If you don’t have iron ore, use scrap. That has been the mantra of India’s steel mills for the last 2 years as ore supply has been disrupted due to a ban on mining. So, somebody else’s waste became India’s want.
India imported 5 million tons (mt) of steel scrap in 2013-14, making it the third largest importer globally after Turkey and South Korea. With locally generated steel scrap falling short of what was required by steelmakers, Indian steel companies have been resorting to bringing in scrap from foreign shores.
That’s one reason why, despite the average price of scrap steel increasing to nearly US $423 (Rs 26,000) a ton during the first quarter of 2014-15, its sales are still going up. A report in the Hindu BusinessLine said limited iron ore availability was the reason for the increase in steel produced with steel scrap through electric arc furnaces. In fact, through both, the electric arc and induction furnace routes, steel scrap serves as the primary input for Indian steelmaking.
The report said that even although iron ore was cheaper at about US $51 (Rs 3,160) a ton for fines and about US $75 (Rs 4,600) a ton for lumps, the mining bans in Goa and Karnataka have made them mostly unavailable.
According to estimates, the amount of steel scrap being produced within India itself was about 10 mt annually. It is difficult to put an exact figure on it since much of the business in scrap metal was being carried out by firms in the unorganized sector.
The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.