India targets investment in ferrous scrap processing

The Indian government is drafting a policy to boost domestic and foreign investment in steel scrap processing units, said Ruchika Govil, joint secretary at the country's steel ministry.

India's steel scrap demand is forecast to be 29.31mn t/yr in the financial year that ends March 2020, with supply at 27.3mn t/yr, according to the steel ministry. India imports steel scrap to plug the deficit.

Ferrous scrap is used as a raw material for steelmaking in electric arc furnaces and induction furnaces, which make up about 35-40pc of India's total crude steel production. India produced 27.7mn t of crude steel in April-June, up by 3.4pc from a year earlier.

Increased consumption of vehicles and consumer durables in the last two decades has generated large amounts of end-of-life products, producing flows of ferrous scrap for recycling.

The new policy will encourage the development of scrap aggregators, collection and dismantling centres and shredders, said Govil.

India's first automobile shredder, Cero, was set up in December by the Mahindra group, one of the country's largest automakers. The company aims to start operations at five other locations in India that will shred automobiles and consumer durables.

Automakers such as Tata Motors and Hyundai Motor India have also expressed interest in setting up such shredding units. And the government is seeking foreign investors to establish scrap processing joint ventures with domestic firms.

The new scrap policy will integrate scrap from shipbreaking with collections of automotive, railway, household and industrial scrap. India has one of the world's largest shipbreaking yards at Alang in the western state of Gujarat.

India's domestic scrap prices were stable at about 24,000-25,000 rupees/t ($350-365/t) this week. Scrap demand has been weak as monsoon rains limit construction activity, weighing on demand for rebar. Indian scrap spot prices are sensitive to rebar demand, as 60pc of scrap is used to make rebar.