India’s new steel scrap policy has raised several market concerns ranging from a surge of mixed metal (unprocessed) scrap flowing into the country to challenges of setting up recycling centers, market participants said.
On 6 November, 2019, India’s Ministry of Steel unveiled its steel scrap recycling policy after seeking industry feedback on a draft of the policy in July.
The policy resulted from the Indian government’s National Steel Policy of 2017, in which the country is expected to have 300 million tonnes per year of steel production capacity by 2030. About 35%-40% of the overall 2030 production is expected to come from electric arc and induction furnaces.
The scrapping policy shall ensure that quality scrap is available for the steel industry. Scrap is an important input for the electric furnaces.
The policy could also result in a surge of mixed metal (unprocessed) scrap into India, several market participants told S&P Global Platts. This comes at a time when countries worldwide are seeking an outlet for waste metals after China’s tightening of mixed metal imports.
With India having better capabilities to process scrap at a competitive cost, market participants said that imports would likely change in terms of the type of scrap rather than the volume.
The scrapping facilities that the policy aims to build could increase India’s capacity to process mixed metal scrap and lead to greater flows of mixed metal imports into the country, according to market participants. However, some added that future government intervention might prevent an influx of such material.
The policy projected that India will need to set up about 70 scrap processing centers in the country to meet a current deficit of about 7 million mt.
Each center will have a processing capacity of about 100,000 tonnes/year, which will require about 300 collection and dismantling centers “on the presumption the four collecting and dismantling centers cater to [each] scrap processing center,” the ministry said. When India’s steel production capacity reaches 250 million mt/year, its scrap requirements will reach 70 million-80 million tonnes/year, it said. Currently, India’s scrap requirements hover at 30 million tonnes/year.