumes will increase to 0.90-1 mnt and containerised will probably have the balance 3.5 mnt share, as per SteelMint’s estimates.
Till August, 2022 data reveals, total ferrous scrap imports had touched 3.03 mnt whereas the figure for entire 2021 was 3.78 mnt.
Interestingly, the share of bulk imports has risen sharply from 0.05 mnt in entire 2021 to a more voluminous 0.15 mnt till August with the balance 2.88 mnt being the share of container ferrous scrap cargoes. It may be noted that container’s share has been dropping steadily since 2019. It was at 3.73 mnt in 2021.
Bulk imports by the end of 2022 — at the expected 1 mnt — could also be a record high, data reveals.
Factors pushing up ferrous scrap imports
Several factors have conjoined to divert material towards India, at highly competitive prices, inflating bulk imports. As a result, there is an influx of cheaper material. Trade sources report that Indian buyers have booked over 20-22 bulk vessels (about 800,000 t) of scrap from the US and Europe in the last two months.
- Turkey’s absence: Turkey, the largest ferrous scrap importer globally, has slowed down its procurement of ferrous scrap, hemmed in by skyrocketing energy prices. Steep power tariffs are forcing mills to reduce production, which, in turn, has kept Turkish mills away from scrap consumption, leaving global suppliers saddled with inventory.
- Bangladesh, Pakistan shows no appetite: Both these South Asian countries, voracious scrap consumers under normal circumstances, are just not showing much appetite. Both are experiencing LC opening issues while Bangladesh’ sliding currency has made imports costlier, putting its mills at a disadvantage. Pakistan, on its part, is struggling with its floods. Further, both countries are plagued by power outages and liquidity issues. All these factors are pushing mills to cut production and, in the process, scrap consumption. Suppliers’ plans of falling back on other South Asian markets, in the absence of Turkey, have been thwarted. They are now thus looking to offload in bulk and comparatively cheaper in India.
- Bulk scrap cheaper than containerized: Cheaper bulk material is enticing buyers for two reasons.
1) The landed prices of imported bulk scrap are lower than that of sponge, encouraging secondary mills to choose it over sponge. The latter, dependent on imported coal, has been easily exposed to the geo-political dynamics. So, mills, at present, feel it is safer to depend on scrap rather than sponge iron.
2) Container availability is tight, which is also pushing up container freight, giving mills another reason to choose bulk over the former. Containerised freight is higher by $30-40/t over bulk. In any case, suppliers prefer bulk loading which offers better realisations, and thus bulk costs are lower.
Global ferrous scrap trade snapshot
The global seaborne ferrous scrap trade in 2021 was at 57 mnt, excluding the European volumes. Turkey was the leading importer with over 24 mnt while India, with 3.78-mnt, was ranked 6th.
Outlook
The global decarbonisation drive is gaining ground in India too as mills increasingly explore green steel options, a key feed for which is scrap. Thus, in the long term, India’s ferrous scrap imports are bound to increase. India’s overall ferrous scrap consumption in the last financial year 2021-22 (FY22) stood at 24.34 million tonnes (mnt), rising 37% y-o-y compared to 18 mnt in FY21, as per data compiled by SteelMint. The country has been consuming 22-24 mnt of ferrous scrap in steel making since the last few years. Added to this is another 5-6 mnt of cast iron (CI) scrap which is used in the foundry industry.
Leave a Reply