Metallic scrap recyclers in India are in a fix over the sudden change in the nomenclature of some types of metallic scrap by the global industry body Institute of Scrap Recycling Industries ( ISRI). This, at a time when finished products are available at cheap rates due to dumping, resulting in a fall in scrap demand for recycling.
Washington- based ISRI, which represents 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 — negotiations between buyers and sellers.
Earlier, these scrap varieties of nonferrous metal scrap were allowed to trade freely.
The change in scrap trading specifications has come at a time when the scrap recycling industry in India is facing reduced demand from consumer industries and cheap import of finished products from countries with which India has signed free trade agreements ( FTAs).
“Any change in quality specification has a temporary impact on import. The prevailing sentiment is weak in overall scrap recycling industry, resulting in overall import falling by around 15 per cent in the past 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 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 import in India was reported at 5.77 million tonnes against 9.25 million tonnes in the previous year and 7.87 million tonnes in 2011- 12. According to estimates, India’s import of metallic scrap fell by 15 per cent in 2014- 15 and the current financial year so far.
“More than change in scrap specification, asharp decline in its demand from consumer industries hit import of metallic scrap in the past few months. Import has been lower by nearly 15 per cent in the past few months,” said Dhawal Shah, vice- president, Metal Recycling Association of India.
ISRI specification bans loose or extra iron attachments to ‘ vador sealed unit’, a type of metallic scrap.
Trade sources believe the government is concerned about the quality of scrap imported into the country.
“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 allow local processing unit to flourish rather than pushing them into peril through inverse import duty structure.
Since consumer industries have started import of finished products from countries such as Vietnam, with which India has signed FTA. So, the demand of finished products from local sources has declined steeply in the past few years. The situation has worsened in the past few months with demand of foundry products from auto sector having shrunk.
“The government should allow import of finished products only with 35 per cent of value addition as specified in FTA norms. There is hardly any room for 35 per cent value addition in metals. Hence, the government should exempt categories like metals from FTA ambit as the same disowns the ‘Make in India’ vision,” said Rohit Shah, managing director of Perfect Valves, a city- based meal recycler.
Business Standard, New Delhi, 28th Oct. 2015
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