India's consumption is likely to be one of the largest swing factors for the US deep-sea ferrous scrap market over the next decade, but whether the nation returns to the market in 2023 with as much gusto as in 2022 remains under question.
The country breathed new life into the global ferrous scrap export market following an unprecedented rush of deep-sea vessel bookings in the second half of the year.
In a little under four months, Indian mills, traders and brokers descended into the global bulk market with an astonishing appetite, primarily concentrated on the US, but also including Venezuela, the Baltics, UK and continental Europe.
The buying frenzy gave US exporters a much-needed alternative outlet as Turkish demand ebbed and other major bulk buyers in Asia remained sidelined.
US deep-sea bulk shipments to India are poised to hit an all-time high of 900,000t this year, according to customs and Argus vessel tracking data and estimates on shipment volumes November and December, well outpacing other suppliers.
For the first time in six years, US bulk shipments surpassed containerized export volume to India.
A multitude of factors have been attributed to India's surge in bulk buying: a reduction in Turkish scrap demand, lower bulk freight rates, lingering container challenges, improved financing access, as well as higher energy and soaring thermal coal prices, which lifted costs of sponge-iron production, a key feedstock for Indian steelmakers.
The nation's consumption of US bulk scrap this year comes in stark contrast to 2021, which saw it completely abstain from purchasing any US-origin deep-sea vessels, but its presence in the US bulk market is not a new phenomenon.
Over the last decade, India has shown an uneven trajectory for bulk scrap consumption, specifically from the US.
US-origin bulk exports to the country previously peaked in 2009 at around 800,000t, which was followed by a steep drop between 2010-14 with annual average of about 200,000 t/yr until 2015-16, when shipments averaged of 575,000 t/yr. Bulks exports cooled from 2017-20 at 210,000 t/yr, capped by a complete absence in US bulk shipments in 2021.
Despite its sporadic buying patterns, India has demonstrated that it can be a formidable outlet for US bulk exports because exporters can source vessels from both east and west coasts.
India's potential rate of consumption, when combined with Bangladesh, gives south Asia enough sway to shift the supply pendulum away from Turkey on high volume months, as witnessed in the second half of the year.
Many market participants are hopeful that India will remain a significant bulk player in 2023.
Some trading houses that have previously only focused on containerized shipments have made a concerted effort to adjust upcoming business plans to include bulk trading.
Still, India's longer-term potential as a major ferrous scrap bulk player looks much clearer, especially as it embarks on obtaining developed country status by 2047.
Currently India is the second most populated country behind China but has steel production capacity that is a factor of 10 lower, which puts its steel capacity per capita figure grossly behind China and many smaller developed nations.
The Indian government intends to cement its position as the world's second largest steel producer, with a target to roughly double its domestic crude steel capacity from 154mn t/yr to 300mn t/yr by 2030.
Large volumes of domestic- and globally-sourced scrap metal will be necessary to meet these targets, as well as maintaining its goals to actively reduce carbon emissions and promote more environmentally friendly steelmaking technologies.
The Material Recycling Association of India (MRAI) estimated earlier this year that India will import about 30mn t/year of ferrous scrap by 2030 to meet the government's vision.
In 2020, India's crude steel production by process consisted of 44.5pc basic oxygen furnace (BOF) and 55.5pc electric arc furnace (EAF) steelmaking, while the country also produced 33.6mn t of direct-reduced iron (DRI), according to World Steel data.
