India's ferrous scrap imports increase over twofold in Jan-June'23

• Imported scrap shipments reach 5.25 mnt in H1CY'23
  
  
• HMS, shredded scrap comprise 70-75% of total imports
  
  
• India's scrap imports may drop in H2 as global seaborne demand recovers
  
  

India's imports of ferrous scrap more than doubled y-o-y in H1CY'23 (January-June) to 5.25 million tonnes (mnt) compared with 2.03 mnt in the year-ago period. Imports surged a mammoth 158% on the year, as per SteelMint data.

The country's ferrous scrap imports had increased over twofold in CY'22 to 7.78 mnt compared with 3.78 mnt in CY'21.

Country-wise shipments

The leading exporters to India in H1 were the US (1.16 mnt), the UK (830,000 t), the EU (560,000 t) and the UAE (370,000 t). It merits mention that except the UAE, shipments from which country decreased by 32% y-o-y, the US, UK and EU raised scrap exports to India-majorly bulk cargoes-by staggering margins.

Grade-wise imports

HMS (heavy melting scrap) imports were recorded at 2.62 mnt during the period-comprising around half of total shipments. Mild steel shredded scrap imports stood at 1.14 mnt-around 22% of total shipments. Among the other grades imported were light melting scrap (LMS) at 490,000 t, turning and rerolling scrap, as well as alloy steel and busheling scrap.

Why scrap imports surged?

• Bulk cargoes redirected to India: Turkiye, the leading seaborne ferrous scrap buyer, has witnessed a 16.3% decline in crude steel production in January-June to 15.9 mnt due to high energy and power costs, natural calamities and political instability. Turkiye's scrap imports are estimated to have decreased by close to 20% in H1 to around 10 mnt compared with 12.27 mnt in the year-ago period. India, the world's second-largest scrap importer in FY'23, emerged as the preferred destination for US- and EU-origin bulk cargoes amid muted Turkish demand. India's y-o-y imports from the US, UK and the EU in H1 increased by 849%, 781% and 356%, respectively.
  
  
• Weak demand in key importing countries: Steel production and scrap demand in the major importing nations of South Asia were impacted due to currency depreciation and shrinking forex reserves, as well as high inflation. On the other hand, WSA data show that India's crude steel production in January-June increased by 7.4% to 67.9 mnt. Amid muted demand in Bangladesh, Pakistan and other East Asian countries, scrap flows into India increased.
  
  
• Price factor: Global scrap prices have decreased sharply since March-April due to subdued steel market sentiments. Imported melting scrap prices into India have decreased by nearly $100/t since the first week of March. Buyers actively sourced seaborne cargoes as import prices edged lower than domestic material.
  
  

Outlook

SteelMint expects India's scrap imports to drop in H2CY'23 compared with H1. In fact, after over 1 mnt of imports in January and over 800,000 t of shipments each in February and March, volumes have declined in subsequent months. Steel production in Turkiye has increased by 7-8% since May, key Asian buyers are slowly returning to the market and trade flows are stabilising.

Moreover, steel imports from China and Russia, especially China, are expected to drop in H2 on production curbs in that country. For instance, Turkiye's steel imports from China in H1 rose 64% y-o-y, as cheaper imports surged amid domestic inflation and steep production costs. In H2, however, as domestic steel production recovers, Turkiye's scrap imports are likely to edge up. Realignments in global trade flows will result in a drop in shipments to India.

Again, Indian imports may also slide in H2 on restricted shipments from the UAE due to export ban by that country and Indian customs stopping clearances for Dubai-origin cargoes. Imports from the UAE dropped over 30% y-o-y in H1 and may fall significantly in the coming months.