India's new 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.
India's Ministry of Steel on November 6
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 mt/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 ministry said.
The policy could 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.
"It's not a matter of increasing or
decreasing imports, it's a matter of saving costs. Indian buyers would
likely import more unprocessed scrap, which is $20-$30 below the processed
scrap prices," a UK-based supplier said. "It is much more cost
competitive to process it in India than in the US and Europe."
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 mt/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 mt/year, it said. Currently, India's scrap requirements
hover at 30 million mt/year.
"This shall require about 700 scrap
processing centers, that is 700 shredders. These shall in turn be fed by
2,800-3,000 collections and dismantling centers spread all over the
country," the ministry said.
"It's definitely possible that India
becomes a key destination for unprocessed scrap, however the facilities
will only be coming soonest in two to three years after the policy is
implemented," a major Indian mill source said. "A lot can happen
in that time, the government may impose restrictions before that, if
inflow gets too high."
Following China's toughened stance on waste
material imports into the country since 2017, countries like Japan were
finding alternative avenues for its mixed metal scrap, which included
places like Vietnam, Malaysia, and recently India, Platts reported
previously.
"After China, Japan was sending mixed
metal scrap to Malaysia and Vietnam. But the governments there are making
it difficult now too. But India seems to be another avenue now," a
Japanese trader told Platts.
In the meantime, the Material Recycling
Association of India said that achieving scrap self-sufficiency, a key
goal of the policy, would be challenging because scrap demand will
continue to be significantly higher than supply in India as there is a
need to fulfill the country's target of 300 million mt/year steel
production by 2030.
Other market participants also held the
view that in order for India to reduce its scrap deficit, other policies
have to be implemented complementary to the current policy. One potential
policy highlighted was over India's End of Life Vehicle, or ELV, recycling
procedures -- still under planning stage -- which have been strongly
advocated by many in the nation's automotive sector.
"A solid ELV recycling policy would
create a more consistent supply of steel scrap within India and solve its
environmental issues as well," an Indian mill source said.
"However to be self-sufficient would take time and may be hard to
achieve within the next decade."
The steel ministry said it will work with
the Ministry of Skill Development and Entrepreneurship to develop
"new vocational courses ... for equipping people in recycling of ELVs,
white goods and other scraps in an environmentally sound and safe
manner..."
Also, the steel ministry said it will
"consider special status for eco parks that are to be set up for
recycling and scrapping purposes and consider introducing targeted
recycling-based tax incentives, both direct and indirect tax."
Source: Platts
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