UAE steelmakers urge Indian customs to crack down on illegal ferrous scrap imports
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- UAE steel mills alert Indian customs to illegal scrap imports
- Emirates Steel, AGSI, Shattaf steel call for stricter regulations, investigation
UAE-based steel manufacturers have raised concerns with Indian customs about illegal imports of steel scrap, claiming that some shippers are smuggling materials using falsified documentation. This practice threatens revenue for Indian customs and poses risks linked to unregulated imports.
The manufacturers have pointed out violations, including altered bills of lading, misrepresentation of country of origin, and counterfeit inspection certificates.
In response to these issues, the manufacturers are urging the Indian government to take swift action against illegal imports. They stress the importance of adhering to the Comprehensive Economic Partnership Agreement (CEPA) between the UAE and India, which is designed to enhance trade relations.
The manufacturers have also called for increased vigilance and stricter enforcement measures to combat fraudulent activities.
Their stated aim is to protect legitimate trade and ensure compliance with international maritime laws, thereby safeguarding both countries' interests.
It's noteworthy that, ferrous scrap exports from the UAE to India dropped sharply by 99% to just 4,724 tonnes(t) in Jan-Sep 2024, compared to 375,256 t in Jan-Sep 2023.
In contrast, ferrous scrap exports from Bahrain to India surged y-o-y by over 200% to 355,995 t in Jan-Sep 2024, up from 105,065 t during the same period in 2023. Market feedback indicates that Bahrain's supply capacity is approximately 150,000 to 175,000 t annually.
These figures support the trend of rerouting UAE-origin materials through countries like Bahrain, Kuwait, and other nearby countries.
Major steelmakers seek action on illegal scrap imports
Earlier, Dubai's Customs Notice No. 03/2024 mandates an AED 400/t export fee on industrial waste, including steel scrap, to support sustainable waste management. This regulation includes steel scrap under specific HS codes, such as 720440, 720441, 720430, and 720449, among others.
Emirates Steel LLC (EMSteel) has voiced concerns in a recent notice regarding the export fee on steel scrap, warning that the fee could drive some shippers toward fraudulent practices. "We urge Dubai's customs authority to strengthen enforcement to safeguard compliance and revenue, ensuring adherence to trade agreements between the UAE and India," EMSteel stated in the notice.
Shattaf Steel Ind. Co. LLC has also highlighted the use of falsified documents by shippers to evade export fees, sought intervention from Indian customs, and provided evidence to support their claims, stressing the need for stricter regulations against illegal activities.
Arabian Gulf Steel Industries (AGSI) has also focused on the fraudulent use of false bills of lading and misreported ports of loading in their notice.
Market reactions
A Dubai-based trader informed, "The Pre-Shipment Inspection Certificate (PSIC) is essential for any export from the UAE to India. Exporters must provide this certificate. Starting in the end-2023 and early 2024, all registered company's PSIC certifications were banned under regulations. As a result, they will no longer accept their PSICs, making exports from the UAE remain."
A Sharjah-based supplier remarked, "There's definitely some activity here, but without decisive government intervention fraudulent practices will likely continue unchecked. A thorough investigation is needed, which would add pressure on domestic scrap suppliers providing materials to exporters."
BigMint's bi-weekly assessment for UAE's domestic ferrous scrap declined by $6/tonne (AED 23/t) w-o-w to settle at AED 1,223/t ($333/t) DAP Abu Dhabi amid weaker buying activities by major mills.
In BigMint's week 44 market survey, weak trade activity was observed, with approximately 2,000 t of shredded traded at AED 1340-1345/t($365-366/t), followed by 2,000 t of HMS processed traded at AED 1,220-1,230/t($332-335/t) DAP Abu Dhabi.
HMS (80:20) spread
The average spread between CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap rose to approximately $35-37/t. Imported HMS prices for CFR west coast India declined to $370/t, while UAE processed HMS offers dropped to $333/t DAP.
Outlook
