Indian scrap imports from UAE halts after container detention at ports
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The Ministry of Economy, UAE, had issued a notice in March 2020 stating that steel scrap and waste paper exports were to be banned, which was periodically extended thereafter. Recently, the country issued a similar notice extending the export ban, which came into effect from March 2023 for a period of four months ending 19 June this year in order to support the country's domestic demand.
The major steelmakers in the UAE are located in Abu Dhabi, while Shattaf Steel is based in Sharjah.
Recent development
In the beginning of May, Indian Customs stopped scrap clearances for imported UAE-origin material following a detailed risk analysis carried out by the National Customs Targeting Centre (NCTC). It appears that metallic scrap is being imported from the UAE despite an export ban imposed by authorities in that country, and the importer squarely falls within the ambit of the ban.
The NCTC has identified some bills as being risky at the customs house code in relation to misdeclaration/forged documents, importer, supplier, port of shipment, gross weight, etc.
Around 800 containers are held up at Indian ports following the declaration by customs. In India, Nhava Sheva, Mundra, and Kandla are the major destinations that receive UAE material. The average transit period is around five-six working days from the UAE to India. Interestingly, buyers are interested in UAE material owing to zero freight between the two countries, SteelMint learned from sources.
Circular on SOP for clearance at Nhava Sheva
The latest circular released by Maharashtra's Nhava Sheva Customs declares that containers with a declared CTI of '7204 ' have arrived at Indian ports despite the UAE's ban on export of ferrous scrap and these have been put on hold by the Special Investigation and Intelligence Branch (SIIB(I)) and Jawaharlal Nehru Custom House (JNCH).
Standard Operating Procedure (SOP) is prescribed after the detailed examination and verification of documents in a few cases, and in order to facilitate timely clearance of goods.
However, if any difficulty is encountered during the implementation of these procedures, the same may be brought to the attention of the Joint Commissioner of Customs, SIIB(I), JNCH.
Hence, buyers whose containers are stuck at ports may get back their material after a clear and verified examination from customs, SteelMint understands.
Buyers' expectations
Indian imported scrap buyers are more or less in wait-and-watch mode. Trade has slowed down due to limited inquiries. Many buyers are waiting for clearance of containers that are stuck at Indian ports, mainly Kandla, Mundra and Nhava Sheva.
"Buyers are waiting for new guidelines to be released by customs, especially those based in the western region," said a market source.
On the other hand, some buyers have increased inquiries for material from Kuwait, Yemen, Japan, Brazil, and West Africa despite the export ban from listed countries.
Additionally, steel producers are likely to wait further for market clarity as finished steel sentiments are not supportive. As monsoon approaches, trade activities in the domestic market remain low.
Suppliers may diversify destinations
UAE suppliers have also opted to wait for new guidelines from customs after which trade with India may resume. Meanwhile, suppliers may look for new destinations and are actively trading in the domestic market as consumption is healthy.
"Now we are doing cross trade and developing local supply," said a Dubai-based scrap trader.
Further, suppliers have observed nearby markets closely, like Pakistan and Bangladesh, after Indian customs stopped clearance for imported scrap. However, they met with disappointment as problems with LC openings in these countries, liquidity crunch, and dull steel demand weighed on market sentiment. While steel producers are waiting for the budget, they are pessimistic about trade volumes improving ahead of monsoons.
On the other hand, Indian intenders are looking to source scrap from origins other than the UAE, SteelMint learned. Fresh offers for UAE material were absent in the market.
Indian scrap imports
India's ferrous scrap imports crossed 10 million tonnes (mnt) in financial year 2022-23 (FY23), as per SteelMint's provisional data, of which the share of bulk shipments stood at 2.20 mnt, with containerised comprising the balance 7.87 mnt.
Despite the export ban, the UAE's share in total imports was around 1 mnt.
