Scrap steel imports in India stalled due to strict regulations

Scrap metal imports have stalled after revised foreign trade policy guidelines, bringing shipments of steel scrap in containers close to zero. This could significantly reduce steel production in India this year.

“Secondary steel producers will face huge challenges. This is a futile government exercise. No one intends to import garbage instead of scrap metal. A better control could be found, such as third-party inspections, certification agencies, etc.,” said the director of Uttam Galva Steel, the largest in India manufacturer of galvanized products.

Government measures have been taken to prevent the entry of radioactive material in container shipments of scrap metal. “Imports have stopped due to a lack of clarity in the implementation of controls. Pre-shipment inspections have stopped inspecting the cargo, and the new regulations require trained radioactivity specialists to inspect the goods,” said Sanjay Mehta, director of Business Pvt Ltd, the country's largest scrap metal center.

In 2012-13, imports of steel scrap in India amounted to 8.16 million tons, and in 2013-14 fell to only 4.78 million tons due to a decrease in demand from the light industry. In 2014-15, it is estimated at 9.6 million tons.

Integrated steelmakers use scrap steel as a raw material to make steel. For small primary and secondary steel producers, sponge iron can replace scrap metal. Therefore, the suspension of scrap imports will not significantly affect them. But businesses that use only scrap metal as raw materials to make products and products intended for direct use in consumer industries will seriously add value, industry sources say.