India’s Ministry of Steel rolled out steel scrap recycling policy on November 6, 2019 after seeking public feedback on the draft of the policy in the June. The new policy attempts of ensure quality scrap for the steel industry.
New Policy to reduce imports; plans to build more scrap centres and facilities
The country’s steel scrap imports in 2017-2018 were valued at over Rs 24,500 crore and the policy aims to “promote circular economy in the steel sector”. It also intends to make India’s steel industry more robust by creating around 300 MT per annum steel production capacity by 2030. In addition to producing high quality ferrous scrap for steel production in order to reduce imports, the scrap policy will ensure processing and recycling of products in a safe environment.
The policy envisages setting up of new metal scrapping centres in India wherein ferrous scraps, generated from various products, will be processed or recycled. With this, the government aims to curb reuse of ferrous scraps in many cities besides formation of mechanism to treat wastes streams and residues generated from dismantling and shredding facilities.
Can the new policy lead to a possible increase in mixed metal imports?
While the policy apparently sounds to bode well for Indian steel industry, there can be possible challenges. According to several market participants, the new policy may cause surge of mixed metal scraps in India because now that China has tightened mixed metal imports, other countries would be seeking an outlet for waste metals.
While the government is concerned for the industry as a whole, for Indian buyers, saving cost for themselves would be of higher priority. The cost of unprocessed scrap is considerably lower than the processed scrap because of which the former may prove to be a viable option for the buyers. This can lead to the scrapping facilities producing more mixed metal scraps resulting in the greater circulation of mixed metal imports within the country.
Furthermore, in order to reach the target of 300 MT per annum steel production capacity by 2030, the supply of scraps should be significantly higher than the demand that can be quite challenging. Hence, for a success of the policy and achieve scrap self-sufficiency, other policies have to be implemented as well, a strong ELV (End of Life Vehicle) policy for one. A robust ELV recycling policy would help supply of steel scrap within the country consistently.