Steel scrap imports at a standstill due to stringent norms

This will badly hit at least 10 million tonnes of steel production and value-added products

Steel scrap import has stopped with the revised guidelines in the latest Foreign Trade Policy, which mandate photography of every step of scrap uploading in containers at the origin.

This is likely to hit about 10 million tonnes of India’s steel production of 88 mt in 2014-15. “Secondary steel producers like us are facing huge problems. It is a futile exercise by the government. What’s the point in reopening the container after filming? No one intends to import garbage instead of metal. There can be better ways to govern like third-party inspection, agencies' certification, etc,” said Ankit Miglani, deputy managing director, Uttam Galva Steel, India’s largest producer of the galvanised product.

Until March 31, third-party inspection and certification were accepted, though at the sole responsibility of importers. The government now wishes to prevent import of radioactive material with the metal scrap.

“Shipments have stopped due to the lack of clarity on the implementation of videography. Pre-shipment inspection agencies have stopped inspection of cargo, as the new guidelines require a trained expert in radioactivity to inspect goods,” said Sanjay Mehta, managing director of MTC Business Pvt Ltd, the country's largest processor of metallic scrap, with a monthly volume of around 1.5 mt. After 8.16 mt in 2012-13, steel scrap import was only 4.78 mt in 2013-14, due to lower demand from consumer industries. In 2014-15, it is estimated at 9.6 mt.

Import of metallic ferrous waste and scrap
Financial year	Quantity (million tonnes)	Value (Rs crore)
2011-12	6.96	18893.82
2012-13	8.19	24356.5
2013-14	4.78	16454.93
Source : Press Information Bureau

Implementation of the proposed change in guidelines is a challenge due to lack of trained radioactivity inspectors and machines. According to Rohit Shah, managing director of Perfect Valves, “Around 1,500 inspectors are required to be stationed. Facilitating of visas and their remuneration would add to the cost for the government, to gain nothing. Without setting up adequate infrastructure, implementation of videography of scrap containers would be a big blow to secondary metal producers.”

  Integrated steel producers use scrap as coolant for manufacturing steel. For large primary and secondary steel producers, sponge iron replaces scrap. Hence, suspension of scrap import would not impact them in a real sense. But mills that use only scrap as raw material for value-added products and articles for direct use in consumer industries will be hit severely, say sources.

Nitin Johri, chief financial officer of Bhushan Steel, however, believes that sponge iron would substitute scrap.