Will India's scrap supply from the EU-27 survive new regulations? BigMint exclusive

• EU's Waste Shipments Regulation threatens India's scrap imports
  
  
• Rising competition for US scrap could impact India's steel and aluminum industries
  
  
• India's non-ferrous recycling sector braces for EPR mandates from 2025
  
  

India's ability to import scrap from the EU-27 faces significant hurdles after the European Union's Waste Shipments Regulation (WSR) revision on April 11, 2024. The updated rules could disrupt the flow of ferrous and non-ferrous scrap vital to India's metal recycling industries, posing challenges for both small and large manufacturers.

Impact of EU-27 waste regulations on Indian scrap imports

The revised EU-27 regulation imposes stringent controls on scrap exports, especially to non-OECD (OECD - Organisation for Economic Co-operation and Development) countries like India. By 2027, the EU-27 will expand its current hazardous waste export ban to include non-hazardous waste, limiting access to essential materials such as ferrous and aluminum scrap. Only non-OECD countries that meet strict environmental criteria may be granted exceptions-an outcome far from certain for India's metal recyclers.

In FY24, EU-27 supplied 20% of India's ferrous scrap and 22% of non-ferrous scrap, including key grades like aluminum, copper, and stainless steel scrap. With the new rules in place, smaller steel producer--who depend heavily on imported scrap--are likely to feel the brunt of the disruption. Meanwhile, India's growing aluminum sector, which sources nearly 90% of its aluminum scrap from abroad, faces similar risks.

Competition for US-origin scrap likely to intensify

With EU-27 scrap potentially becoming less accessible, India may turn to alternative suppliers like the US. However, this will increase competition with other major scrap-importing nations, particularly Turkiye. India, already the second-largest global importer of ferrous scrap, imported roughly 10 million metric tons (mnt) of scrap in FY24, and demand is expected to rise as India's steel output grows to 210 mnt by FY30.

As per data maintained by BigMint, In the FY'24 period, India utilised approximately 34 mnt of steel scrap, with about 10 mnt imported, primarily from the US, UK, and the EU-27.

US scrap, especially grades essential for aluminum alloy producers-such as zorba and taint tabor-will become increasingly sought after, driving up prices as Indian buyers compete with global markets.

India is the world's largest importer of aluminum scrap, with nearly 90% of its aluminum scrap sourced from abroad. In FY24, it remained the top destination for European aluminum scrap, importing 0.29-0.32 mnt.

As of 2024, India has an aluminum production capacity of 4.16 mnt and aims to ramp this up further to 12 mnt by 2030. The share of recycled aluminum is expected to rise to 35-40% of total consumption in the coming years.

Non-ferrous metals products to include at least 5% recycled content from FY'28

India's Ministry of Environment is set to introduce extended producer responsibility (EPR) regulations in 2025, requiring non-ferrous metal producers to include a minimum percentage of recycled content in their products. By FY28, aluminum products must contain at least 10% recycled material, with further increases mandated by 2032.

The EPR initiative aims to tackle pollution and address non-renewable resource scarcity by promoting recycling.

Outlook: Industry initiatives and policy support

Sanjay Mehta, President of the Material Recycling Association of India (MRAI), in BIR Singapore conference expressed concerns over the potential impact of these new regulations, calling it "disheartening" that developed nations were imposing such restrictions. He emphasized that India, as the world's fastest-growing country, plays a pivotal role in the international recycling industry. If these regulations are implemented without flexibility, it could negatively affect both India and the global recycling market.

Mr. Mehta highlighted MRAI's ongoing efforts, noting that the association has been in discussions with Indian government officials for the past 18 months. He expressed optimism that India will successfully apply for the necessary scrap import streams and praised the government's support for recycling through policies like extended producer responsibility (EPR) and mandatory recycled metal use in new products. These measures aim to boost domestic recycling efforts and reduce dependence on imports.

In addition, MRAI is advocating for the removal of import duties on non-ferrous scrap, which would further support the sector. Mr. Mehta urged the government to reduce import duties to zero, particularly on non-ferrous scrap, to help Indian recyclers compete globally, especially given the expected rise in scrap procurement costs after the implementation of the EU WSR.

To counter potential disruptions, MRAI and the Ministry of Environment, Forest and Climate Change (MOEF&CC) are finalizing an application to the European Union, justifying India's need for continued scrap imports and providing necessary data to support the case. This proactive approach, combined with the government's policy shifts, positions India's recycling industry for resilience despite the challenges posed by the EU WSR.