India's ferrous scrap generation seen rising 70% to 45 mnt by 2030

• Contribution of EOL scrap likely to be highest
  
  
• Iron ore-based steel production to persist till 2030, then taper off
  
  
• India's ferrous scrap consumption to touch 60-65 mnt by 2030
  
  

Morning Brief: India's total scrap generation will increase by a substantial 70% to around 45 million tonnes (mnt) by 2030 from the current 27 mnt, reveals data culled from a study conducted by SteelMint.

Also, India will be sourcing domestic scrap from some key originating segments. It will be sourcing old scrap from mainly three areas - EOL (end-of-life) vehicles, ship recycling and foundry. In prompt scrap, the main contributors will be home, industrial, and construction.

The study was conducted based on certain life-cycle methodologies. For instance, it was estimated that construction steel would acquire obsolescence after 40 years and vehicles, post-15 years. The life-cycle of the other steel-consuming/scrap contributing segments was, likewise, estimated.

As per the study, by 2030, the share of EOL scrap will be the highest at 12 mnt, spurting 85% from the present 6.5 mnt. It would be followed by home scrap generation of 10.50 mnt, which would show a 72% jump from 6.1 mnt currently. Industrial will contribute 9.5 mnt, rising 61%.

In the period under review, construction's contribution will jump 76% to 6 mnt (3.4 mnt) while foundry sourcing will rise 30% to 6.5 mnt (5 mnt) and ship recycling by 67% to 0.50 mnt (0.30 mnt).

Factors that will support rising domestic scrap generation

• Indian steel's green thrust: The data indicates that the country is increasingly looking to put a thrust on green methods of steel-making in keeping with the government's vision document and to also make the ferrous scrap market more structured and organized from the present set-up.
  
  
• Ministry roadmap on decarbonisation: As per the Ministry of Steel's Vision 2047 Roadmap, it is looking at a crude steel production of 255 mnt by 2030 (from 124 mnt in 2022) with the aim to increase the share of scrap in the feedstock to 30% from the current 20%. Also, the share of EAF-IF (scrap+DRI+coal/gas-based) production route is to be enhanced to 60% from the present 56% by 2030 while BF-BoF will be gradually reduced to 40% from the current 44% in this time frame.
  
  
• Self-sufficiency in scrap imperative: If EAF-IF share has to be expanded, then scrap consumption must be increased. To become self-sufficient in the material, adequate generation of the same is a forgone conclusion. And, since most supplier countries are adopting a protectionist stand with regard to ferrous scrap exports - keeping their decarb goals in mind, India must become self-sufficient in scrap.
  
  

Working towards this end, the government has brought in the Vehicle Scrappage Policy, 2021 which will make available low-cost scrap for the steel industry.

Outlook

As per SteelMint's estimates, India's total ferrous scrap consumption will touch around 65 mnt from the present nearly 35 mnt. This is drawn from the fact that SteelMint estimates the country's crude steel production at 210-215 mnt by 2030, in which the quantum of scrap consumption will touch 55 mnt. That apart, around 8 mnt will be utilized in the foundry industry, pulling up the total to around 65 mnt.

With scrap generation pegged at 45 mnt, the balance 20-odd mnt will have to be either imported or part of it plugged with metallics like sponge or pig iron.

Iron ore- and coking coal based-production through BF-BoF will persist till 2030 since most of the new capacities coming up are linked to this route. But, eventually, this will need to be tapered off to dovetail with India's net zero ambitions by 2070.