Change in quality norms adds to woes of metal scrap importers

By Anil Mathews (ScrapMonster Author)

October 27, 2015 03:43:21 AM

A change in nomenclature of metallic scrap by global industry body, Institute of Scrap Recycling Industries (ISRI), has added to the woes of Indian metallic scrap recyclers, who are already reeling due to low demand.

The Washington-based body, which represents more than 1,600 scrap recycling companies worldwide, amended its specifications and incorporated radio-mixed hard/soft scrap lead which consists of clean lead solid and lead shots free of other materials. Also, relay – lead covered copper cable – has been added to the existing categories of metallic scrap for trading on bilateral basis i.e. negotiations between buyers and sellers. Earlier, these scrap varieties of non-ferrous metal scrap were allowed to trade freely. 

The change in trading specifications has come at a time when the scrap recycling industry in India is facing reduced demand from consumer industries. Cheap imports of finished products from countries with which India has free trade agreements (FTA) has impacted the demand for scrap metal. 

“Any change in quality specification has a temporary impact on imports. The prevailing sentiment is very week in overall scrap recycling industry, with overall imports falling by around 15% in the last few months. We expect the trend to continue throughout this year as well,” said a senior industry official. 

Metals recovered through recycling of scrap meet nearly half of India’s base metals demand. A substantial portion of India’s steel production is met through recycling of ferrous scrap. 

In 2013-14, for example, total scrap imported in India was reported at 5.77 million tonnes as against 9.25 million tonnes in the previous year and 7.87 million tonnes in 2011-12. According to estimates, imports of metallic scrap fell sharply by 15% in 2014-15 and the current financial year so far. 

“More than change in scrap specification, a sharp decline in its demand from consumer industries hit imports of metallic scrap in the last few months. Overall scrap imports have been lower by nearly 15% in the last few months,” said Dhawal Shah, vice president, Metal Recycling Association of India (MRAI). 

ISRI specification bans loose or extra iron attachments to 'vador - sealed unit', a type of metallic scrap. Trade sources believe that the government is concerned about the quality of scrap imported into India. Imports of unfriendly wastes have been monitored aggressively unlike earlier. 

“There has been shrinkage in metallic output from recyclers resulting in proportionate decline in scrap import,” said Shah. 

Meanwhile, metal recyclers have urged the government to exempt categories like metals from FTA ambit.

They said that consumer industries import finished products from the countries like Vietnam (India has FTA with Vitenam) and so demand for finished goods from local sources has declined steeply in the last few years. The situation has worsened in the past few months as demand for foundry products from auto sector has shrunk. 

“The government should allow imports of finished products only with 35% of value addition as specified in FTA norms. There is hardly any room for 35% value addition in metals. Hence, the government should exempt categories like metals from FTA ambit as the same disowns ‘Make in India’ vision,” said Rohit Shah, Managing Director of Perfect Valves, a city-based meal recycler. 

According to him, a massive stock of finished products is lying with secondary non-ferrous metals producers due to weak demand from consumer industries and lack of overseas orders. 

Courtesy : www.business-standard.com