New Regulations Cut India’s Ferrous Scrap Import Trade in 2017

SEATTLE (Scrap Monster): The ferrous scrap import trade in India remained subdued throughout the year 2017. The slew of government regulations restricted the country’s import trade. Further, the high price offers by buyers in neighboring Pakistan too led to increased flow of ferrous scrap to that country. Key suppliers including the UK and European countries reported increased shipments of shredded scrap categories such as shredded scrap to Pakistan.

The reduced demand for finished steel and scrap on account of sluggishness in manufacturing industry following the demonetization policy announced in December 2016 continued to impact imports even in 2017. The ferrous scrap market was also impacted by the confusions that arose with the much awaited introduction of the unified tax system- the Goods and Service Tax (GST).

The availability of direct reduced iron (DRI) in local market has also led to reduced demand for imported scrap in India. On the other hand, neighboring Pakistan is solely dependent on imported scrap, mainly due to the non-availability of local DRI.  As a result, buyers from that country are seen willing to pay higher prices than Indian buyers for same scrap grades. The bid prices by Indian buyers were seen at much lower levels. It must be noted that international scrap prices have run up significantly during 2017.

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The data published by the Bureau of International Recycling (BIR) indicates that India’s ferrous scrap imports dropped sharply during the first six months of 2017. The country imported only 2.68 million tonnes of ferrous scrap during this period as compared with imports of 3.77 million tonnes during the corresponding seven-month period in 2016. Incidentally, scrap import volumes from the EU region dropped by nearly 42% during H1 2016. During this period, Pakistan outclassed India in imported scrap volumes. The full year import volumes by India are expected to decline sharply by more than 40% in 2017.

Of late, India’s scrap imports have picked up towards the end of 2017. The country’s scrap imports have surged higher by around 60% to around 540,560 tons in September 2017. The country imported around 4.28 million tons during the first nine months of the year. The US was the main supplier of scrap to India, accounting for over 15% of the total imports by India. The other key suppliers were the UAE and the UK.