India: Stainless steel scrap imports drop 16% y-o-y in H1FY'25 amid shift towards semis

• Lower prices lure producers to semis imports
  
  
• Billet imports shoot up 1,357% y-o-y in H1FY'25
  
  

India's stainless steel (SS) scrap imports registered a significant decline of 16% y-o-y in the first half of fiscal year 2024-25 (H1FY'25), with a total volume of 583,260 tonnes (t), compared to 694,930 t during H1FY'24. This decrease follows a shift in preferences among domestic producers towards more competitively priced imported semi-finished products, such as slabs and billets, majorly from Indonesia. The lower semis prices allowed producers to optimise costs while meeting the demand for finished products.

Grade-specific trends

The decline in imports was most pronounced in 300-series scrap, which saw a 25% drop y-o-y. This is in line with the increased arrivals of semi-finished products and the preference for domestically sourced scrap.

The 304 grade, which is the most widely used in stainless steel production, also witnessed a sharp decline of 30%, falling to 198,183 t in H1FY'25 from 282,280 t in the same period last year.

Conversely, imports of the 430 grade rose by 8%, suggesting a shift in material preference based on production needs.

Why did scrap imports decline?

Shift towards semis

A significant factor behind the decline in India's stainless steel scrap imports is the growing preference for semi-finished products such as slabs and billets, which offer cost advantages over scrap. Indonesia, in particular, has become a key supplier of 300-series semi-finished slabs, with imports rising 18% to 267,988 t in H1FY'25. This shift has been further supported by the increased availability of nickel pig iron and ferro-nickel, which are used in producing stainless steel billets, further reducing the need for scrap.

As per provisional data maintained by BigMint, billet imports jumped dramatically from just 5,190 t in H1FY'24 to 75,620 t in the corresponding period of FY'25, marking a 1,357% increase. While Sweden was India's largest billet supplier in 2023, Indonesia emerged as the top supplier in 2024, with nearly 67,000 t - an impressive shift from the previous year, when its share was negligible. This change has significantly reduced India's reliance on scrap, particularly for long product manufacturing.

Growth in domestic production

India's stainless steel production grew by 11% in H1FY'25 to 1.8 million tonnes (mnt), up from 1.62 mnt in H1FY'24. Notably, the production of finished flats and longs increased by 11% and 10% y-o-y, respectively. This boost in domestic output reduced the need for imported scrap, as producers could rely more on locally sourced materials and semi-finished products. While an increase in production would typically lead to higher scrap imports, the combination of higher billet imports and competitive pricing for semi-finished materials altered this dynamic.

Red Sea crisis

Further compounding the decline in scrap imports was the Red Sea crisis, which began in October 2023. It disrupted global trade routes, particularly affecting shipments from the European and Middle Eastern regions, which together account for around 40% of India's scrap imports. Port congestion and higher freights in mid-2024 also escalated the costs associated with importing stainless steel scrap.

Nickel price volatility drives bid-offer disparities

In April 2024, nickel prices on the London Metal Exchange (LME) surged to $19,000/t due to sanctions on Russian metals, and by May, they peaked at $21,000/t amid unrest in New Caledonia. This led to a sharp rise in imported stainless steel scrap prices, with SS 304 scrap offers touching $1,500/t, while bids ranged at $1,430-$1,450/t, creating a significant bid-offer disparity. For SS 316 scrap, offers were at $2,680-$2,700/t, while bids were at $2,630-$2,650/t, as per BigMint's assessments.

However, following a price drop in June 2024, due to an oversupply of nickel, as forecast by the International Nickel Study Group (INSG), LME prices fell. Despite this drop, the demand for stainless steel scrap remained weak, particularly in the finished products segment, which kept imports lower. Buyers were also mostly focused on need-based buying.

Country-wise arrivals

India's stainless steel scrap imports saw mixed trends across key suppliers in H1FY'25. Imports from the US fell over 9%, while Vietnam saw a strong 59% increase. South Korea's imports dropped by 17%, while Thailand's rose by 11%. The "Others" category, however, experienced a significant 31% decline.

Imports from the Middle East and Europe were notably impacted by the Red Sea crisis, with Middle Eastern volumes dropping 23% and European shipments falling 44% amid disruptions in global trade and higher shipping costs.

Outlook

Looking ahead, India's stainless steel scrap imports are likely to remain under pressure in the second half of FY'25. Despite a decrease in LME nickel prices, the outlook for scrap imports remains cautious. With domestic production continuing to increase and semi-finished materials still being preferred, imports of scrap are expected to remain subdued. Additionally, sluggish demand in the finished stainless steel segment, combined with the festive season slowdown, suggests that the need for scrap will be limited, and mills may continue to opt for selective, cost-effective imports.

The shift towards semi-finished products, particularly from Indonesia, is expected to persist, further reducing India's reliance on imported stainless steel scrap in the coming months. As domestic mills focus on controlling costs and optimising production processes, import demand for scrap is unlikely to rebound in the short term.